Competitive Advantage at Dell Inc

In: Business and Management

Submitted By SrimalNPerera
Words 4800
Pages 20
GROUP ASSIGNMENT- CASE STUDY

INTRODUCTION
Michael Dell founded the Dell Computers in 1984 in USA and by 2001 the company became the world’s largest personal computer vendor, continuing to gain market share and post profits in an industry struggling with slumping sales and billions of dollars in losses. Dell sells 90% of its PCs directly to the final customer, largely bypassing the reseller channel that accounts for most of the world’s PC sales. This direct customer relationship is a key to Dell’s business model, and provides distinct advantages over the indirect sales model. Dell’s direct relationship with the customer allows it to tailor its offerings to customer needs, offer add-on products and services, and use the Internet to offer a variety of customer services. In addition, Dell’s PCs are built to customers’ specifications upon receipt of an order, giving Dell additional advantages over indirect PC vendors who must try to forecast demand and ship products based on those forecasts. Dell’s direct sales and build-to-order model has achieved superior performance in the PC industry in terms of inventory turnover, reduced overhead, cash conversion, and return on investment.
Dell’s business model is simple in concept. Building PCs to order means that Dell must have parts and components on hand to build a wide array of possible configurations with little advance notice. In order to fill orders quickly, Dell has excellent manufacturing and logistics capabilities supported by information systems that enables it to substitute information for inventory.
To manufacture its products, Dell coordinates a global production network that spans the Americas, Europe and Asia, combining in-house final assembly with heavy reliance on outside suppliers and contract manufacturers. Manufacturing of printed circuit board assemblies, subassemblies and some final products (mainly…...

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