2. Using the published information about Dell Computers, write a brief case study showing the strategic development and its current strategic position.
Dell Computer Corporation started in 1984 by Michael Dell with this very simple premise as its basic foundation: that personal computers could be built and sold directly to customers and by doing this, Dell could address their specific needs and provide the best computing solutions that meet those needs.
Dell’s Direct Method provides two distinct advantages: 1. reducing marketing and sales cost by eliminating markups of distributors and retailers and 2. building to order reduced inventory costs and risks of retaining inventories.
Dell’s Direct Model is the main reason why it has achieved its stellar status in business today. This strategic model enables Dell to interact with customers directly providing them with fast, reasonably-priced and friendly means of production and distribution.
Strategies to Remain Competitive
In order for Dell Computer to improve its product differentiation, it needs to do the following:
- Control R&D patents in key industry technologies. They have to give up its extreme outsourcing and standardization strategy;
- Introduce new innovative services instead of just offering standard services based on software packages of which it does not have any patent.
The strategic positioning of Dell in the actual e-business does not allow the company cost advantages nor product differentiation. Dell should affiliate with other players in e-malls and compete using the combination of huge range of products offered by their multiple malls partners. A company web site is not enough for Dell.
- Rethink its Virtual Network
Dell’s e-business strategy consists of outsourcing almost all the value chain activities in order to lessen price. This is a short-term (tactical) cost view and may not be effective in the long run as competitors are getting more resourceful in providing lower-priced products.
Dell should reconsider the “make or buy” strategic thinking focusing primarily on activities and components that are could potentially introduce future technological breakthroughs in PC industry.
- From Hardware to Software
It is high time for Dell to start developing proprietary software that provides supply chain and integrated solutions (E-crm, e-commerce, etc.).
- SWOT Analysis of Dell Computers
- Ten Opportunities for Improved Profit Margins
- Where to Find Dell & HP Coupons Online
- Functional Strategies
Online “Platinum Councils”. Dell has its regular council face-to-face meetings that are intended as brainstorming process to be able to determine problems. A good strategy would be adding a forum on their intranet which would allow them to share ideas and problems immediately as they arise.
- From “Internet CRM” to “Ubiquitous Marketing”
Dell should utilize a wider array of strategic points such as branching out into similar businesses that would enable them to come in contact with more prospective customers such as :
- UMTS phones;
- Interactive TV;
- Internet-enabled POS terminals;
- E-wallets.
Dell can introduce and develop ways to offer a customized approach to any media.
- E-marketing
Dell could tie up with Microsoft or make use of popular social networking sites to advertise their products.
Dell, for instance, could negotiate with Gates to include a Dell logo or a window in Windows desktops showing the latest Dell’s e-ads any time customers connect on the internet.
- Enhancing Customer Purchase Experience
Strategic ways to attain this would include:
a) Providing link to complementary products (i.e. Microsoft software) in their websites;
b) Providing customer with a choice of system based on their needs such as creating custom computers designed mainly for computer engineers or construction engineers not based on product specifications such as the kind of processor or size of monitor.
- Dell should explore emerging computer markets in other parts of the world such as
- It should also explore ways to generate attention from education markets particularly college students. Product differentiation through more aggressive sales marketing strategies could do this.
Dell's strategy is; survival, sustainability, revenue generation, and profitability through innovation and speed.
Dell's efforts remain focused on four strategic initiatives:
“Driving global growth”
“Attaining product leadership”
"Superior customer service”
" Embracing Dell's corporate culture:”
Dell's survival depends on remaining alert to developing trends and economies. Dell's rapid innovation and resourcefulness has helped maintain its ranking amongst the top PC producers. Dell's strategic focus on the business and educational markets has resulted in a significant market share in each of those segments. The organization was the leading supplier of computer systems business for two years running. Dell's strategic development of its direct marketing agenda has resulted in phenomenal growth.
Dell consistently delivers swift strategic response to match customer needs to products and service. In addition to a full line of desktop and notebook PCs designed for consumers, Dell offers network servers, workstations, storage systems, and Ethernet switches for business customers. "Electronic commerce is now allowing global customers in some industries to connect directly and reveal their preferences, such as Dell Computer's strategy of assembling computers in-house to customer specifications." (Anderson
Dell's strategic alliance with the voices of the customer and stakeholders to accurately project and exploit trends and make prompt decisions by reassessing strategies, continually adds competitive advantage by leveraging and enabling the latest process concepts. Dell's strategy to incorporate customer and stakeholder feedback in process innovation and product design ensures customer loyalty. This integration serves to prevent misinterpretation between perceived and actual customer needs. Dell purposely "forms linkages, upstream and downstream, lateral and horizontal" (Kessler, 1996) through all phases of research and development. These alliances reduce time and cost as they minimize or remove steps in the research and development process. It also provides motivation for its employees. Research has shown "that direct contact with customers triggers quicker action and helps employees to pay attention to new ideas, solutions, and opportunities." (Kessler, 1996) Rapid product development increases the learning capacity of employees while strengthening their technical, conceptual, and interpersonal competencies.
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