Dell Case Study

Dell Case Study

Dell Case Study

Introduction

In 1984, after the creation of income of $ 80,000 per month to the upgrading and selling computers from his dorm room, Michael Dell dropped out of Texas Tech University and founded the Dell Computer Corporation. The upstart companies are opposed to the established industry giants as IBM, Compaq and Hewlett Packard, but using an ingenious strategy and revolutionary business model, Dell has flourished and grew with each passing year. Now they are on top of U.S. PC market, and competitors are doing everything possible to catch up.

Rather than relax and enjoy their incredible success, Dell is now trying to assess their current situation and look to the future. Will the competitors try to imitate their strategy? If so, they can be successful? And if Dell manufacturing and distribution models successfully mimicked what will be their source of competitive advantage? How Dell is considering these troubling questions, they believe a change in strategy, which is so good for them.

a) Dell's competitive environment and its business model and business/IS/IT strategic initiatives

Dell direct model is the first time in the computer industry. This means that while their competitors are selling computers for distributors, resellers and retailers; Dell sold directly to the customer. It is also known as the DIS-intermediation or removal broker in the transaction. First, and most notable advantage of this is that Dell understands higher gross margins than their competitors. For example, Compaq and Dell made a similar computer that has the same processor, operating system, and is equivalent to accessories / features. This computer retails for $ 1499. Consumers can either buy a computer with your local dealer or order it directly from Dell. In addition, both companies have spent $ 1215, to make computers. Now the difference in the distribution model. Compaq Computer distributor sells for $ 1320 and distributor turns around and sells it to small resellers to a slightly higher price. Dell sells directly to the customer, so they pay the full $ 1499 on a computer that costs $ 1,215 to make. Compaq only gets $ 1320 on a computer that cost them $ 1215 (In this example shown in Figure 1). The results of the distribution model competitors 8-12% mark-up and after the computer made it takes 4-5 weeks to make it through the distribution channel for the consumer. Unlike Dell Court again made on the customer's computer about 1 and a half days after the order was received. The second benefit from the direct model is that it allows Dell to work to order production strategy. As Dell receives orders directly from customers, they are waiting until it is received before the start of production of computers. This allows them to more easily customize your computer and reduces the inventory of Dell.

In his capacity, Dell uses a 5 person producing cells unlike the assembly line. Parts for computers are placed in a box and sent a camera along with orders to ...