Dell Online Essay

Dell. Dell’s products—computers, servers and printers—are commodities. Dell tends not to develop the technologies underlying these products. Instead, it purchases the components from firms that develop the technologies (semiconductors and computer software). Dell’s direct-to-customer marketing strategy is not unique, but the extent to which Dell performs this strategy better than anyone else in the industry gives it a competitive advantage. Its size, purchasing power, quality control, and efficiency permit it to operate as a low-cost provider.

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 has emerged as one of the biggest sellers in the PC market. From humble beginnings in 1983, when Michael Dell worked out of his campus dorm room, to 1996 when we reached $7.8 billion in sales, the source of our amazing success has been our unwavering focus on the customer, termed the “Dell Direct Model.”

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.

Unlike PC market, the support service was more critical for server market since a problem in server even for a short time could cause serious problem in the customer’s business. Competitors such as Hewlett-Packard and IBM had begun offering variety support service aggressively to enhance the quality of their service. DELL, through a business model that focuses on direct PC sales, make to order model, low-cost production, and superior customer service, will definitely face some challenges or even have to change their strategy in order to guaranteed their high quality service when they enter the larger-scale server.

PC industry is characterized by fast declining ASP year over year. Together with the increasing component costs from 2009, both Dell and HP are facing squeezing profit margins (HP 2010; Dell 2010). In the first quarter of 2011, HP’s gross margin for its Personal System Group (PSG) is as low as 6.4% (Epstein 2011). Similarly, Dell’s gross margin of PCs is often 3 to 5% (Wang 2010). This indicates that if both

            This paper will analyze the impact of market trends on the computer industry and the organization Dell, Inc.  The market trends will be identified within the following areas; market structure, prices, technology, production, cost structure, competitors, regulatory, supply and demand.  The paper will also discuss the impact of new companies entering the market.

Dell's value-chain strategy combines technologies from Intel, IBM, and Microsoft to serve customers efficiently and with state-of-the-art computer technology. Dell is able to introduce next generation products faster than its competitors can because its market-driven strategy is developed around a direct sales, built-to-order business design. This distinctive process capability is supported by effective supplier, distribution, and service partnerships with other companies. Dell's management understands its customers since company personnel are in close contact with buyers who make inquiries and place orders. Not only does Dell process some 500,000 telephone calls each week, but 65,000 corporate customers are linked to Dell through their own Dell Premier Pages on the Internet, and Dell's Internet based sales reached $50 million a day in 2000. Indeed, in 2001, Dell became leader in global market share. (market driven strategy ch 1, http://highered.mcgraw-hill.com/sites/dl/free/0072466650/46701/cra66650_ch01.pdf#search='dell%20external%20influences%20marketing%20strategy')

This essay will focus predominantly on Dell Compter Inc and how it uses customer data to drive the manufacturing of its products. Discussion on how Dell uses technology to make business decisions is presented. The current model of distribution is investigated and finally recommendations will be made in terms of overall improvement to the current operating model.

Dell had to solve the problem of balancing the production of laptops, desktops and servers. On the laptop market, which Dell was committed to

▪ Communication. Maintenance of close ties with their most profitable corporate customers. By keeping open lines of communications, installing custom software, and keeping up with its customer’s business inventories for them, Dell is increasing customer loyalty and satisfaction. Dell has also built and maintained a Premier website for corporate customers. The website can be accessed by any customer subsidy worldwide, and not just a company’s purchasing agent. Through the website customers are able to purchase computers according to the automated policy (Kotler & Lane, 168).

The fact is that today the PC market is a mature market and only the strong survive. In Exhibit 1 is shown how the PC market has been shared among the most valuable players and how Apple 's share has decreased by more than half during five years time.

Dell believes the direct business model is the most effective model for providing solutions that address customer needs.3 Customers pay only for the features they will actually use. Another benefit for customers is they deal directly with the product maker. Dell loads the software so the purchaser can use the product immediately. This USP has given Dell an element of uniqueness in the market place that allows it to differentiate products from the “off the shelf” versions that competitors produce. Dell’s direct contact with customers allows the company to: • Properly identify market segments • Analyse the requirements of each segment • Develop accurate forecasts of future demand.

For the long time, Dell was well known as the largest manufacturer and marketing company of personal computers. But then due to increasing competition in the market,

Dell is a computer corporation recognized for manufacturing computer systems through parts assemble. In 1983, Michael Dell saw an opportunity in using IBM compatible computers for a new assembly line that can be sold to local businesses. The idea as explained by Michael Dell, in an interview with Joan Magretta[1], is that in the early days of computers' manufacturing, companies had to be able to produce every part of the system. As the industry matured, companies started to focus on single parts and to become specialized in creating items that can be assembled with other parts to prepare a computer. As a result, Dell understood that to have a competitive edge in the market, they needed to focus on