Dell Inc. Case Study
Dell, Inc. Case Study
First: Problem Diagnosis:
Over the years, Dell has devised very successful strategies to increase customer loyalty and reduce costs. However with the passage of time, the company has failed to have a proactive approach to capitalize the opportunities provided by the environment and sustained its competitive advantage.
1. Use of the direct selling approach:
This approach has been the main competitive advantage of Dell over the years, which enabled the company to create strong relationships with its customers without the need for any intermediary. But this trend is starting to lose its advantage because:
The increased use of the internet across the world is increasing, and the competitor are taking steps to utilized this trend by following the Dell model of eliminating the traditional distribution system and focus on e-business. Such as : Gateway.
Customers’ desire to see and touch products before purchase made Dell’s direct marketing channel less attractive to them
Dell’s absence in retail stores had hurt the company attempts to expand beyond PCs into consumer electronics such as TVs.
2. Depending on Suppliers of component parts:
Traditionally the company outsourced its various components parts from suppliers in order to provide competitive prices to the customer. The strategy was once a very successful, but keeping in view the present market conditions, this eliminates the company differentiation, because the outsourced firm provides the same component part to other competitors and may not offer the quality parts Dell is expecting.
3. Low Cost Strategy:
Dell had been the lowest cost provider in the PC industry because it held no inventory (relies on JIT approach) which reduces its inventory costs other than competitors. Also it has no distributors or retail stores, which gives it a better command on its supply chain. This core advantage of Dell is now threatened because competitors are now able to cut their costs and price their products
First: Problem Diagnosis:
Over the years, Dell has devised very successful strategies to increase customer loyalty and reduce costs. However with the passage of time, the company has failed to have a proactive approach to capitalize the opportunities provided by the environment and sustained its competitive advantage.
1. Use of the direct selling approach:
This approach has been the main competitive advantage of Dell over the years, which enabled the company to create strong relationships with its customers without the need for any intermediary. But this trend is starting to lose its advantage because:
The increased use of the internet across the world is increasing, and the competitor are taking steps to utilized this trend by following the Dell model of eliminating the traditional distribution system and focus on e-business. Such as : Gateway.
Customers’ desire to see and touch products before purchase made Dell’s direct marketing channel less attractive to them
Dell’s absence in retail stores had hurt the company attempts to expand beyond PCs into consumer electronics such as TVs.
2. Depending on Suppliers of component parts:
Traditionally the company outsourced its various components parts from suppliers in order to provide competitive prices to the customer. The strategy was once a very successful, but keeping in view the present market conditions, this eliminates the company differentiation, because the outsourced firm provides the same component part to other competitors and may not offer the quality parts Dell is expecting.
3. Low Cost Strategy:
Dell had been the lowest cost provider in the PC industry because it held no inventory (relies on JIT approach) which reduces its inventory costs other than competitors. Also it has no distributors or retail stores, which gives it a better command on its supply chain. This core advantage of Dell is now threatened because competitors are now able to cut their costs and price their products