Analysis Of DellS Competitive Advantages Business Essay Example

the computer industry through an efficient supply chain/distribution system. Dell achieves higher profits by effectively utilizing information, communication, e-commerce, e-business, internet and web technologies.

Dell utilizes a Just-In-Time inventory system with only 6 days of inventory. This system helps Dell achieve higher profit margins and increased profits. Inventory and labor are the biggest liabilities for a company. By operating with only 6 days of inventory, Dell is able to reduce expenses related to hiring people for inventory management, storage, and maintenance of obsolete technology. This frees up cash flow for investment in other value-adding activities. The Direct Model strategy requires Dell to implement a JIT inventory system because customers can only order directly from Dell.

Dell revolutionized their company by using their website www.Dell.com to take client orders. The organization focuses solely on direct sales, eliminating other distribution channels. This approach allows for a closer relationship with clients, enabling Dell to provide better service, savings, convenience, and efficiency. The utilization of the internet by Dell has completely transformed the company.

Dell's user-friendly website makes it easy for clients to place orders. The separate "Premier Pages" on Dell's website, designed for corporate, educational, and government clients, provide easy navigation, current price promotions, and a wide range of options to choose from. Dell's customer relationship management software closely monitors the types of computers that clients are purchasing. In addition to using the internet to streamline the ordering process for customers, Dell also utilizes it to foster stronger relationships with suppliers.

Dell relies on their suppliers to ensure superior service and meet the demands of their 6-year stock inventory. They utilize art production planning programs to predict the required components for computer

assembly. This forecast is shared with suppliers, who provide cost estimates and adjust their production accordingly. Dell's competitive advantage is greatly attributed to their advanced and intelligent e-commerce internet infrastructure. By using this platform to analyze trends and product demands, they have surpassed their competitors. Dell has also formed strategic partnerships with other companies to sell their products through the direct selling distribution channel.

In 2000, Palm, Inc. and Dell formed a partnership to provide a wider range of hand-held Palm products and accessories. This agreement enabled Dell to boost the market for the Palm operating system (Dell: 2000, April 17). Additionally, Xerox also teamed up with Dell to benefit from their e-commerce capabilities.

There are several benefits for Xerox in providing Dell computers to the printers. The advantages for Dell are also significant, as they can sell high-quality printers along with their computers. More importantly, this arrangement allows Dell to participate in the customer purchasing process for printers. Being involved in decision-making is crucial to Dell's success because it enables them to understand their customers' preferences and shape their production agenda accordingly. This strategy gives Dell a competitive edge in the industry, thanks to their superior supply chain management. Dell leverages technology to analyze data and, by participating in the customer purchasing process, they can effectively determine their customers' needs.

Dell streamlines production and establishes close relationships with suppliers, ensuring timely deliveries for customized client's computers.

Analysis of Dell's Business Model:

Dell focuses on both Business to Business and Business to Consumer commerce to meet the needs of their business and individual customers. They recognize the different requirements of their business customers, who purchase

large quantities of computers, compared to individuals who want to customize a single unit. "Dell's business model is no secret, of course, and it has been imitated with less success by many of its competitors (Henricks, 2003)." They initially succeeded by utilizing the internet as a means of sales and marketing.

``Dell's direct-to-the-customer scheme is highly cost-effective and has been a significant contributor to sales in the year 2000. Their early utilization of the internet gave them an advantage over their competitors who struggled with conducting successful Business to Business operations online. While online exchanges were still developing, Dell's customer-friendly ordering process and direct interaction through the internet proved successful due to their belief in prioritizing customer needs to drive their business model."

Dell acknowledged the difficulties of dealing with customers and categorized them into two main groups: business clients (such as corporations) and individual clients. Dell has successfully managed the needs of these two different types of consumers until now. Recently, Dell made the decision to split their operations into two separate websites, each with its own B2B site. The purpose of having separate sites was to simplify the procurement process on the internet for businesses and institutions of all sizes, resulting in substantial savings for larger clients. However, this concept did not succeed, and Dell had to shut down its B2B site just four months after its launch due to the site's failure to attract more than three suppliers.

Recommendations for achieving sustainable competitive advantage in the future:

After analyzing Dell's IT and their competitive advantage resulting from their innovative and successful IT strategies, it is challenging to suggest ways to further

enhance their success in an industry where they already thrive. However, despite Dell's current achievements, we understand that in an ever-evolving technology industry, there is always room for improvement. 1) Dell should consider selectively integrating additional vendors into its supply chain management system. With Dell's increasing global sales, it may be beneficial for Dell to selectively incorporate new suppliers into their supply chain management system. The inclusion of these suppliers should not incur significant costs for Dell, and in fact, could potentially lead to Dell negotiating better component prices with these new suppliers.

New providers may be attracted to participating in this exchange due to the association with a leading technology company. Additionally, Dell should utilize customer surveys to gain a larger market share. Despite performing well in international markets, Dell has experienced a decline in domestic market share and has greater potential overseas. It is crucial for Dell to promote and increase visibility of their products in international markets. To accomplish this objective, extensive customer satisfaction surveys should be implemented in markets where they lag behind their competitors. Furthermore, Dell should allocate more resources towards research and development.

In order to maintain its competitive advantage, Dell needs to offer new technology products and services. One potential avenue for expansion is to enter peripheral product markets that would complement their computer sales. Additionally, Dell could provide online data backup capabilities to increase revenue. Another option is to offer existing customers, both businesses and individuals, backup capabilities on Dell's own servers. This arrangement would benefit both consumers and Dell.

Consumers, especially businesses, can rely on Dell for data recovery services in case of any issues with their work and

computer systems. Dell regularly backs up their data offsite, ensuring that customers can always retrieve their information. By offering this additional service, Dell can generate revenue. Additionally, Dell benefits from a built-in customer base as a result of their computer sales. Enhancing customer support services is another way Dell adds value to its offerings.

Dell's success relies on having well-trained individuals available for client support via phone and internet communications. Some research indicates that Dell may be losing customers because of perceived lack of support, so a cost-benefit analysis should be conducted to determine if investing in additional staff who can address technical inquiries and meet customer needs is warranted.

References:

1. Dell.com, Supplier Principles: Supply Chain Management System, 2007, viewed on April 9, 2011 <http://www.dell.com/content/topics/global.aspx/corp/sup_prince/en/supply?c=us&l=en&s=corp>
2. Harrington, L, The Accelerated Value Chain: Supply chain management just got smarter, faster and more cost-efficient, thanks to a groundbreaking alliance between Intel and i2 technologies, 2002
3. Breen, Bill,
   Living in Dell Time. Fast Company,
   2004,
   viewed on April 10,
   2011 <http://www.fastcompany.com/magazine/88/dell.html>