Matching Dell

1437 Words Apr 12th, 2006 6 Pages
We will first try to analyze the pc industry by the help of Porter's Five Forces Model and then continue with explaining Dell's business model, its positioning, and its competitive advantages, which heavily depend on extremely successful direct sales model and supply chain management. We will wrap up the case with some recommendations.

The PC industry has started to develop fast in the 80's when IBM, the leader of the industry thanks to the first mover advantage, launched its first PC series and later on when numerous small companies entered the market. PC is a new product and companies had to create the demand to it from the scratch. We will apply the Porter's 5 Forces model to examine the PC market and see how forces of competition
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Dell is able to sustain a competitive advantage over competitors in the computer industry because of an extremely efficient supply chain/distribution system and its JIT inventory system. Since inventory and labor are the highest liabilities of a firm and Dell operates with a few days of inventory, they are able to cut costs on warehousing, hiring people to track and maintain inventory, and avoid holding on to obsolete technology.

Dell uses a JIT inventory system because Dell's customers can only order computers directly through Dell itself. Dell uses their website www.Dell.com to take customer's orders. Dell focuses on direct sales, cutting out other distribution channels entirely. This allows for a deeper relationship with the customers whereby Dell can offer their customer's better service, savings, convenience, and efficiency.

Dell's Positioning and Activities

(see appendix 2 and 3 for Dell's and its competitors' positioning)

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

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