DELL

Dell's Current Situation

Dell's Current Situation

Introduction

Dell is considered to be one of the world's leading IT company and has been ranked as the best computer brand in the world. Its operations are also considered one of the most efficient because of the way it manages it distribution strategy. Dell is one of those companies that keep its inventory levels to a figure near zero. This method of maintaining their inventory ensures lower costs and hence they are able to offer better prices to consumers. However, the market in which Dell operates is changing to a great extent and because of the reduction in demand of computers, Dell's revenue is falling. No industry in the world remains the same throughout the years. The computer industry is currently one of the fastest growing companies due to which changes are taking place rapidly (Moorhead, 2012).

Porters Five Forces Model

In order to study the current scenario Dell is going through, it is important to first study its market and the factors that affect it.

Bargaining Power of Suppliers

Dell is a large purchaser due to which it has a significant impact on the suppliers thus reducing their advantage. The size of the company influences suppliers due to which they are able to get components at lower costs. This results in competitive advantage because of the lower prices that are being offered as well as the higher quality of parts that it gets due to its relationship with the suppliers (McAllister, 2013).

Dell forms relationships with the suppliers which enables them to get the products they need whenever required. Such relationships with suppliers are essential as it helps in seve3ral ways. While choosing its suppliers it ensures that they are capable to delivering higher quality of products and continuously innovate their offerings so that the company may come up with better products for its customers.

Dell also prefers to deal with suppliers that are located near its assembly plants. This enables them to maintain a very low inventory. Whenever the company needs some items, the sup-pliers can supply them within a few hours. Thus, the production never comes to a halt due to a shortage of inventory. In this way, Dell has a greater bargaining power compared to its suppliers (AP. San Francisco, 2013).

Bargaining Power of Customers

Dell offers a much better service to institutional and corporate customers because it believes that this market can contribute a major share of its revenue. It does this by offering in-person sales and support. This is done through mails and calls. The website of Dell is specifically configured for corporate clients where they can calculate the prices of the services they wish to avail (McAllister, 2013).

The fact that Dell has targeted several major customers gives it a better bargaining power because it would be more expensive for companies to switch from Dell to any other manufacturer. Currently, home users have a better bargaining power due to the variety that exists in the market. Price conscious customers prefer cheaper products that offer similar ...