Strategic Formulation for Dell's Computer

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

The proposal presented herein gives the background information of Dell Computers Corporation highlighting the current operation for the manufacture of computers. The proposal highlights the potential of the company to increase its market share and profitability through change of its culture from order based to inventory base.

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.

Founded in 1984 by Michael Dell with the aim of building relationships directly with customers. Dell is a premier provider of PC products and services sought by customers worldwide to build their information technology and internet infrastructures. Through its direct business model it designs, manufactures and customises products and services to customer requirements and offers an extensive selection of software and peripherals.

To evaluate the above option we will use the SWOT analysis of Dell’s existing model.

Dell's deal with a large amount of suppliers from many different countries, this can be an issue if a product is out of stock or not ship to Dell on time.

In addition Dell’s reliance on suppliers also creates risk and uncertainties. “Reliance on suppliers, as well as industry supply conditions, generally involves several risks, including the possibility of defective parts (which can adversely affect the reliability and reputation of Dell’s products), a shortage of components and reduced control over delivery schedules (which can adversely affect Dell’s manufacturing efficiencies), and increases in component costs (which can adversely affect Dell’s profitability).” (Form10-K 2005 p9)

This enabled strong customer relationships and increased customer satisfaction. One of the characteristics that distinguishes Dell from its other competitors is that Dell provides the facility to customize computers of their choice and taste and deliver the system to the customer as it is. This is the most crucial and critical success factor behind Dell Computers. Dell’s direct to consumer model concept helped them reach above-average returns and remain in business today. Customers have developed a brand-name loyalty to Dell because of their cost efficient differentiation strategy. Their strategic moves for their products created an image for themselves in the market and is the reason for their dominant existence. This enabled them to earn more market share in the industry. The customer segmentation that Dell focuses on is the corporate segment and large businesses form the majority of its clients. This customer segment targeting is more likely a result of its operational strategy and not the other way round. However, with corporate segment customers seeking high performance, reliable, affordable solutions, Dell fits in comfortably. Dell also appeals to those customers who want hands on experience of the latest technology and the idea of customized computers is very appealing. For Dell, it focused on providing superior quality services to its customers through its sales representatives. It also shifted

Dell management was concerned that, although the firm carried almost no inventory, its suppliers might be holding much more inventory than was needed to provide desired customer service. For this reason, Dell asked a team from the Tauber Manufacturing Institute (TMI), a partnership between the engineering and business schools at the University of Michigan, to study this issue. Dell sought recommendations for a sustainable process and decision-support tools for determining optimal levels of component inventory to support the final assembly process.

For some consumers it is an inconvenience that Dell PCs cannot be purchased through retail outlets

Dell is considered a very successful company. According to Govindarajan & Gupta (2005) one of the successes is its customer-direct concept that has been practiced since the company 's inception. The concept involves dealing with customers directly and not through a third party, which helps maintain the quality of the relationship with its customers and also the products. In addition, this concept allows Dell to eliminate unnecessary inventories, warehouse space and storage expenses. Dell succeeds by expanding its business, which can be measured by how it creates relationships with other big businesses, such as Walmart, Boeing, and Ford. Dell expands its business by providing products other than computers, for

Due to a changing market environment and existing product life-circle there is a need for the company to revise its present business units and to think about further expansion. There is a shift in customer demand and therefore it is crucial for Dell to recognize in what ways best to satisfy the customers?needs.

DELL Computers, a leading PC supplier to corporate and government customers, today is now among the first companies to provide its customers with the next level of industry-standard Pentium processor power, while many vendors are still struggling to broaden their processor-based product lines. Dell 's unique ability to take a market strategy position during important technology transitions because of its build-to-order manufacturing process. This build-to-order approach allows the company to maintain low inventory levels and integrate emerging technologies into systems. Today 's customers are reducing their supplier bases, providing the opportunity for the most capable suppliers to seize huge market share gains as Dell needs to redefine

For many years the Dell Corporation has been the fastest growing entity in the computer industry and is considered a pioneer in direct marketing. With the Pc industry being such a unique industry with its super fast product life cycles and having to keep up with continuous innovation, it is one of the most difficult industries to maintain a competitive edge. From the beginning Dell has been focused on customer service by understanding the customer’s