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Competitive strategies used by dell
Dell competitive advantage case study
A case study of Dell and other competitors
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Recommended: Competitive strategies used by dell
ERP Individual Assignment
Marco Arvioti
UIBS00753
Prof Mr Van Gastel
Introduction and ERP
ERP stands for Enterprise Resource Planning ( "enterprise resource planning").
It is a management system that integrates all of a company's relevant business processes such as sales, purchasing.
In an era when the cost of the added value increasingly important percentage of the cost of raw materials, to increase efficiency and profitability it is not enough to buy at the lowest price, but it is absolutely necessary to optimize all processes corporate organization, and this can only be achieved by introducing Computing software that eliminates waste and errors.
The first step is to avoid that the organization is "broken", or divided
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Dell should manufacture highest quality products.
The fourth one is Deliver: in this step company gets order and customer should be satisfied with the product delivered and it should be done in time limit. Here dell gets some issues as it does not have any distributors to deliver its products.
Return: if the product is delivered company should have distributors to check it out for the customers. As dell does not have any distributors it should make the return process as easy as possible for the customers.
2. How has Dell influenced visibility, consumer behaviour, competition, and speed through the use of IT in its supply chain?
Dell focuses a lot on the inventory and holds much time of it in its supply chain which this would show the visibility.
Dell should also concentrate in its consumer behavior, this is a very important step in identifying the needs and wants of the consumer.
Nowadays it is a crucial part of the business to involve researches in the consumer behavior.
As shown in the case study DELL is the fastest company in producing due to their advanced technology.
DELL is as well trying to to do their best in working to catch up the success in the
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According to Mr. Dell “Dell get closer with its large customer by using “Premier Pages” which is a paperless ordering process for configuration, ordering, services, support, and customized PCs according to customer’s need”
Explain how an ERP system could help Dell gain business intelligence.
Using ERP (Enterprise Resource Planning) is essential in making decisions for companies, in this case DELL. DELL is known worldwide and the demand is so enormous for this company that the monitoring of orders and the reductions of waste and stock is very important to have always profit.
Therefore to keep its customers happy, they must use ERP to help them plan for the future. Instead of having departments work individually, ERP helps them interact and help each other for the good of the company.
By using this system, the communication between all departments will get better which in turn could save the company time and money. By having everybody communicating they could speed up the process of getting their products to the customers quicker, this would give even a faster delivery than now even though they are already the fastest
Why has Dell been so successful despite the low average profitability in the PC industry?
Michael Dell, who is the founder of Dell Computers, began his venture towards revolutionizing the computer industry in 1980. In 1980, Dell purchased his first computer; an Apple II, and took it apart to understand how it was designed and made (Dell & Fredman, 1999, p. xi). In 1981, IBM introduced the Personal Computer (PC) and Dell saw this as a business opportunity. Dell switched from the Apple computer to the IBM PC and began to learn all of the possible components. Michael Dell’s hobby was to disassemble computers, rebuild them with improved components, and sell them directly to the user according to the biography by Mr. Dell in Smart Computing (2007). “Traditionally, in the computer industry, manufacturing companies built computers, which were distributed to resellers and dealers who sold them to businesses and individual consumers” (Dell & Fredman, 1999, p. 11). Dell noticed that IBM also sold their computers to through the distribution method, and in 1984, Mr. Dell made his business venture official. The original name for Michael Dell’s company was registered in the state of Texas as “PC’s Limited.” The organization transformed and renamed the company to Dell Computer Corporation in 1988.
Liquidity, profitability, and growth are used to measure the success of a company. When asked to review Dell and it's marketing strategy I looked closely at it weakness and threats, because once you address a company weakness it then has the possibility of becoming a strength and when you acknowledge threats to a corporation, the company can then take the appropriate action to alleviate the threat. My recommendation to Dell would be not to make any grand changes, to continue observing the computer technology market and continue to make amend changes as necessary.
