Direct Model Strategy Used By Dell Business Essay

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Dell Computer Corporation was founded in 1984 by Michael S.. Dell and today it has become one of the worlds largest computer company. Dell company through its four subsidiaries provides its customers a wide variety of products and services directly or by other means of distribution channels. Four global subsidiaries are namely 1) Large Enterprise - which delivers IT solutions through its data centre and cloud computing to large and global and national corporate consumers. 2) Public segment - it concentrates on educational institutions ,government body , healthcare , law enforcement agency. 3) Small and Medium segment - it fulfills needs of small and medium businesss and gives excellent services to them to achieve their business goals.

4) Consumer segment - it offers customers total technological experience through entertainment, gaming, mobility and design.

The company employs approximately 11,500 people . Its Headquarter is located in Round Rock, Texas , it has manufacturing facilities in Austin, Texas , Limerick, Ireland ,Penang , Malaysia.

"Direct Model " - eliminated intermediaries and facilitated direct contact with customers to better understand their needs put success stone for dell -this model surpasses dealers in supply chain and sells computer systems directly to consumers building each to order. It doesn't manufacture computer components ,merely assemble computers based on availability of that in the market which inturn reduces product cost.


Porters Five Forces :

1) the risk of entry by potential competitors, 2) the intensity of rivalry among established

Companies within an industry, 3) the bargaining power of buyers, 4) the bargaining power of

Suppliers ,and 5) the closeness of substitutes to an industry's products.

Within porter's framework a strong competitive force can be regarded as threat because it

Depresses profits. A weak competitive force can be viewed as opportunity because it allows

Company's to earn profits. This helps managers to formulate new strategies.

Porters Five Forces for Dell :

1) the risk of entry by potential competitors - latest technology , high investment, famous brands

Available in the market, so this makes it difficult for new company to enter in the market.

2) the intensity of rivalry among established companies within industry - is very high, lot of

Companies are present in market like HP, Apple , Lenovo ,etc with each having good chunk of

Market share .

3) the bargaining power of buyers - is high because of presence of many branded companies like

HP, Lenovo , Apple, Compaq, Toshiba, etc.

4) the bargaining power of suppliers - is low because of presence of lot of suppliers.

5) the closeness of substitutes to an industry's products - smartphones are giving tough

Competiton to laptop and desktop market .

Swot Analysis

Strengths: Dell deals with the customers directly and there is no agent in-between company and customers. Dell gives its customers made to order computers fulfilling all needs of customers ,they provide online technical support and next day on site product service. Wide range of products and services is definitely dell's biggest strength. Through efficient purchasing ,

Manufacturing , and distribution process dell offers competitive price to its customers. Customers can track the delivery status.

Weakness: Since Dell deals with large amount of suppliers from different parts of the world it would be a problem in case there is recall of product. Customers just can't buy dell computers as easily as other brands because each product is built made to order according to customer specification and sometime it may take time to finish. Dell is not having very different technology to offer to market.

Opportunities: Demand for laptop is growing all over world in fact it has surpassed the demand of desktops this is another opportunity to grow in other segment and increase market. share. Since dell has strong online presence and nowadays customers shop more online it's a great opportunity for dell to capture this change.

Threats: Technology changes everyday new software , new hardware , and new computer accessories are introduced in the market in very short span of time. That's why it is important for dell to always lookout for new things or new computer systems. There are lot of brands available in the market .Since dell builds computers but does not develop them competitors also offers the same computer which dell offers to the customers.

Direct Model Strategy Used by Dell -

Dells success was put forth by its direct model strategy. Dell understood the very basic concept of customer need fulfillment is through coming in direct contact with the customers. Dell started building their computer system as per specification provided by customer himself. This removed unrequired resources and it gave customers satisfaction at the fullest. Dell also removed retailer and dealers from supply chain . It started selling computer system directly to customers made to order.

Dell's direct strategy has much more strength by not manufacturing any of computer parts by itself , it facilitates dell of no burden of acquiring and holding assets, investing into research and development thus minimizing investment risks. This also reduced marketing and advertisement cost of dell and it achieved greater success to meet customers' needs at faster and efficient way.

Opinion And Conclusion -

Dell's most focus is on government and corporate institutions , their market share in education sector is low , dell should also focus to attract college students. Dell should directly sell build to order laptops to schools as most of the students buy laptops from school. Dell should also start retail sell as competitors are managing low cost and offering the same products as Dell does.

Dell should also start research and development for the development of computer system as they are into manufacturing but not in developing. If they do so ,they will be able to offer unique technology in the market.