Case Analysis: Dell Computer Corporation
Dell Incorporation is an American computer- hardware company, which is the largest manufacturer of personal computers, devices, servers; software network switches, etc and was founded by Michael Dell in 1984 with a capital of just $1000. The Headquarter of the company is situated in Round Rock, Texas (the USA). The Direct Model of the company and Just in Time methods are the core competencies of the company. With the help of these features, the company is able to offer its products much faster and cheaper than its competitors to its customers. In the year 1999, Dell Computer Corporation was in the second position in computer manufacturing behind Compaq (Tan & Young, 2003).
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The company sells different products in the different market segments according to the products’ brand name. In the business class segment, the company sells various products such as OptiPlex- Desktop computers Dell N-Series, Latitude- the commercial notebook, Vostro- mainly designed for the small businesses, Precision- high performance notebook, power edge, Power Vault, etc. At the level of home and consumer class, the company sells the following products: XPS- high performance system, Inspiron- the consumer desktop and notebook, dell monitors, LCD Plasma TVs monitors, etc. The company also sells the products for the services and support to the customers such as ‘Dell on Call’ for EMEA customers, hardware and software support products, etc.
Dell Going Global
Dell should go global, as it will increase its profitability and growth rate, which is quite difficult to obtain in the pure domestic market. By selling computers internationally, the company has expanded its domestic market. Many benefits are associated with going global. Firstly, it opens the door towards the huge lucrative business segment. If a company is not able to go global and address business customer, it becomes difficult for the company to negotiate suitable price from suppliers (Tan & Young, 2003). Secondly, if Dell goes global, its sales would increase and if the fixed cost is compensated by domestic operations, profits would rise rapidly. Thirdly, it reduces greater dependence on the domestic market. Fourthly, by marketing globally, it can take the advantage of flourishing export markets. Last but not the least, going global would provide Dell to learn new techniques and approaches and develop ideas (Pineger, Dell Computer Corporation, 2002).
Apart from this, Dell has a unique set of strengths through which it can accelerate growth in the other countries. Strengths of Dell have provided it with competitive advantage. First and foremost, the company is capable of producing series of superior products with the consented standards of competitors. Dell basically applies test of general market availability, which helps to decide whether the company should buy or make a product (Kotler, 2002).
Dell continuously gets remark from its customers related to the products and services, their opinions on several products and reaction to advertising. These inputs have proved to be successful for the company as Dell is able to produce products, services and communication program as per the needs of the customers. Because of the low inventory, the company is able to maintain competent operation of manufacturing.
Dell’s strategy in Globalization
Among the recognized businesses within the last 20 years, Dell is one of the most prospering businesses. The chief cause behind this enormous success is the approach of Direct Marketing, which Dell focused i.e. one-on-one straight relationships with its customers, business partners and suppliers. The direct marketing approach of Dell provides huge customer value by the grouping of features like low prices, product customization and quick delivery. Through this model of direct business, Dell extends in-person associations with institutional and corporate customers, Internet and telephone purchasing, phone, customized computer systems and online technical hold. As a global strategy, Dell looks for the installation of system and management, assists customers with the help of technology transitions and renders a broad range of other services. Dell also focuses on serving small and medium businesses and users of home-PC.
Unique Direct Model of Dell includes strong and consistent financial performance, award-winning customer service and industry-leading growth. All these help the company to differentiate itself from the competitors. Dell competes on the following grounds:
- Efficient procurement
- Efficient process of manufacturing and distribution
Dell provides its customer with the highly configured systems that too at competitive prices along with their own designed machines through the telephone or web. Apart from this, the company can pre-assemble every computer to exact requirements (Tan & Young, 2003). With the help of Dell Ware, customers can easily choose a huge range of products from corporate allies of Dell (Sharan, 2005). The main aim of the Dell Ware is to save the time and expense of the customers while dealing with the numerous vendors, alleviate the load of matching the software to the requirement of system, etc.