Dell Inc. weakness was cell manufacturing because their assembled computers were being shipped five to six days after the order was placed. It is an inconvenience for the customers to always send their computer away to have it repaired. First, they are left without internet access. Second, the time it reaches Austin, Texas, have it repaired, and shipped back can take days. The company opportunities were the Dell U.K. that open business in 1987 and in that country it was a lot of companies selling cheap computers. Dell Inc. strides on loyalty among customers and employees, and that could only be derived from having the highest level of service and performing products. Segmentation within the company enables them to measure the efficiency of the business in terms of assets use. Dell Inc. evaluates their return on invested capital in each segment, compare it with other segments, and target what the performance of each should be.
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 Computers Strategy Global companies play an important role in the business environment, because they connect their businesses together around the world. A good example of a global company is Dell Inc., an American computer-hardware company, headquartered in Austin Texas, which develops, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. They design, build and customize products and services to satisfy a range of customer requirements: from the server, storage and Premier Services needs of the largest global corporations, to those of consumers at home. According to the Fortune 500 2006 list, Dell ranks as the 25th-largest company in the United States by revenue.
Dell made the bold decision in 1994 to eliminate their products from retail stores and focused on mail order customers. In 1996 Dell began selling through their website as well. By eliminating the retail store presence Dell was able to reduce costs, reduce inventory, and maximize profit. Dell utilized a built to order system that allowed customers to specify exactly what they did and did not want on their Dell computer. Dell's just in time inventory system lowered inventory to 6 days and storage costs were saved.
Dell's Successful Use of the Internet as a Selling Channel Dell are currently the worlds number one PC supplier, a position in the market they took from Compaq in April 2001. In short, the company’s success story is mainly down to their innovative direct business model, which pays particular attention to the selling process where Dell completely bypasses all intermediaries and/or middlemen. This is because Michael Dell believed they add little if no value to the end product, instead just gaining a considerable mark-up for selling the product.
The biggest area of expansion for Dell is the consumer market. In order to develop more sales in this market Dell needs to focus more advertising on the needs and wants of the consumer. Currently Dell promotes its direct model, which is a key factor Dell needs to create a better position for itself in the consumer market. With all of the PCs in the market being more or less equal, Dell needs to focus on what differentiates its products from the competition, namely service and support.
Since its launch in the mid '90s, Dell's e-commerce business has been a poster child for the benefits of online sales, says Aberdeen Group analyst Kent Allen. The company's strategy of selling over the Internet -- with no retail outlets and no middleman -- has been as discussed, admired and imitated as any e-commerce model. Dell's online sales channel has proven so successful, says Allen that the computer industry must ask: "Does the consumer need to go to the store to buy a PC anymore?"
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).
How does Dell achieve such staying power? “Direct relationships with our customers give us an advantage of seeing changing customer requirements and needs earlier than companies who do not have the same breadth of direct relationships” (Dell, 2009). Customer satisfaction is just one of the many areas Dell focuses on; from developing new and effective processes to extensive performance measurements Dell strives to excel in every field.
In order to be more productive and accurate, most of the companies depend on use of technology, with the help of enterprise resource planning (ERP) systems. (Olsen, and Saetre, 2007).
Dell Company has a clear understanding of its own company strengths such as selling their products directly to customers without a middle man and in designing its computers and other products to the customer's specifications. For example, Dell Company had designed its products to be more functional, lighter and more easier to use. This helps reducing the manufacturing costs that was needed. Dell Company also not forgetting its own weakness such as having no relationships with local computer dealers, which will be hard for getting supplies and support from the other companies. Besides, Dell Company is a company with a smaller capital, and at that time what they need the most will be financial support and sponsorship. Thus, with no relationship with local computer dealers disadvantages the company. Besides, they do not have unique technologies to offer the market compared to its competitors. Dell Company faced threats from other competitors such as Compaq and IBM, both of which had much stronger brand names and reputations for quality at that time. Moreover, it is hard for the Dell Company to compete in a market that the need for computers and laptops are getting lower, which these products are getting replaced by smart phones and tablets. Dell Company identified opportunity by noting that its customers were becoming more knowledgeable about computers and could specify exactly what they wanted without the help from the sales person of the company. Dell Company should release new technology and new ideas that can attract and fulfill the customers. Related to that, Dell Company has to establish its Research and Development department in order to produce new products to the market. In the mean time, Dell Company provides various enterp...
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.