Based on the external environment and the historical perspective of Dell, Michael Dell needs to realize that his nearly 20 year-old business model needs a dramatic change. He needs to get the product in customers hands (before point-of-sale), focus on quality customer support/service, and use customer indicators as a sign of what areas need improvement/enhancement within the company. Additionally, limited options based on narrow-minded perceptions (only using Intel chips) not only cost Dell market share, it also cost them on the bottom line (Operations). Not listening to the needs and wants of loyal consumers can result in a loss of market share, which is what Dell has experienced.
REQUIRED ACTIONS
In my opinion, Dell will only regain its growth percentage when it ceases focusing on measuring profitability via delivery time ratios and number of unit sold and begins focusing on what foreign markets expect, based on their cultural differences. It seems Dell did little research before opening several foreign manufacturing facilities and attempting to develop international sales relations. As a result, they failed to alter their U.S. business model to meet the needs of other (foreign) consumers. Also, through this ignorance they also sacrificed the brand name and initial marketing push/hype.
SUPPORTING INTERNAL RESOURCES
Strategic groups should be used as internal resources to analyze the industry and use competitor analyses to observe whether the business mission is still being served, or perhaps requires modification to meet the changed environmental factors. The firm could use its internet associations to present the customer with a survey for feedback about the product offerings – what they would like to see added to the product line, or perhaps what service could be added or improved. Seeking the direct opinion of the loyal customer base is readily at hand when they are contacting customer service/support for assistance with a problem. Not only is this a prime opportunity for mending or strengthening a relationship, it is the opportunity to receive quality input from the consumer group that is purchasing Dell’s product.
STRATEGIC WEAKNESSES
The weaknesses to implement a new strategy are self-conceived via issuing poor customer service, limited consumer choice, limiting the consumer shopping experience to one method (indirect – phone, mail order, internet), and failing to measure quality before selling thousands of faulty products, thereby costing the firm significant amounts of profit and negatively altering the customer-base as a result of these actions.
A second alternative is a shift in marketing focus towards a new target segment and improved product. A strong and unified market strategy can strengthen synergies through new collaboration. Given the rapid growth, it is essential to reach influential segments that can create a mass appeal over the broader market. Doing so, will also require improving the quality of their product by focusing more on programming and less on hardware sales. A possible benefit would be creating a niche market that enables a rapid brand expansion. On the other hand, a possible drawback would be not being able to handle rapid
Intel’s future strategy is not to move away from PCs, for obvious reasons being that it is currently the most profitable component of the business, but to create an additional focus on expanding in housing data (Moorhead, 2016). Patrick Moorhead explains, “Intel believes its future lies within the core growth areas of cloud and data center, IoT (Internet of Things), memory, and programmable solutions.” (Moorhead, 2016, para.
Why has Dell been so successful despite the low average profitability in the PC industry?
1. How and why did the personal computer industry come to have such low average profitability?
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 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 .
Dell Inc. has realized that the most efficient path to the customer is through a direct relationship, with no intermediaries to add confusion and cost. With the power of their direct model and their team of talented people, they are able to provide to their customers high-quality, relevant technology, customized systems, superior service and support, and products and services that are easy to buy and use. HISTORICAL REPORT Dell Inc, was founded as “PC’s Limited” in 1984 by Michael Dell, while still a student at the University of Texas at Austin, with just $1000. From Michael Dell's off-campus dorm room at Dobie Center, the startup aims to sell IBM-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs.
In 1995 Dell entered the Chinese market. With a population of 1.3 billion this was a great new market for Dell to tap into. IBM, Compaq, and Hewlett-Packard had all ready realized this and had opened offices in China in the early 1990s.
According to the casing study, Intel’s “Rebates” and Other Ways It “Helped” Customers Intel paid customer huge pay. As the dominating company, they purposely paid other companies not to use ADM products. They paid Dell 6 billion dollars over a 5 year period (Velasquez, 2014). In addition, they knew ADM would not be able to compete with them: they took advantage of their size and used their rebate program to try and ADM from advancing in the x86 processor industry. In addition, Intel’s monolply-like behavior is displayed in the terms of quality. They did not care about customers wanting the reliable x86 processors, they wanted to monopolize the market with their product, and would pay a huge amount of money to achieve their
Dell Computer have recently announced changes to their business strategy and supporting supply chain. They will no longer focus on a made to order direct sales model for their personal computers. Nor will they continue to refine their renowned supply chain model that supported their sales model. Instead, they will be looking to produce personal computers with fixed configurations at lower prices. This essay looks at why Dell have changed their strategy, and then considers the customer value proposition of the new strategy, as well as lessons that other organisations can learn from the Dell experience.
...market share, Intel progressively reduced licensee and developed process and manufacturing infrastructure to manufacture chips by itself. Thus, it contained the “profit pool” in its value chain. Thereafter, successful tie-ups with ‘horizontal’ complementors like Compaq 7 Microsoft led to wrecking of IBM’s hegemony. With established leadership in microprocessor industry, Intel strategically started ‘Intel Inside’ and ‘Runs better on Pentium processor’ programs to improve brand recognition. As more and more end-customers identified Intel and microprocessor as the most important component in a PC, Intel could now command higher power and bargaining position with OEM and software manufacturers. This ensures demand-side control.
2. SEVEN-ELEVEN'S SUPPLY CHAIN STRATEGY IN JAPAN CAN BE DESCRIBED AS ATTEMPTING TO MICRO-MATCH SUPPLY AND DEMAND USING RAPID REPLENISHMENT. WHAT ARE SOME RISKS ASSOCIATED WITH THIS CHOICE?
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.
“The Dell Theory of Conflict Prevention,” is a theory that is approved by multiple famous authors. The theories main points are valuable and the theory should be looked upon more seriously. In Thomas Friedman’s essay, “The Dell Theory of Conflict Prevention,” he gives examples of how global supply chains would be constructive to promoting world peace. Friedman feels that if everyone is an ally to each other in some shape or form, then no one will want to engage in war. Madeline Albright would agree with Friedman’s theory according to her writings in “Faith and Diplomacy.” Albright felt that religion should play a factor in the diplomatic system of America, in order for us to maintain some kind of peace with other nations. Friedman and Albright both were looking for a solution to world peace. Albright would agree with this theory from the religious perspective. Appiah argued that an ideal global citizen would be essential to America, in his essays “Making conversation” and “The Primacy of Practice.” Appiah felt that people must have an understanding of each other in order to get along with each other. Both Appiah and Albright would agree with “The Dell Theory of Conflict Prevention.” “The Dell Theory stipulates: No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain”(Friedman 125).