According to Michael E. The initial investment is relatively low 1. The direct model which is nowadays Matching dell case study known as Dell Direct was used for all the consumer segments Dell was serving which are shown in appendix 1.
Therefore the most of the five forces claim the profit for themselves, decreasing the part of surplus remaining to the PC manufacturers. Porter, the profit potential of an industry depends on five competitive forces: To differentiate from its competitors Dell invented a new business strategy which would enable the company to gain cost leadership in the PC market.
Cost advantages could be realized by low cost entrants who enter the market without using advertisements addressed to the end consumer.
Dell remained in close electronic contact with suppliers, often communicating the need for parts on an hourly basis.
On the one hand manufacturing facilities do not require large financial resources but on the other hand the technologies except of the operating system and microprocessor need investments in research and development to stay up to date.
Complimentary products product market is rapidly growing and therefore it raises the industry profitability.
It is very hard for the customers to join forces and fight for their interests. PC industry is affected by two opposite forces: Average prices of comparable PCs for the consumer market from - Table 3: The result of the calculations defines the PC industry as highly competitive.
See Appendix 1 for detailed description of how does certain parameter influence the market. All in all, Dell was able to reduce its days of inventory from 32 days in to 7 days in Since Dell is receiving orders directly from the customer, the company begins production on demand whereas its competitors had to produce on forecasts.
This meant that while its competitors sold computers to distributers, resellers and retail stores, Dell sold directly to Matching dell case study customer and eliminated the other channels. The homogeneity of the product also lowers the switching costs.
The second benefit of the produce to order strategy was that Dell was able to arrange just in time delivery with its suppliers. To be competitive, Dell implemented an innovative business model which made the company grow and achieve the status of the one No.Case Study: Matching Dell Introduction: Dell corporation is a well known computer company incorporated in Dell Computer Company is the pioneer of the highly publicized business model called "Direct Model" in the personal computer industry.
Dell arranged for suppliers to locate their production facilities close to Dell’s to maximize the efficiency of operations.
This allowed Dell and suppliers to work closely with one another, integrating the organization and minimizing buffers. After years of success with its vaunted "Direct Model" for computer manufacturing, marketing, and distribution, Dell Computer Corp.
faces efforts by competitors to match its strategy. This case describes the evolution of the personal computer industry, Dell's strategy, and efforts by Compaq, IBM, Hewlett-Packard, and Gateway to capture the benefits of Dell. Matching Dell 1. Presented by: Patricio Becar Hasnain Zaheer Candong Wu Puru Tiwari 2.
“ It’s amazing to me that our competitors think the customer is the dealer.”. Matching Dell Case Solution, After years of success with its "direct model" praised for computer manufacturing, marketing and distribution, Dell Computer Corp.
face efforts by. How and why did the personal computer industry come to have such low average profitability? The PC industry has started to develop fast in the 80's when IBM launched its first PC series and later on when numerous small companies entered the market.Download