Matching Dell

Case memos
Group 1
Group members:
2B8007 Mr. Pabitra Dangol
2B8006 Ms. Napatsorn Chingulprasan
2B8027 Mr. Chedzani Mbinda
2B8030 Mr. Shamil Musuraliev
2B8202 Ms. Katherina Andriani
1B8047 Ms. Malaphay Phongmany
1. Why does the personal computer industry
have such low average profitability?
 High threat of new entrants
- Low Capital requirements
- Low product differentiation
- Easy to create assemble line
 Low threat of substitute products
- No substitute products for PC
 High bargaining powers of suppliers
- Monopoly suppliers for microprocessor (Intel and Microsoft)
 High bargaining powers of customers
- Provide buy back and price protection option to retailers and distributors
- Customers can access to product information easier
- Low switching cost
 High rivalry and intense competitions
- Intense competitions pushing down whole industry’s price
- Low product differentiation since using similar technology
- Similar distribution channels
 2. Why has Dell been so successful despite the
unattractive structure of the industry?
What were the sources of Dell’s competitive
advantage?
Why Successful? Sources of competitive advantage
Use of Direct Model  Low inventory cost due to use of JIT and MTO system
 Removed  Suppliers are located in Dell’s Assembly centers/lines.
intermediate channels
 High performance and customized products in relatively low price.
 Fast delivery
 Good relationship among suppliers and customers.
 Low cost
 Effective utilization of communication and sales channels (E.g.: Telephone,
website, UPS, Airbase express etc.)
 Effective Supply Chain Management
3. Capture Dell’s strategy (in 1990’s) in an activity
system diagram.
No
distributors
Low /retailers 24
inventories hours Website
hotline

Customized
PCs

Direct Customer
Model relationsh
Inside/ ips
Outside
Supplier’ sales
s reps Connectin
facilities g suppliers After
location to sales
customers

Short Just-in-
Inventory assembling time
/ buffer and
eliminati delivery
on time
Q.4 Why was it so difficult for rival competitors to
duplicate Dell’s business model? What were the
barriers to imitation?
Direct Model Pioneers
- Customized PCs
- Short assembling and delivery time
- Good relationship with suppliers
- Low inventory cost

Effective Supply chain management

- Just in time system
- Close location to assembling lines

Strong Distribution network

- Close relationship with large customers
- Effective use of communication channels (hotline, website etc.)
 THANK YOU…

END OF PRESENTATION