Matching Dell Case

study
 1. How much do you think is the cost advantage of Dell? What is the source of the
advantage?

• Dell computers from the very start were selling customized personal computers.

• The customers were able to choose the components they wanted in their personal computers.

• This had not been done by the competitors and could not be replicated easily as direct
contact with the customers were lacking in case of Dell’s competitors.

• We can say that the products provided by Dell had a pull effect whereas product provided by
its competitors had a push effect.

• PCs were being manufactured as per the order placed by the customers in case of Dell where
as PCs were being created and shipped to distributors Matching Dell case solution and resellers
so that they could push the products to the customers in case of Dell’s competitors.
• To provide an analysis of Dell’s internal factors we will use Porter’s value chain and focus on
the primary activities.

• The primary activities consist of inbound logistics, operations, outbound logistics, sales and
marketing and services.

Inbound Logistics

• As PCs did not have a high margin, Dell focused on reducing cost.

• To reduce the cost, Dell introduced "Just In Time". This system helped to make inventory
turnover very high.

• It therefore helped to have "no stock lying around" and as soon as the raw material components
arrived, they were assembled and shipped to the customers.

• This Matching Dell case solution helped Dell reduce large amount of cost as there would not be
any obsolete stocks.

• Furthermore, there was minimal holding cost to the company hence, reducing the cost.

• Whereas, this system had not been followed by its competitors and this built huge cost for its
competitors hence reducing the profit of the company.
• Operations

Another competitive advantage Dell had to its rival was the operation. It reduced the time to manufacture
and assemble the PCs as much as possible.
• First by generating part list from a computer and assigning bar codes and the older facilities being
organized in assembly-line fashion, as the chassis of the machine travelled down the line, hardware
specified by the part list Matching Dell case study pdf was added.
• Further, in the new facility five-person manufacturing cells where the parts would arrive in a bin and the
assembly would take place.
• The assembled PCs would be sent to the software loading zone where the specified software would be
installed then it would be tested in the “burn-in” area after which they would be boxed and shipped.
• Components such as monitors would be shipped directly with the assembled PCs without the monitors
ever arriving at Dell.
• This reduced the holding cost of finished goods and there would be no obsolete finished goods as they
would be shipped as soon as they are assembled.
Outbound Logistics
• Unlike its competitors, Dell sold directly to its customers through shipping which eliminated huge
additional cost that were bore by its competitors Here.
• Dell’s rivals used traditional distribution channels i.e. distributors, resellers and retainers due to which it
would take a long time for the PCs to reach the end customers.
• This provided Matching Dell case competitive advantage the major risk of price change and obsolete
inventory.
• The cost bore by rivals were price protection, buy back and the margins of the distributors, retailers and
resellers.
• These all cost was eliminated in case of Dell which provided Dell with superior profit margins compared
to its rivals.
Sales and Marketing

• Dell sold directly to its customers.

• So it had a distinct advantage over it rivals in segregating the customers.

• Further, they were able to understand the customer needs as they had
employed over a thousand outside sales rep. to understand the customer needs,
helping customers and prompting Dell’s products.

• Dell’s competitors lacked behind in this as the rivals never interacted with its
end customers as they never sold directly to its end customers and this would
be done by either distributors, retailers or the resellers.
• Service

• Dell was able to response to problems with its product immediately.

• With the help of customer database, diagnostic software and highly Matching Dell case
solution organized customer support team, customer problem was resolved quickly.

• This helped Dell retain customers and pull customers from its rivals.
Problem Recognition
Seeing the success of Dell, its competitors had started to adopt either the direct sales
strategy or the just in time in certain aspect. Further, with certain level of saturation of the
PC industry and high dependence on this market had become one of the major problems for
Dell. By 1998 there was not much difference in the price offered by Dell and its
competitors.
 2. Why did Dell fail in its retail market foray?

• Even though the competitors have started to adopt Dell’s “direct model”, they still have a long
way to go in order to catch up with Dell.

• In regards of just in time the competitors have not been able to successfully implement it.

• Dell’s Matching Dell case solution high dependence on the PC market can be identified as a
major problem.

• To overcome this problem Dell needs to either find new markets with its existing products
which is known as market development or develop new products into the existing market, as
we can see the later has already commenced therefore the need to penetrate the workstation
and server market which is known as market penetration.