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Dell company's strategy
Dell company's strategy
Dell company's strategy
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Mr Michael Dell founded Dell on November 4, 1984 in Austin Texas.
He started Dell with selling computer system straight to its consumer such that they will be able to know the customer demand. Dell started with just $1000. After 4 years, dell expanded greatly and theirs shares were sold at $8.50. Now, Dell Inc. is a privately owned multinational computer technology company based in Texas, Dell develops, sells, repairs and supports computers and related products and services. Dell sells personal computer, server, data storage devices, and all other electronic devices.
When Dell started, they are well known for its innovations in supply chain management and electronic commerce, particularly its direct-sales model and its "build-to-order" or "configure to order" approach, which is their key supply chain strategy, to manufacturing— They took orders through telephone, asking the customer their specification for the product, then, delivering individual PCs according to the customer.
By adapting the “build-to-order” strategy, Dell removed resellers and middleman and was able to understand customer needs and wants first hand and adapt to market changes faster than competitors. The “build-to-order’ also helps the customer to lower the cost of the product. Second, Dell built computers directly for customers, not for inventory. This meant that the company did not waste resources (Time, Money, Labour) building systems that may need staffs to transport around the world, or spend time tracking and managing inventory, and dismantling systems that become obsolete before purchased.
Original Dell did not target the consumer market, by targeting the consumer market; the cost will be higher and will also reduce the profit margin in selling to indi...
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...heir customers questions on what to kind of functions the consumer wants.
Dell believes in getting feedback from customers and suppliers so as to bring information from the outside world of Dell. By doing this, Dell could stay competitive with other alternative brands. Michael Dell once said he would roam around, outside Dell to observe, analyse and hear how the people in the outside world thinks about their brand as well as the others. He would crash the chatrroms and listen to their conversation about their deliberation on their purchasing behavior. Therefore, he believes by doing this it gives Dell a great opportunity to improve the company.
Dell not only gets feedbacks from the customer but also the supplier. Thus by collating all the feedbacks both from the customers and the suppliers, Dell could improve their company’s efficiency by satisfying both parties.
1. How and why did the personal computer industry come to have such low average profitability?
... thing while being in the right time on the right place. Everything else is the history. Many stories were told about Dell. Dell was most famous for its customized products which they sold directly to customers. This strategy worked for some period, however to capture bigger market share Dell had to return to the retailers. Michael Dell is one of the biggest asset Dell has. His enthusiasm and hard work build a multibillion dollar company. He has promising outlook for the IT market and always make strategic decisions. Therefore Dell at the beginning made strategic decision to sell in the stores to capture market share, then they decided to sell directly to customers to avoid retailer margins, however, at the end they returned to retailers to capture market share again. Although these strategies contrasted each other, they were right strategies for the right time.
Why has Dell been so successful despite the low average profitability in the PC industry?
New online manufacturer brand e.g. Dell.com - Entrepreneurs saw opportunities for developing online manufacturers' brands that took advantage of online technologies that enabled innovative new products to be adapted to customer preferences, and by using IT to enable efficient and effective operations such as assembly and logistics.
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's strengths were oriented around listening to the customers, responding to the customers, and delivering what the customer wanted. The direct relationship was first through telephone calls, then through face-to-face interactions, and now through the internet. It has enabled them to benefit from real-time input from real customers regarding products and future products they would like to see developed. The company also doesn't use reseller or retail channels because every computer is built-to-order, which allows less inventory. The direct model allows them to take the pulse of whatever market and provide the right technology for the right 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. HISTORICAL REPORT Dell Inc, was founded as “PC’s Limited” in 1984 by Michael Dell, while still a student at the University of Texas at Austin, with just $1000. From Michael Dell's off-campus dorm room at Dobie Center, the startup aims to sell IBM-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs.
Dell made the bold decision in 1994 to eliminate their products from retail stores and focused on mail order customers. In 1996 Dell began selling through their website as well. By eliminating the retail store presence Dell was able to reduce costs, reduce inventory, and maximize profit. Dell utilized a built to order system that allowed customers to specify exactly what they did and did not want on their Dell computer. Dell's just in time inventory system lowered inventory to 6 days and storage costs were saved.
Dell Computers has been around for nearly 35-years working in an industry that many would consider not to be environmentally friendly, the wholesale and manufacture of computer devices. However, Dell has set out on a mission to make their company more sustainable and socially and environmentally responsible. Dell’s goal is to create a “legacy of good” where whatever it takes to make their technology they do 10 fold as much good for, the planet, its people, and its communities.
This strategy was carried out by selling via phone, fax and direct sales, instead of selling through retail stores. Not only this approach differentiated Dell from other competitors at the time, it also reduced its operating costs as it did not have to rent expensive retail space. In addition, Dell’s strategy of selling customised computers allowed it to hold only a small amount of inventory, which reduce...
Dell has three distinctive capabilities which consist of: 1) selling products directly to consumer’s which eliminates the markups of resellers 2) build products as they are order, which eliminates overstocked products and 3) having the ability to respond quickly to customers who experience problems with their products.
Regardless of the company's past success, Dell is affected by two current trends in e-commerce, says Forrester analyst Carrie Johnson. And only one of these trends works in the PC giant's favor.
Dell Inc had very effectively used the direct marketing channel for the sales of computers to the end consumer. When all the other pc makers were selling through retailers and distributors, Dell had started efficient use of the direct channels.
"Technology is like fish. The longer it stays on the shelf, the less desirable it becomes." (1) Since the dawn of computers, there has always been a want for a faster, better technology. These needs can be provided for quickly, but become obsolete even quicker. In 1981, the first "true portable computer", the Osborne 1 was introduced by the Osborne Computer Corporation. (2) This computer revolutionized the way that computers were used and introduced a brand new working opportunity.
“The Dell Theory of Conflict Prevention,” is a theory that is approved by multiple famous authors. The theories main points are valuable and the theory should be looked upon more seriously. In Thomas Friedman’s essay, “The Dell Theory of Conflict Prevention,” he gives examples of how global supply chains would be constructive to promoting world peace. Friedman feels that if everyone is an ally to each other in some shape or form, then no one will want to engage in war. Madeline Albright would agree with Friedman’s theory according to her writings in “Faith and Diplomacy.” Albright felt that religion should play a factor in the diplomatic system of America, in order for us to maintain some kind of peace with other nations. Friedman and Albright both were looking for a solution to world peace. Albright would agree with this theory from the religious perspective. Appiah argued that an ideal global citizen would be essential to America, in his essays “Making conversation” and “The Primacy of Practice.” Appiah felt that people must have an understanding of each other in order to get along with each other. Both Appiah and Albright would agree with “The Dell Theory of Conflict Prevention.” “The Dell Theory stipulates: No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain”(Friedman 125).