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Direct the model of Dell: an original strategy

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case study
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  1. Introduction
  2. Mission
  3. History
  4. Internal analysis
    1. Value chain
    2. Resources and skills
  5. External analysis
    1. Environmental Analysis
    2. Sector Analysis
  6. The sources of change
    1. External sources of change
    2. Internal sources of change
    3. The opposing forces
  7. The typology of change
    1. The pace of change
    2. The importance of change
    3. Mintzberg Phases
  8. Recommendations and conclusion

DELL, is a specialized company in micro processing, and was founded in 1984 by Michael DELL at Rand Rock in Texas. Young entrepreneur all of 18years, he started working by manufacturing computers in his garage and today is the head of one of the most profitable multinational companies in the world.

DELL made a turnover of 56 billion dollars over the four last quarters and a clear benefit of 3.6 billion dollars. Its success rests largely on its innovative concept of "direct model": It is the result of selling the products directly to the customers over the internet or by telephone while even decreasing by removing the intermediaries completely and by avoiding the ?traditional' means of distribution.

The company also has another distinctive method, the manufacture of the products according to the customer's orders and requirements. This implies a great relationship of trust between the company and the customer and a great flexibility with respect to its request. DELL has proven itself to be reliable and has found a new way of marketing in the very dynamic and competitive PC market, making it a leader in this field.

However, Dell's competitors have quickly realized that this model was a direct competitive advantage. So they tried to catch up in this area to compete on its own ground. What are the kinds of strategies that DELL takes on to maintain its leading position in the computer market as well as that of direct selling?

Personal computing is an area where environmental premium on companies that is to say external forces are necessary to them. This case will be presented using an environmental model. The first part, will analyze external business, the environment of the micro computer and competition in the sector to identify threats and opportunities for Dell. Then in the second part, the focus will be on studying the internal analysis, that is to say, the development method of functional strengths and weaknesses of the company.

There are five main direct competitors DELL, HP, IBM, GATEWAY 2000, APPLE and COMPAQ. The competition is particularly intense because all these players offer essentially the same range of products. These companies are forced to differentiate themselves through other means like price variation, type of distribution, customer service, communication etc.

Dell opted for an early distribution method that was original and well differentiated from its competitors. They tried to make direct sales based on this model with varying degrees of success.

The PC market is very competitive and there are many barriers to entry because the initial investment is very important as this is a market of constant new technologies. It appears very difficult for a new entrant to enter this market so the PC market is not really threatened from outside.

Tags: DELL, original sale strategy, analysis of external business

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