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Michael Dell started his company with an imagination in his mind which was that he would be selling directly b Idea. Therefore when Michael Dell started his business of Dell PCs Ltd., he started selling PC's and IBM clones in the market at price which was 40% less than that available in the market to compete with his product. This was the strategy which he adopted to position himself in the market and this resulted in quick growth for his company.Â This very fast paced growth of the company provided him with witnessing his share of all the early product development problems. Firstly he had to increase the capacity of his production, and then increase his manpower, and finally had to create a business model which was to be followed. In undertaking this Dell had to control and ensure that all his growth and development costs would not go high. Later he went ahead with renaming the company as "Dell", and strategized by increasing and adding a sales force and provided with common stock. The sales team was motivated to work with Corporate and sign contracts with large customers. This strategy helped to increase his sales dramatically and sales rose to $388 million in 1990.
In order to increase the Dell penetration in the market he concentrated on direct sales which helped increase the market share even faster. Â They further decided to distribute his products even at warehouses and stores. In doing so it was noted that the margins were dropping and DELL realized that their open market strategy was a mistake. So within three years DELL withdrew from the retailers after and realized that direct sales were the only market they had to be with to have the market share as well as profits.
In his role as CEO, Micheal DELL performed through his innovative ways of marketing his product line of computers. He guided Dell from a small, start-up Company into a global leader in PCs and IT Products and Services. He was very accessible CEO and a role model for young executives because he knew how to delegate the authorities to subordinates. His management principle which he thoroughly believed was that the best results come from the most talented people who could be relied in doing things and who know what they are supposed to do. Michael Dell was also the chief architect of the company's direct sales approach and build-to-order approach. He justified his excellent performance by proving himself very well in all the five areas of Crafting & Executing Strategy. His strategic vision for Dell had five tenets which described the vision of having a strong and direct customer relationship, allowing customer to purchase custom built products, creating non-proprietary and efficient technology and supply chain and the company should endeavor to deliver added value to customers. These five tenets became the key to delivering superior customer values. He made sure that all company executive believed strongly in the five tenets of his company. Â He developed the business model, which used the company's strong capabilities in supply chain management, low cost manufacturing and direct sales capabilities to expand into product categories where Dell could provide added values to its customer in the form of lower prices. Therefore today Dell has become the leader in low cost and this has been possible only with his business model and strategy.
Elements of Dell's Strategy.
There have beenÂ four main elements to the strategy adopted by DELL to
deliver superior value to the customer. One of the first and the key
element is that Dell concentrated the selling of products directly to the
consumers, and this proved to be a very effective way to market the
company's product line thereby eliminating the wholesale and retail dealers
from the middle level of selling.
The second key element was to allow the customers to buy built products and
services in a custom made or in a tailored manner thereby helping and
allowing the customer to meet his specific needs.
The third which was very highly effective was the supply chain management
and manufacturing organization with strong roots in standardized
technologies, and direct selling thereby allowing Dell to sell it products
at lower prices. As compared to most of the competitors in the market.
The last one was that Dell deliveredÂ added value to customers by
implementingÂ extensive research in all technology options and trying to
determine the most optimal option. And lastly to be accountable to the
customers by helping them receive the highest return on their investment
that is "Best Value for Money".
Therefore in the business model, Dells' Strategy was clear. It was to
constantly strive to reduce cost. In the most recent year, 2008, they had
set a goal in trying to reduce cost by $3 billion. With dell obtaining the
seven major factors in its strategy it was able to dominate the market.
FirstlyÂ it made its computers "build to order." Secondly, it partnered
with its suppliers to "squeeze cost savings" out of the supply chain.
Thirdly, it used direct sales strategy to gain customers confidence.
Fourthly , it grew to have larger market share by expanding its additional
products and services to capture a larger share of consumers IT spending.
Fifth, it focused on providing best customer service and technical support.
Sixth, it kept R&D and engineering activities solely on better meeting the
needs of consumers. Lastly, it focused on using standardized technologies
in all of its product offerings.
