1

VALUE CHAIN ANALYSIS OF DELL

1.1 Introduction to the Study

In this report we have discussed the Value chain Analysis of Dell Corporation. We have
discussed the introduction of Dell Corporation and complete value chain process in Dell
Corporation. Value chain management simply involves the activities and processes
involved in adding value in an organization. Dell is engage in efficient value chain
management practices to obtain a competitive advantage over their competitors.

1.2 Purpose of Study

The purpose of my study is to understand the activities of Value Chain Process and the
achievement of the competitive advantage by Dell Corporation.

1.3 Introduction to the Dell Corporation

Dell is a multinational and is among the leading computer manufacturers companies in
the world. The company designs and manufactures sells and provides support for
computer equipments, associated products and the services. The company boosts as one
of the largest company in terms of technology in the world. It is considered as the third
largest computer manufacturers worldwide. The corporation is involved in the
manufacture, sale, support and distribution of servers, personal computers, computer
software, data storage devices, computer network devices and other computer
peripherals. (Achtmeyer, F)

1.4 Value Chain Activities of Dell Corporation

Value chain is comprised of the activities involved in the design, production, marketing,
delivery and also to offer support for the production of certain products. In value chain,
there are two categories of the involved activities; primary and the support activities.
Primary activities involve issues such as inbound and outbound logistics, sales and
marketing activities. On the other hand, support activities are concerned with issues such
as the human resource management activities, technology development, procurement
activities and the organizational infrastructure to support the processes of value creation
at the center of value chain. (Saloner,Shepard & Podolny, 2001).

1.4.1 PRIMARY ACTIVITIES IN DELL

Inbound logistics

Inbound logistics are concerned with the practices involved to receive and also to provide
storage of the externally sourced materials (Porter, 1985). In the inbound operations, the
company believes in time delivery of the manufacturing materials. To achieve this, the
company is usually very close to the suppliers. Its main suppliers are the Intel and
Microsoft corporations. Intel is involved in the manufacture of the microchips while
Microsoft develops the system software for their products. (Byrnes, J. 2000).

Operations

For the operations, they involve direct manufacture of the goods and services, i.e. the
direct conversion of the input to the outputs (goods and services). At Dell, this involves
the use of technical knowhow, skills and labor and combining them with the input
resources to achieve the finished products such as the personal computers. Under this
option, Dell has employed two major strategies, building-to-order and customization
options (Porter, 1985).

Outbound Logistics

Outbound logistics are concerned with the activities involved in delivering the final or the
finished product to the customers (buyers involved in the supply chain). At Dell, the
corporation believes in being close to customers. Dell has engaged various technologies
to ensure a close contact with the customers. Under this, the corporation continues to
invest heavily on e-commerce systems. Its e-commerce system allows a closer contact
between the customers and the company. (Podolny, 2001)

Sales and marketing activities

Sales and marketing activities are concerned at providing information to the buyers
(mainly the consumers) about the existence of the products and services. In marketing
and sales, the corporation has been involved in various strategies to increase the
customers awareness of their products. It engages multiple marketing processes such as

advertisements, public relations, direct selling and sales promotion. (Porter, 1980; Porter,
1985).

1.4.2 SUPPORT ACTIVITIES IN DELL

Procurement

Procurement is associated with the resource acquisition for the company. It involves
actions such as negotiating and sourcing the materials from the suppliers. Under
procurement strategies, the corporation is mainly concerned at reducing the bargaining
power for its key suppliers; Microsoft and the Intel. (Lumpkin, 2002)

Human resource management

Human resource management usually concerns itself with the activities and practices
involved in the recruitment, motivation, development and the rewarding schemes of the
workforce The company ensures continuous employee training and development for all
of its employees. (Droege, Dess, 2002).

Technology Development

In technology development, activities associated with the management of information

processing. It is also concerned with developing and protecting the knowledge in the
company. Through efficient E-commerce systems, Dell has been able to manage, not only
the information about the internal operations but also external information such as the
customers and supplies information. (Dedrick, J. 1998)

Support Infrastructure

Support infrastructure involves the functions and the support systems such as quality
control, finance, planning and the general support from the senior management. At dell,
there is a global business consultancy that assists in the development of the metrics to
aide in the judgment of business-unit performance. This allows efficient decision making.
This keeps the associated costs low. (Hesterley, 2006)

1.5 Findings and Recommendations

In order to ensure the competitiveness of the company, here are some recommendations
provided to Dell Corporation.
Dell should re-evaluate its core competencies including the management of value,
workforce, capacity management, facilities, market and financial know how, systems and
technology.
Dell should develop the common process for producing the computers which are most
common among larger group of customers.
Dell can also improve in modern day operation capabilities in which the transition of craft to
agile manufacturing focused is provided.

1.6 Conclusion
From this study we have concluded that Dell has been able to successfully adopt
differentiation and cost leadership strategies to maintain a competitive advantage.
Through value chain analysis, the firm has been able to develop a unique distribution
channel, a direct customer model. A direct customer model, together with the unique
build-to order strategy and an efficient E-commerce system, Dell has been able to obtain
a sustainable competitive advantage.

1.7 Bibliography
Achtmeyer,F. (2002).Dell Computer Corporation, Center for Global Leadership, Tuck
School of Business. available at <http://mba.tuck.dartmouth.edu/pdf/2002-2-0014.pdf>
Hesterley, Barney, J.B. &, W.S. (2006). Strategic management and competitive
advantage-Concepts. Pearson Prentice Hall: New Jersey.
Byrnes, J. (2012). Dell Manages Profitability, Not Inventory, Harvard Business School
Working Knowledge of leader available at
<http://hbswk.hbs.edu/item.jhtml?id=3497&t=dispatch>
Dedrick, J. & Kraemer, K. (1998). Asias Computer Challenge: Threat or
Opportunity for the United States and the World? New York: Oxford University
Press.
Droege, S.B., Dess (2002). Competitive advantage and avoiding pitfalls. Organizational
Dynamics, 30(4), P-347
Lumpkin, G. T. (2002). Achieving sustainable competitive advantage and avoiding
pitfalls. Organizational Dynamics, 30(4), pp 325-340.
Porter, M.E. (1980). Competitive strategy: techniques for analyzing industries and
competitors.Free Press: New York.
Porter, M.E. (1985). Competitive advantage. P-247, New York: Free Press.
Podolny,J., Saloner, G., Shepard, A. (2001). Strategic Management. John Wiley & Sons:
New York.