Dell Business Strategy Change

2013 Words Oct 8th, 2008 9 Pages
Dell Computer have recently announced changes to their business strategy and supporting supply chain. They will no longer focus on a made to order direct sales model for their personal computers. Nor will they continue to refine their renowned supply chain model that supported their sales model. Instead, they will be looking to produce personal computers with fixed configurations at lower prices. This essay looks at why Dell have changed their strategy, and then considers the customer value proposition of the new strategy, as well as lessons that other organisations can learn from the Dell experience.

According to Michael Cannon, Dell's President of Global Operations, the key differentiators that have made Dell so effective for nearly two
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Instead, Dell have opted for a strategy of trying to compete on price and quality. This strategy was outlined by Michael Cannon on April 14, 2008. The aim of the new Dell strategy is to “provide the customers with great satisfaction on their needs, better than our competitors, in a way that delivers total lowest landed cost, anywhere in the world” (SCN, 2008).

In the past, Dell's supply chain was focused on being able to provide customers with a made to order computer. Dell are finding that although this strategy is profitable for customers that customise their configurations to the higher end of the configuration price bracket, when they are selling the base model, the cost of their complex supply chain is not efficient, as most of the complexities are not needed. Dell have recognised that not all segments of the market want a customisable computer, and are happy to purchase a limited configuration with slower delivery time. This will be especially true in emerging markets, where Dell believes customers will be looking to buy cheaper personal computers with fixed configurations. One of the major changes to their sales approach will see them entering the retail market, which they have already started to do. However, Michael Cannon did confirm that the direct model will remain important to Dell (SCN, 2008).

To achieve the goals of their new strategy, the

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