Michael Dell began his company, Dell Computer, by selling IBM Personal Computers in
1984. A year later they shifted to selling the Dell branded computers. Having faced stiff competition from IBM, Compaq, Hewlett-Packard, Apple, Gateway, eMachines, and
Toshiba, for over a decade running, Dell strategically adopted Internet and e-commerce in
2000, which according to Kraemer and Dedrick, “Aimed at improving its own efficiency, enhancing customer satisfaction, and reaching new product markets;” though remained glued to its vision of hardware production. Prior to this bold initiative, it had made unsuccessful foray into retail PC channel; to only come back to its direct vendor roots.
After fully incorporating Internet, the business developed its
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It further ensures Dell Computers produces according to customer specification, as they have the opportunity to configure products online. “A Dell PC is designed to minimize human touches in production, suppliers are selected to ensure high product quality, suppliers are physically integrated into production, and the entire order fulfillment process is managed by a sophisticated combination of internal and external information systems;” Kraemer et al
(2000). This is the way Dell makes itself visible, not middlemen, in the sight of consumers.
The model, in the nutshell means innovative combination of customer focus, supplier partnership, mass customization, or just-in-time; using information and IT to accomplish higher level efficiency and effectiveness throughout the entire value system.
The direct business model has given Dell an unprecedented competitive edge over its rivals.
While it turns its inventory over 60 times a year, the competitors could do so only at about
12 to 15 times. To become the leader in the industry, the model helped it grow at minimized costs. It spent only 1.6% of its revenues on R&D as against 4-7% for IBM, HP,
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Further more Dell has physically integrated with suppliers (Phillips, Nokia, Samsung) and business partners (Gen
3, Unisys, Wang, Banctec) to hold little or no inventory on its own, and in turn creates personnel efficiencies for them. Indeed the model presents the strengths of win-win relationship with customers, coordination of the value web, and emphasizing the company 's capacity of providing e-commerce solutions to consumers. Despite these overwhelming strengths, Dell is constrained by language, communication protocols, power supply, power cords, financial practices, preferences for national computer companies, and government regulation, which are nation-prone industry hurdles. In addition, the firm is fundamentally unable to research the market, a problem associated with its model. It fails to identify good local competitors: Toshiba in Japan, Olivetti in Europe. It could not understand either how attached consumers are to local brands or profoundly entrenched distribution channels.
Consequently Dell cannot reach out to new corporations and government consumers.
In spite of the inherent limitation the direct model is the engine propelling Dell
Michael Dell founded Dell Computer in 1984 and grew it into one of the largest computer manufacturers in the world. Dell Computer’s success resulted in Michael Dell being the highlighted as “youngest CEO of a Fortune 500 company” (Krames, 2003, p.58). Michael Dell’s guiding principle is to focus on the customer. This principle routinely guided his leadership decisions including computer design and development decisions, the organizational structure of the company and in how Dell Computer used the Internet.
Historically the personal computer (PC) industry has sold its products at reasonably high prices yet garnered only small profit margins. One reason for this is the high competition in the PC industry which led to competitive pricing among producers. Analyzing the competitive environment of the PC industry, it is evident that there is very little barrier to entry in this market. PC's have very low physical uniqueness and are made of standard components that require very little expertise to assemble.
In 1976 college dropouts Steve Jobs, Steve Wozniak, assisted by Ron Wayne embarked on a path to start a tech company that would create new innovative products by connecting people all over the world. This company came to be known as Apple Computers which has become a global leader in Technology and cultural innovation. The rise of Apple computers did not come easy and along with the major success obtained their failures have not gone without notice. Yet, through the joy of success and the agony of defeat, Apple has continued to reinvent its brand over four decades.
Sony, as an organisation, must deal with the dynamic industry they operate within. They established themselves by developing a stable work environment where engineers had profound appreciation of technology and could work as freely as they pleased, focussing on developing dynamic technologies and creating products that people longed for (Mintzberg et al, 2003).
In 1984, Michael Dell invested $1,000 in start-up capital to register his business as Dell Computer Corporation, which was known as PC's Limited. The company becomes the first in the industry to sell directly to end-users by passing the dominant system of using computers resellers to sell mass-produced computers. Dell Computer also pioneers the industry first thirty-day money back guarantee. It became the cornerstone of Dell's commitment to expand its service offerings, superior customer satisfaction, and the industries first on site service program. It also established its first international subsidiary in the United Kingdom, and raised $30 million in its initial public offering.
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 .
In early 1976 Wozniak and Jobs finish work on a preassembled computer circuit board. It has no Product keyboard, case, sound or graphics. They call it the Apple I. They form the Apple Computer Company on April Fool's Day and sold the Apple I board for $666.66 at the Home brew Computer Club in Palo Alto, California.
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.
floundered in its attempts to become the next big thing in mainstream America. Apple eventually bought the company in 1996 for $429 million. Which have Jobs a major share in the company of Apple.
Launched as a static page in 1994, Dell.com took the plunge into e-commerce shortly thereafter, and by 1997 was the first company to record a million dollars in online sales, according to Dell spokesperson Deborah McNair.
According to Michael Cannon, Dell's President of Global Operations, the key differentiators that have made Dell so effective for nearly two decades are its made to order direct sales model and its innovative supply chain (SCN, 2008).
In the future our firm could offer, the facility to make computers to consumers tastes, needs and budget. This is what the Gate Way Computer Company, which was very successful. Our firm can offer an after sales service. This would encourage consumers to come back to us. E.g. AOL offered a service where, if consumers had any problems, they could just ring them up and they would sort it out with no additional costs.
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.
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.