Dell Analysis

Dell Analysis

In spite of Dell’s Direct Model strategy, the company had lost any price advantage it had over its competitors. Dell also had an issue with channel inventory availability driven by the fact that their competitors were attempting to replicate their strategy. This was a large threat to the organization because they so heavily relied on just-in-time delivery of parts. Dell’s competitors faced many challenges to the direct distribution method, however. According to Exhibit 8 in the case (“Ratings of PC Vendors by Corporate Mangers with PC-buying Responsibility”), channel based support was rated the lowest on all scales, showing that this was Dell’s riskiest area as well.

Internal Analysis

Strengths and Weaknesses

Dell’s main strength lies in their perfection of the Direct Model, which boasts a production process that lasts only a day and a half so the company is able to serve customers quickly and has the capacity to withstand very large orders. Dell built held no finished goods inventory on hand, which helps to reduce idle assets and risk. The company maintained excellent relations and communication with suppliers who were able to adhere to Dell’s just-in-time inventory management and allowed suppliers to send shipments direct to customers, reducing inefficiency. Dell encouraged suppliers to locate their facilities in close proximity to assembly operations. Additionally, Dell had very high customer service and support satisfaction and maintained some of the best performance metrics in the industry. Finally, their main source of revenue came from businesses and large government institutions and no single customer represented more than 2% of their sales, which lowers their risk of buyer power.

One of the firm’s...

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...rosoft operating systems) so if relations between a particular supplier and the firm go awry, the firms can seek other suppliers to do business with. There is also little difference in the supplier’s products.

Overall Analysis of Industry Attractiveness

Overall, the computer industry is relatively attractive. The potential for future growth is high but new competitors must face the threat posed by already established, well-known brands. There are relatively few substitutes for computers and the power of suppliers and buyers is low. New companies would likely be able to successfully yield a profit. Companies have been relatively successful in this industry throughout its history. It is important that all firms in the industry are able to keep up with ever changing cutting edge technology, however.

**paper is based on a case study from Harvard Business Review**