The company that I chose to do my case analysis on is Dell computers. Many companies start out as very aggressive but get crashed either by its competitor or by poor strategic management. Dell Computer's entered the market with strong strategic vision and stronger strategic management. One of the biggest strengths that Dell has is its simple business concept which is building personal computers built to order and selling it directly to its customers. This simple notion gives Dell several competitive advantages over its competitor. One it is bypassing distributors and retail dealers which eliminated the markups of resellers, and two building or order greatly reduced the costs and risks associated with carry large stocks of unneeded inventory. As a major competitor in the personal computer market, Dell's focus on efficiency of manufacturing, and a direct marketing approach, that allows the company to continue gaining ground on the competition.
Dell was established in 1984 by Michael Dell, a college student pursuing a degree in medicine who also happened to have a hobby of building computers. He decided to sell the product of his hobby, and began the business in his dorm room. Business quickly took off, and today ranks among the world's largest computer systems companies. As the CEO of Dell Computer Corp. he started the company with a mere 1000 and has turned it into a multi-billion dollar computer giant. Dell Computer was first known as PCs Limited in 1984, selling PC components and PCs under the brand name PCs Limited. Dell's strategy was to sell direct...
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An Increasing growth in the economy is an opportunity for Dell to increase its market share, ant production as well. Most of Dell's revenues come from large businesses; a growth in the economy would drive demand for production.
To conclude, in order for Dell to compete successfully in today's industry, it needs to take advantage of all of the above opportunities. Consumers are becoming more demanding and price-sensitive. The next generation of products must be consistent with the relevant trends affecting the industry today. If Dell excels in its attempt to make a product that fits the trends, it will probably still remain one of the leaders in today and tomorrow's industry.
Works Citied
1. http://finance.yahoo.com/q/co?s=DELL
2. Dell Company website: www.dell.com
3. Wikipedia: http://en.wikipedia.org/wiki/Dell_Computer
4. http://www.reuters.com
1. How and why did the personal computer industry come to have such low average profitability?
A second alternative is a shift in marketing focus towards a new target segment and improved product. A strong and unified market strategy can strengthen synergies through new collaboration. Given the rapid growth, it is essential to reach influential segments that can create a mass appeal over the broader market. Doing so, will also require improving the quality of their product by focusing more on programming and less on hardware sales. A possible benefit would be creating a niche market that enables a rapid brand expansion. On the other hand, a possible drawback would be not being able to handle rapid
Michael Dell is the founder and CEO of Dell Computers Inc. one of the largest sellers of personal computers in the world. His contribution to the computer industry is the “one-to-one relationship between the company and the customer— there are no intermediaries, no middlemen” (Krames, 2003, p.59). Not only did he relinquish the middleman, he also perfected combination of the bottoms up strategy and the just-in-time (JIT) by waiting till he received orders from the customer to build computers. In doing this, Dell increased its return on investment (ROI) while reducing its inventory overhead cost.
Why has Dell been so successful despite the low average profitability in the PC industry?
A business is feasible when it is able to generate profits, standstill despite of risks and achieve the founders’ goals (Hofstrand, 2009). In order to meet all of these achievements, the researcher need to investigate investment, technical market and commercial feasibility (How to conduct a feasibility study, 2015). In terms of Business model Canvas, the ‘customer segments’ component presents the market feasibility. Dell has targeted four main segments which allow the company to design, produce, promote and deliver different products with different features. In comparisons, the ‘value propositions’ contribute to the technical feasibility when the product is formed and advertised, ready to deliver. Dell has used different strategies to maintain and developed the brand including remain the same brand name for different products. This strategy is promised to stimulate customers’ awareness of the company, thus, attract numerous number of clients and increase annual profits. Finally, ‘channels’ characteristic focuses on accessing technical feasibility. Dell disposes different channels in order to reduce the transportation and warehouse costs as well as guarantee customers with aggressive on-time delivery. Consequently, as the cost has been lowered and the reputation has been improved, Dell is expected to maximize their revenues
Dell Inc. weakness was cell manufacturing because their assembled computers were being shipped five to six days after the order was placed. It is an inconvenience for the customers to always send their computer away to have it repaired. First, they are left without internet access. Second, the time it reaches Austin, Texas, have it repaired, and shipped back can take days. The company opportunities were the Dell U.K. that open business in 1987 and in that country it was a lot of companies selling cheap computers. Dell Inc. strides on loyalty among customers and employees, and that could only be derived from having the highest level of service and performing products. Segmentation within the company enables them to measure the efficiency of the business in terms of assets use. Dell Inc. evaluates their return on invested capital in each segment, compare it with other segments, and target what the performance of each should be.
Speaking about the business model of Dell, it has ability to remain on the higher end of the scale for a particular time period. Dell has business model, which primarily focuses on direct selling line of attack. It in a straight line supplies the PCs to the regulars. It does not believe in intermediary, retailers for the business practices. Undeniably, this gives them an edge to serve customer well. Nevertheless, it understood the importance of retailers and start offering products on the premises of retailers, such as Wal-Mart, Sam’s Club and so on. Next, Dell administration is certain of the exclusive business of PCs. As time goes on, however, observing the
Dell Inc. is a privately owned multinational technological company, which develops, sells repairs and supports computers and relates products and services. Dell Computer has a fully Internet-enabled supply chains, which is constructed by the extranet to automate interactions with suppliers, service partners and customers .
Dell Inc. has realized that the most efficient path to the customer is through a direct relationship, with no intermediaries to add confusion and cost. With the power of their direct model and their team of talented people, they are able to provide to their customers high-quality, relevant technology, customized systems, superior service and support and products and services that are easy to buy and use.
Michael Dell founded the company Dell to offer network servers, workstations, storage systems, Ethernet switches, desktops, and notebook PCs after successfully selling his computers to customers directly in Texas. Over the course of three years his sales volume warranted the opening of an international sales office in 1987. In 1988 he began selling to large customers including several government agencies and Dell became a publicly traded company.
Apple can adopt the strategy to portray a picture of a not so conducive less profitable market, which could discourage new entrants from picking that path as they will be demotivated by the low return on investment resulting from low profitability levels. In order for apple to create a niche for t numerous products, it needs to adopt and implement such bold strategies of defense to protect their interests and continue to be profitable and successful (Ideavist, 2011). Entry of a new company into the technology sector would spell doom for most companies already struggling for market share as better priced and reliable products could imply consumers would shift their preference to the new entrant leading to a negative volume of sales stir for most already established companies. Another strategy that could be employed as part of Apple’s defense could be the pre-entry strategies that make it even harder for new entrants to compete and enter into the sector and this involve continuous improvement for their products, covering
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.
Lenovo has received public reprimand not once but twice for malicious adware added to their computers. The first exposure was in early 2000’s when Lenovo shipped computers with malicious software, once identified they were restricted for use in the US State department. The second incident was in February 2015, US CERT exposed them for preinstalling Superfish visual discovery software. The visual discovery software tracks images and injects ads on the screen, similar to pop ups, in this process it install its own root certificate which leaves the system infected with a back door for hackers.
Moreover, over time the company will lose its capability of extending service support to customers. This weakness can be exploited by the competitors who can enter the market with better service support and in turn eat the market share of Dell away.
Dell Computer have recently announced changes to their business strategy and supporting supply chain. They will no longer focus on a made to order direct sales model for their personal computers. Nor will they continue to refine their renowned supply chain model that supported their sales model. Instead, they will be looking to produce personal computers with fixed configurations at lower prices. This essay looks at why Dell have changed their strategy, and then considers the customer value proposition of the new strategy, as well as lessons that other organisations can learn from the Dell experience.