Michael Dell and his Computer Manufacturing Company

In this essay, the author

• Explains that the bargaining power of suppliers is low overall as most of the components included in the final product have many vendors.
• Explains that buyers dictate the segmentation and price points which will be accepted in the industry. all companies cater their offering to the changing trends of the market, making the bargaining power of buyers high.
• Explains that third-world vendors can assemble computers based on any specification, so a company wanting to enter the market faces low barriers of entry. however, to challenge established companies and get market share, millions of dollars need to be spent.
• Explains that the threat of substitute products is low because the functionality of a computer cannot be replaced with other existing technology at the moment.
• Explains that the ebb and flow of the market, mergers and new companies are being formed and taking over the old companies, makes competition extremely strong in the industry.
• Explains that dell's customers are divided into institutional and non-institutional customers, representing corporate clients and sme companies and retail buyers.
• Opines that dell needs to enhance its retail distribution network and reduce its reliance on direct selling.
• Opines that mergers and acquisitions would be a feature of most computer companies to grow in highly competitive market with little room for organic growth.
• Explains that dell has a strong brand name and strong us market share of institutional buyers. its direct selling model helps it reduce inventory costs and keep business streamlined.
• Explains that dell has a weak reseller network and has created distrust within such channels. customer satisfaction has decreased over the years, especially in tech support.
• Opines that customer satisfaction becomes paramount, leading to change in customer centers to other countries with better english standards.
• Opines that the alienation of institutional customers, who form the bulk of the customer base, could lead to a loss of trust.
• Explains that diversifying into different countries is easy and requires little in the way of cost.
• Explains that for dell to stem the downfall, it needed to cater to the retail segment in a more comprehensive and dynamic manner.
• Analyzes how dell's direct sales model grew the company and kept costs and inventory levels at a minimum. the company has lost 60% of its stock value and needs to relook at how it markets and satisfies its retail customers.
• Explains that just in time methodology helps reduce costs of production for the company. others have tried, but experience shows that this resource of dell is hard to copy.
• Explains that dell follows a concentration strategy, concentric related diversification, and differentiation strategy on the corporate level.