Dell’s focus on the direct selling eliminates the retailers, resellers and other high-priced intermediaries. Direct selling provides efficient selling and costs minimization, which ultimately gets transferred in the form of the lower price to the customers. Dell represented strategic positioning which helped them to produce huge returns by taking the advantage of important skills, which grew in foreign operations.
Dell gives due emphasis on the researching opportunities so that it can successfully meet the needs of the customers through its services or the products. Whenever Dell designs and implements its products, it keeps its customers at the fore front. Dell makes the use of term ‘relevant technology’ which describes that the features play an important role for the customers. Dell utilizes the expertise of engineers for conducting Research and Development. In order to get the proper understanding of the clientele, engineers spare time with the representatives of the sales force. As a result of these activities, company has boosted its decision making process. All these strategies together help the company to expand globally and earn huge profit and growth.
Dell’s operations in Malaysia
As Dell Computer Corp. is one of the major manufacturers of computer in the world, it has formulated international business strategy. The company’s international business strategy has backed its global performance and position. Dell selected Malaysia because its investment in this country reduced its exposure to the foreign exchange and substantiated its low-cost advantage.
Dell is characterized by the presence of the unique strengths, which help the company to invest in Malaysia. These strengths describe that Dell is only manufacturer, which exclusively uses microprocessors of Intel and extends operation system belonging to Microsoft for all its broad range of products. In Malaysia, the direct distribution is capable of reducing the cost and the turn around times (Tan & Young, 2003).
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Dell has started giving emphasis on the broadening and enhancing of key competitive advantages associated with the direct model. For this purpose, the company focused on the application of the internet to its entire business operation by directly selling computers to the customers through the traditional medium. All these together helped the Company to satisfy and understand the customer’s computing needs (Business Description. 2007).
Dell deals effectively with the management especially in the case of international companies so as to organize processes in such a way that it can fit the needs of the business. In Malaysia, Dell can easily capitalize on expansion and educational opportunities. Dell’s educational opportunities comprise of the Educational Online mall. This provides the consumers with an option of selecting computer systems, obtaining pricing information and knowledge related to the system within few seconds. In order to increase the online revenue, Dell formulated international websites and selected Malaysia to establish manufacturing plant. This expansion was supposed to provide Dell with an opportunity of reaping the gains of minimum import price along with increasing the business investment strategies in fresh markets.
From the above study, it is concluded that Dell clearly knows the factors that drive the success and business. The company has developed knowledge about the working of business and ways to serve the customers. Dell believes in the philosophy of continuous development and searching for the next boundary of value, which they can create for their customers. Therefore, it always focuses on the policy of valuable interactions. Hence, it’s the company that gets personally involved with the customers.
As a result of these interactions, Dell possesses competitive advantage in relation to the speedy decision making. Through the proper application of the distribution and marketing strategy, Dell has major opportunities of growth in foreign markets. Dell Corporation’s strength lies in the huge volume of current sales. The continuous advancement in the technology and product also develops an opportunity to grow in the market successfully. Apart from this, it is the leader in the customization, Internet sales and latest technology. Moreover, the company has fantabulous growth rate and low costs.
Dell Computers is a multinational firm and thus faces the currency risk. It should take a proper watch over the market and employ techniques for minimizing the risk related to the changes in the exchange rates. By preparing budget and implementing risk management techniques, it can be easily determined as to how much amount is to be invested on a particular project in order to avoid losses.
Business Description. (2007). Retrieved on September 14, 2007, from http://www.cbronline.com/companyprofile.asp?guid=8E2C53C7-29AC-4848-9511-9B752758E3B4&CType=Background
Kotler, P. (2002). Marketing Management (11th Edition). New Delhi: Prentice Hall of India Private Ltd.
Pineger, Dell Computer Corporation (2002, March 13). Retrieved on September 14, 2007, from http://www.pinegars.com/PDF_Files/Paper%202a.pdf
Sharan, V. (2005). International Business: Concept, Environment and Strategy (3rd Revised Edition). New Delhi: Pearson Educational Publishers.
Tan, J. & Young, M. (2003). Dell Computer Corp.: Investment in Malaysia as a Global Strategic Tool. Richard Ivey School of Business.
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