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Dell computers business strategy
Dell inc case study
Dell computers business strategy
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Company Overview
Dell is among the world's leading computer manufacturers that has transformed and diversified into variety of business segments over the years. Products range from Dell PowerEdge servers, Power Vault, Dell EMC storage systems as well as PowerConnect switches for corporate clients. For individuals and professional customers products range from Dell Precision workstations, OptiPlex desktops, Dimension desktops, Inspiron and Latitude notebooks. Apart from these core products, the company also offer products and services range including printers, projectors, Axim handhelds, and other accessories. More recently, the company has announced intentions to explore LCD television/computer monitors as well as digital music players (Annual Report 2004).
Spanning over 20 years, the company has always been associated with designing, manufacturing and customizing products and services to satisfy a diversified range of customers including individual customers to corporate and retailing businesses. The company's philosophy to deal with customers one-on-one has become a management model for other companies. Having gained the market leadership position in computer products and services, Dell's team have always been careful in sustaining its marketing strategy of providing standard-based computing solutions (Official Website 2004).
Today Dell is the third largest computer manufacturer in the world. On January 2004 Dell reports net revenue approximately $41,444 millions and 46000 employees (Annual report 2004).
Marketing Environment
Dell's strategy is global. It realizes that being closer to the customers is essential in carrying out its marketing strategies as well as in enabling it to build customer base. First by establishi...
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...ds IT products and services create a difficult need/requirement profile that would be challenging for Dell. As more and more consumers in developing regions like China, Brazil, France, and India grow to appreciate computerized environment, they also have complex needs. This way Dell would have a difficult time to incorporate a pervasive marketing strategy. Instead, it should maintain differential but integrative marketing strategy so that the company has a niche in each of the markets in which it manufactures products.
Furthermore, Dell has also to keep in mind that some of its marketing campaigns would be difficult to carry out due to government regulations and local industry close economy. For this reason, Dell need to re-evaluate its strategic locations that has these limitations by shifting to regions with more liberal trade policies (Kraemer and Dedrick 2004).
1. How and why did the personal computer industry come to have such low average profitability?
The only constant in computers today is their frequent and exponential change. While the form factor of a computer, whether a desktop or a laptop did not change significantly, the technology and the capability of today’s computer versus a computer from last year can be vastly different. In my search for a laptop computer to use for my academic work with the Ashworth College, I had the opportunity to explore various laptops of their price, capability, availability and various other elements. The final two candidates that made the cut of my budget of $400.00 or less and a screen size of 16” were the Dell Inspiron I15RV1383BLK priced at $396.99 (Best Buy, 2014) and $399.99 price tagged HP 2000-2d80nr (Best Buy, 2014). While these two laptops had a lot of similarities in price; form factor and more from an initial look, the Dell Inspiron presented itself to be the best deal when compared against the HP 2000 in terms of value determined by their differences in hardware, software, reliability, user satisfaction and warranty.
Why has Dell been so successful despite the low average profitability in the PC industry?
There are several current legal and regulatory aspects that face the company. The company has to meet the entire legal requirement and frame work of operating in computer technological industry as far as quality and price regulations are concerned. Dell has been able to meet the legal and standard requirements in the manufacture, distribution and promotion of its products. For instance it offers its products at reasonable prices that reflect the industry pricing regulations. The...
In an effort to cater to these demands, companies like Dell and HP look to market trends to aid in the development of new products. In most recent stages, the laptop market has been specifically influenced by a number of trends. Simply, customers are becoming more educated about their purchases. As a result of these consumer educations, buyers want increased customization of PCs. The growing amount of knowledge is creating the ability for buyers to distinguish their own personal needs from a standardized product.
Dell's strengths were oriented around listening to the customers, responding to the customers, and delivering what the customer wanted. The direct relationship was first through telephone calls, then through face-to-face interactions, and now through the internet. It has enabled them to benefit from real-time input from real customers regarding products and future products they would like to see developed. The company also doesn't use reseller or retail channels because every computer is built-to-order, which allows less inventory. The direct model allows them to take the pulse of whatever market and provide the right technology for the right customers.
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. 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.
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.
Most personal computer organizations lose money on the hardware and make money on the supporting attachments such as software, upgrades, and peripherals such as keyboards, mice, and other adaptors and options. Dell has figured out the model to success through an innovative supply chain process that fosters growth, lowers cost, and reduces on-hand inventory to unheard of levels. According to Schneider (2015), “We are always looking for ways to take out waste, to take out time and cost, and then passing these savings along to our customers” (p.1). Dell uses a unique supply chain strategy that gathers large volumes of customer data through its direct-sales model and shares this information with internal procurement, sales departments, and all external suppliers. Dell is working with a real-time inventory model that allows them to meet the diverse customer needs and still have an extremely low inventory on hand. This strategy is also known as the “Mass Customization” process strategy. Heizer and Render (2014) stated that mass customization is a rapid, low-cost production of goods that fulfill unique customers’ desires. It is not just about variety; it is about making precisely what the customer wants when the customers wants
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 company offers products and services ranging from digital entertainment to digital photography and computing to home printing (Hewlett-Packard, 2008)). With these services offered this helps to match the right services products and solutions to satisfy the customer’s needs. Hewlett Packard has three business groups that drive industry leadership which are: Personal Systems Group, Imaging and Printing Group, and the Technology Solutions Group (Hewlett-Packard, 2008). Each group is formed to specialize in a core technology area to help service as many customers as possible. Focusing on three technology shifts that can be used to transform customer’s lives and businesses are next generation data center, mobile connection, and ubiquitous imaging and printing.
Historically, personal computer companies produced most of the components for a computer which they assembled into their final products and distributed to resellers. The manufacturing of these components was vertically integrated into the organisation. Dell, as a small start-up, could not build this infrastructure. Instead, they developed a model where they developed relationships with organisations that could provide these components, allowing Dell to focus on selling and delivering computers. By selling directly to customers, initially through mail orders and later by using the internet, Dell avoided reseller mark-up. Dell also enabled customers to order customised computers, which Dell then assembled after receiving the order (Magretta, 1998, p.73-74). “Customers got exactly the computer they wanted and Dell saved money making the computers only when they were ordered” (Hill & Seggewiss, 2008)....
Lamb W. Charles, F. Hair, Jr. Joseph and McDaniel Craig. 2014. The Principles Of Marketing. 7th ed. Mason, OH: South-Western.
Today’s world is full of technology, new things are created every day to make life easier and to keep people entertained. For the companies that create this technology it is a constant battle to stay on top of the newest trends of today’s people. With the growing popularity of Facebook, Myspace and Twitter even more people are looking for technology to help them access these things. The days of the “Old School” monitors and towers are all but forgotten. Monitors these days measure roughly one inch in width, far smaller than the once popular (now referred to as) dinosaur monitors. With companies like Apple and Dell constantly coming up with new devices it’s hard for the buyer to purchase with one is right for them. There are many things to consider when you’re shopping for a new tool to access today’s newest technology and the buyer must then ask his/herself “what am I going to use my device for?”