Dell's strategy is was overall very commanding , which had the major
factors relying on one another in order to help the company to succeed
overall . My understanding is that DELL'sÂ undertook the constant evolution
strategy and looking of new avenues to expand their products and services
without trying to overload the system.
Recently , Dell has gone into expansion into data storage hardwar
switches, handheld PC's, printers, printer cartridges, and several new
SWOT analysis of Dell is summarized as below.
Dell is among one of the World's largest PC manufacturers . The company
went on to cut off the retailÂ andÂ direct supplies to the customers. DELL
approach towards the customer satisfaction of its loyal customers is
through the use of information technology, and Customer Relationship
As a manufacturingÂ Company has a wide range of products and components for
different supplies to various countries all around the globe.Â Therefore
when a situation arises wherein a product has to be recalled will put into
a situation of credibility loss since it is a computer maker, not a
computer manufacturer and It buys all componentsÂ fromÂ groups of
concentrated hi-tech component manufacturers.
Business and Product diversification strategy has been undertaken by DELL
which is doneÂ by introducing many new products at regularly thereby giving
customers innovation in technology. Initially the company had goods related
to Computers and IT like printers and toner. However lately itÂ introduced
LCD televisions and other non-computing goods. Dell has also introduced
low-costÂ computers and computer peripheralsÂ to suit the needs of PC
retailers in the United States and other countries.
According to me the one of the biggest problem for Dell in PC market
globally is the competitive rivalry that exists in this market sector.
Also,Â being a global playerÂ in its marketing and operations, it is also
exposed to fluctuations in the currency and exchange markets.
CurrentlyÂ Dell is not the leader in market share for the PC but itÂ takes
a close spot and is second in the race with Hewlett-Packard. Dell, inÂ the
first quarter of 2008 had a market share of 15.7%. Lenovo had a total
market share of 6.9 %, while Gateway fell into the other category, and has
not been a large threat to Dell as a competitor.
Hewlett-Packard has a market a market share of 19.1%. Both the companies
haveÂ grownÂ at a steady paceÂ of 1% in comparisonÂ to the previous
quarter. My understanding and opinion is that Hewlett-Packard has the
strongest competitive position as it had a growth of 4% in the fourth
quarter of 2008. HP had forecasted the 2009 fiscal year revenues to be
between $127.5 to $130 billion range. While Dell forecasted for the same
period a 3% decrease from that of the previous year, with their 2008 net
profit already being down by 3 percent.
Â The fact thatÂ people still prefer Dell over any other brand of computers
is undoubtedly true due to easy availability of product in the market. In
my opinion I do not feel that HP may have used any strategies that may or
are rather more appealing than those ofÂ Dell's strategies since Dell has
always been on the top in terms of marketing and advertising as well as in
using all strategies to attract the customers .Â There will surely be
people with preference to HP or even other productsÂ because customers have
their own choices and opinions wherein theyÂ may be believingÂ that the
price of HP products are more than Dell and therefore the quality could be
better than HP.Â However not to forget that Dell's strategies have always
been more appealing than HP globally.
To enable Dell to get into becomingÂ aÂ market leader, they will have to
implement new plans and policiesÂ to meet the developing and the changing
market. Dell has to work towards providingÂ Â Â goodÂ quality items in the
market and at competitive prices which will attract customers but this has
to be done at reduced cost, and they have to beÂ able to increase the
revenue. Dell hadÂ overtaken HP in the global sales of PCs is not to be
ignored. And Dell is one of the Best companies of the world.Â A fewÂ things
that Dell's needs to look into to enable them to beat HP in the worldwide
sales of PC's are as below
- Provide all accessories to its customers like that of HP to beat HP in
terms of after sales spares and support.
- Dell needs undertake innovation such that they will be able to beat the
sales of HP since HP has limited products .
-Â Dell should promote and have lot of promotional sales very often, so
that the customers start giving attention to Dell or rather attract more
and more customers.
Â -Dell should have good after sales support as well as strong technical