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Dell’s case: the build-to-order business model

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  1. Company background.
  2. Dell and the technology complex: The build-to-order business model.
  3. The role of IT and Internet in coordinating Dell's value chain: Dell as an e-commerce company.
    1. Direct PC value chain: Dell' s hardware delivery system.
    2. Primary activities.
    3. Support activities.
  4. The strategy-technology relationships.
  5. Conclusion.
  6. References.


Michael Dell founded the company in 1984 while he was at the University of Texas at Austin. He began by selling improvements of IBM-compatible PCs and started to sell his own brand of PCs one year later (the Turbo). The concept was very simple: from the beginning Dell's business model was based on direct sales. Taking order by telephone or today thanks Internet, PC's fitted exactly customers' needs by selling computers directly to customers at very competitive prices. This direct business model eliminates retailers that add unnecessary time and cost, or can diminish Dell's understanding of customer expectations.
« At Dell, our approach to innovation focuses on customer requirements. Customers define what is important. Dell innovates internally and through collaboration with others in the industry. Many of Dell's innovations are shared through standards, rather than locking customers into proprietary solutions. Customers gain flexibility and real value. This approach is direct, customer-driven innovation." Kevin Kettler, Chief Technology Officer.
Dell also introduces the latest relevant technologies much more quickly than its competitors. For example, in 1987, Dell was the first computer systems company to offer next-day, on-site product service. Moreover, in 1996, Dell launched its website www.dell.com and customers started buying computers online.

[...] The role of IT and Internet in coordinating Dell's value chain: dell as an e-commerce company Dell uses its own PC-based technology to run its own business. Not only this is a very good marketing tool, it allows also Dell to create an integrated virtual chain with its suppliers and its main partners: the value web in the extent where suppliers and partners are linked electronically. In 1994, Dell saw Internet as a great opportunity to maintain its competitive advantage: first it has no distributors to impede this change (but a one-step link between the retailer Dell and the customer). [...]


[...] But thanks to Information to Run the Business (IRB) distribution is optimized locally and globally. Moreover e-commerce increases the demand for small deliveries to residential places in tighter time slots. Concerning warehousing, as said before when dealing with the technology complex, Dell avoids costly stocks using just-in-time production, i2 solutions and well integrated suppliers' relationships. MARKETING AND SALES: -Internet allows Dell to provide customers self- service tools; they have access to the same information technology available to Dell's employees. -Dell sells its products at the dell.com website. [...]

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