Dell Computer Corporation – Strategy and Challenges for the 21st Century

Dell's business strategy combines its direct customer model with a highly efficient manufacturing and supply chain management organization and an emphasis on standards-based technologies. This strategy enables Dell to provide customers with superior value; high-quality, relevant technology; customized systems; superior service and support; and products and services that are easy to buy and use.

Dell and Hewlett Packard (HP) are two of the most influential companies in the PC market. The CEO of HP requires an understanding of how dells strategy allows it to achieve a competitive advantage so that he/she can counteract it. This report has been carried out to provide the CEO with the necessary information to do this. Therefore the objective of the report is to provide the CEO with detailed information on Dell as a business and its strategy. In order to achieve this, first the main strategies of Dell and how they provide competitive advantage will be identified, then the business models and e-business initiatives used

Since the beginning Dell has been selling customized computers. In 1988 Dell became a public company, turning the company more profitable by acquiring new investors. From 1990 to 1993, Dell used to sell computers in retail stores such as Wall Mart, Best Buy, Staples, etc. and because of low profit as results, in 1994, the company refocused its strategy to direct sales, eliminating retailers, wholesalers and consequently acquired satisfied customers by reducing cost and time for them and also the company. In 1997 the company became the low cost leader in pc vendors. During 2002-2007 the company had 7 elements as its strategy: making build-to-order manufacturing progressively more cost-efficient; partnering closely with suppliers to reduce cost of the supply chain; using direct sales techniques to gain customers; expanding into additional products and services and technical support; keeping R&D and engineering activities focused on better meeting the needs of customers, and using standardized technologies in all product offerings. As a conclusion, Dell has been always changing its strategy according to customer needs and in a way to make the company more profitable.

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

Dell Company has a successful business strategy. As it is following cost leadership strategy. Its success story is hidden in cost proposition, delivery, and unique customization. In response to the high performance and better chances for growth Dell is applying two way strategy parallel to one another.

In 2008, Dell Inc. had grown from a $1,000 startup called PC’s Limited to a company that had $ 61 million in revenues. ("Dell 's net revenue 1996-2013 | Statistic") Dell Inc., formally known as Dell Computer Corporation, was started and headed by Michael Dell until 2004 when he stepped down as CEO. Michael Dell went from being a college drop out to becoming the youngest ever CEO of a Fortune 500 company, not to mention becoming a multibillionaire in the process. ("Dell Inc. History") However, the successes of his company would not last after he left in 2004. ("Dell 's net revenue 1996-2013 | Statistic") This faltering of company performance prompted Mr. Dell’s return to the helm of the company in 2007. ("Dell Inc. History") This case analysis will examine the initial strategies Mr. Dell used to grow his company and the impacts that these decisions would have on Dell Inc. as it faced uncertain conditions in 2008.

Essay 1 : Introduction to Dell 3 Parts - Look at the Business Model in Particular (Is it fit for purpose?) – Then the Ecosystem – The Modularization and mention licensing Look the Paradigm of Dell Conclusion

The advantages support one another. The economies that Dell has built with these advantages are difficult to imitate. The supply chain relationships and the high switching cost to customers due to high customization offered increases the difficultness to imitate. Even the competitors want to imitate it will take time because of the path dependency that Dell has built. And moreover, Dell has been constantly upgrading itself. Hence the model of Dell is inimitable and hence can continue delivering sustainable

Door het relatief simpele concept van directe verkoop aan de klanten, weet Dell het beste te begrijpen wat de behoeften van de klant zijn en de meest effectieve oplossingen te bieden die tegemoet komen aan een invulling van deze behoeften. Dell's strategie kan het best worden samengevat als samenwerking en integratie. De cultuur strekt zich uit van de relatie met leveranciers, andere zakelijke partners en het meest belangrijkste de klanten. Dell ontwerpt haar producten en diensten conform de wensen van de klant en verkoopt daarnaast een hele range aan perifere hardware, printers etc. Daarnaast levert Dell nog andere diensten zoals hulp bij de installatie, de technologische overgang etc, Dell heeft de markt als volgt gesegmenteerd:

This analysis describes the case of computer and peripherals industry especially the successful management of Dell Computer Corporation which grew twice as fast as its major rivals like Compaq, Gateway, Hewlett Packard and IBM. The main reason for the success of Dell was their "Direct Model" of selling computers which eliminated all traditional channels like distributors, resellers and retailers. Traditionally all its competitors like IBM, HP, and Compaq etc. used reseller, retailers and distributors to sell their computers to end users. IBM was the first company to launch its PC in 1981 and soon held 42% of the market. But the growth of IBM proved to be short

Michael Dell, the founder of Dell, Inc., recently took the company private, because he would like to concentrate on the Enterprise Solutions, Software and Services divisions. He felt that stockholders did not want to change the core business from the manufacturing of computers. This doesn’t mean he plans to stop manufacturing computers; in fact, he wants to sell computers at a competitive price to get

This research is made to analyze computer hardware industry and focus on Dell Inc. First part will be analyzed overall industry and competitive analysis by answering 7 key questions. The second part will be evaluated company resources and competitive capabilities by answering 5 key questions. This research can help manager to understand more about computer hardware industry and learn how Dell deal with their competitors.

Dell put together a business strategy that included mass customization and just-in-time manufacturing (letting customers design their own computers and custom-building systems). Dell also stuck with its direct sales plan and offered sales on the Internet.

Although Dell is an extremely successful company, there are areas of improvement and enhancement that should be considered. After a thorough analysis of Dell¡¯s IT tools, business model, IT infrastructure and competitive advantage, we have developed seven key suggestions. By implementing these recommendations, Dell can keep its high ranking in the competitive computer industry by increasing customer satisfaction, competitive advantage and superior value chain, without changing its principal operations to achieve these goals.

Over 2 decades of time Dell’s Configured to Order (CTO) business model did fine. However, over the period due to revolution in IT business, changing needs of the customers and strong competitive challenges in the PC market, Dell’s ability to grow revenue and deliver strong profitability was undermined. This forced Dell to review its business model and make it more competitive in line with the changed scenario in IT business. Following factors played crucial role in forcing Dell to revise its business strategy involving retail channels, pre-built PCs and smart selection methods for customers with new less time consuming Build to Order (BTO) strategy (Blanchard, 2012):