Essay 9812

What are the fundamental reasons for Dell’s success?

One of the biggest strengths that Dell has is its simple business concept which is building personal computers built to order and selling it directly to its customers. This simple notion gives Dell several competitive advantages over its competitor. One it is bypassing distributors and retail dealers which eliminated the markups of resellers, and two building or order greatly reduced the costs and risks associated with carry large stocks of unneeded inventory.

Dell was able to use his low-cost provider status to generate more profit for the company in other areas. Dell was very conglomerate in its industry, being the number one domestic seller of servers and workstations in 2002 Dell also created products that could potentially bring him more loyal customers. Such as, low-cost routing switches, handheld PCs, retail-store systems, electronic cash registers, specialized software, laptops, printers, scanners, monitors, digital cameras, modems, memory cards, zip drivers and speakers. By having variety of different products that interrelates to one another, Dell strengthens its customer satisfaction of getting inexpensive and good quality products all at the same place. This strategic key issue brought convenience and stronger relationship between Dell and its customers.

What should Dell do next to maintain it’s competitive advantage?

Keep going on :

- its discounting strategy (the business attracted many price-conscious buyers which increased his profits)

- generating high revenues through its e-commerce. The daily revenue through internet sales was almost 50 million dollars in a day. Dell tried to sell their products through retail stores such as Best Buys, Wal-mart, and Staples wasn't a very good decision, because its profit margin was very low. Dell realized this weakness and attacked it right away and withdrew from selling to retailers and refocused on direct selling.

Is its business model still viable?

No because :

- even if dells have great products, its management does not know how to market it or change its business activities rapidly ,so the demands of consumers might not be as successful.

- dell main target was big corporations and government sectors. dell failed to recognize individual users and creating something exciting for them. For example, the use of laptops emerged significantly in 1993. It was more convenient for individuals to use it such as students, teachers, and others that work from home but need to have their data with them all the time. Lacking in addressing the demands and wants of consumers who were primarily interested in laptops caused Dell a loss of 38 million dollars, because buyers were turned off by the company's laptop models.

- the computer hardware industry was booming, in recent years the industry has experienced a slight decrease in profits. Most of this is due to the downturn in the economy and a decrease in consumer confidence and spending because of inflation. Many consumers hesitate to upgrade their computers. Dell must implement new and attractive products at a lower-cost to attract its customers.

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