Dell Computer Corporation

Summary & Answers

Overview
Worlds largest direct selling computer company 34,800 employees in more than 30 countries and customers in more than 170 countries Headquartered in Austin, Texas

1. What is Dells strategy?

Market leadership as a result of a persistent focus on delivering the best possible customer experience Direct selling, from manufacturing to consumer, was a key component of its strategy Leverage reputation as one of the worlds most preferred computer systems companies and a premier provider of products and services that customers worldwide needed to build their IT & internet infrastructure.

1. What is basis on which Dell builds its competitive advantage?

Dell redesigned PC industry value chain based on: Cost advantage:
Component purchase costs Inventory costs Selling and administrative costs.

Customer knowledge advantage:

Understood consumer needs Efficiently met needs by selling directly to customers Direct business model eliminated retailers and cut out unnecessary time and cost

1. What is basis on which Dell builds its competitive advantage?

Customer knowledge advantage:
Took orders over the phone or via the internet Designed integrated supply chain linking suppliers very closely to assembly factories and order intake system Outsourced all components but performed assembly

Technology advantage
Custom-built machines after receiving an order instead of making machines for inventory in anticipation of orders Introduced latest relevant technology much more quickly than companies with slow moving inventories Moved into IT portfolio with servers, and storage, mobility products, and also challenged Printer leader HP

2. How do Dells control system help execute the firms strategy?

Performance Measures:
Scorecard included both financial measures (such as ROIC, component purchasing costs, selling and administration costs) and non-financial measures (component inventory stock outs, finished goods inventory, A/R day and A/P days)

Localised decision making system:

Used its structure as a flat organization as a competitive advantage and localized its decision-making If issue did not require higher ups attention, then decision made without involving him Would not have been possible in companies bogged down by layers of bureaucracy

2. How do Dells control system help execute the firms strategy?

Business unit Performance:
Developed a set of metrics to judge business-unit performance

Expedited the assembly process:

Recognized early the need for speed, or velocity quickening the pace at pace at every step of business

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