Environmental Analysis of Dell Organization

In 1994, Dell made the bold decision to remove their products from retail stores and focused on direct to customer sales. In 1996 Dell began selling through their website which is to this day their most successful sales channel. By eliminating their retail store presence Dell was able to reduce costs on multiple fronts, reduce inventory, and maximize profits. Dell created an order system which allowed customers to specify and select options, components and features they wanted on their Dell device. Dell 's just in time inventory system lowered inventory holdings to just 3 days from 9 days and storage costs were thus minimized significantly. In 1995, Dell entered the Chinese market where a population of 1.3 billion was a great opportunity to create a significant market presence; IBM, Compaq, and Hewlett-Packard had all penetrated the Chinese market prior to this date and had opened offices in China during the early 1990’s. It wasn’t long before Dell proved to be worthy competition with not only international companies but also with local companies like Toshiba, Samsung, NEC and Acer. With so

Dell’s company strategy is to deliver a quality product to their customer and the company will not hold inventory. The orders come in through the internet and that is how purchasing orders the parts that are needed to supply the customers with orders. Because Dell wanted to be able to touch the world with their product the internet was their best way of achieving this. The internet gave Dell the ability to surge in their sales. With the surge in sales, Dell had to take the production of Dell products to other countries. To do this they had to do research to ensure that they could bridge the cultural differences and obtain the ability to open plants in major cities where the product could be sold saving cost in transportation to get the

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. 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.

Having the low cost advantage Dell is able to expand the gap between cost and customer's willingness to pay. Therefore, they are able to satisfy their end-consumers, who are educated want product stability, high-end performance and low lifetime costs. They have served the US market and started to expand their market worldwide; in addition, they have

Dell’s target market consists of personal computer users and corporate users. Dell is known for their ability to build computers suited to their customers needs. Because their largest customer base is marketed online, their geographic area is unlimited. Since technology is rapidly progressing and moving away from traditional PC’s, Dell has to diversify their products.

It is indicated in the proposal that the company has potential given its product superiority in the market to increase profits through tapping into markets in the developing world. It has been researched and ascertained that the market for computers has not been fully exploited. Dell Corporation has the potential and capacity to venture in the developing world market and increase its sales and revenues.

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.

Affordability of latest technology through Direct Sales Services - Dells uses direct customer relationship or as it calls it “customer intimacy” as its distribution strategy. This means meeting customer needs directly and cutting middleman interference as much as possible. This is done either through dedicated sales representatives, telephone based sales and online at www.dell.com. As a result, the purchase price would be lower than other competitors.

Now with the success in its hands Dell wants to take a larger bite in server and storage market. Also it wants to explore

What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion?

million to $3.6 billion. In many of those years, Dell earned more on PCs than all of its main rivals

Because of these views DELL has the competitive advantage over others because of many reasons. The level of inventory costs is really low since the case of fastest reply to demand changes, it is also observable that customer pays for an order before DELL pays its supplier for the products components.

Dell has also employed two major strategies, customization options for clients who demand cutting edge technology along with a build-to-order option. As a result this has drastically increased its value to customers and also allows Dell to carry fewer inventories which could in turn result in obsolesce. In other words the overproduction is greatly reduced as the production is essentially in line with the demand and the market.

Dell entered into China, the world 's fastest growing PC market in 1998. Even though it was a late entrant, Dell initially succeeded through its direct business model, which is primarily aimed at industry and public service units. But this approach will leave the Chinese consumers ' desire to touch the product before buying. Although the actual growth of the zones, the third and fourth tier cities are left behind. But the Chinese grass was tamed domestic brand, Lenovo. It 's relational and efficient supply chain business model, combined with the commercial network helped Lenovo corner 35% market share; Dell continues to dip. But 2005 was a challenging year for Dell. Not only did the company 's struggles in the consumer electronics segment, which leads to the cancellation of MP3 players, but also the core of the PC segment, Dell was the corner of its traditional competitors, such as Hewlett-Packard and Gateway, and new competitors, such as Lenovo and Acer. This resulted in lower average sales prices of Dell products and operating margin weakened. Dell has problems on various fronts; the share price fell to $ 29 in October 2005. (IBS Case Development Centre, 2015)