Similar Business Model As Dell example essay topic

Dell History The Dell Company was founded in 1984 by no on other than, Michael Dell. He, through no coincidence is the computer industry's longest running chief executive officer. He has accomplished this based on a simple concept. He decided to sell personal computer systems directly to customers. His direct selling empowered Dell with the knowledge, so he could best understand his consumer's needs; and provide the most comprehensive computing solutions that met those needs. Dell Mission In 1997, Dell Computer's mission became "to be the most successful computer company in the world at delivering the best customer experience in the markets we serve".

Dell's objective was achieving "virtual integration". Business Strategy In today's environment, Dell is enhancing and broadening the fundamental competitive advantages of the direct selling model. The enhancements are likely to lead to increasing efficiencies to its entire business. Through the direct business model, Dell offers in-person relationships with corporate and institutional customers. But that is just a small part of their model, they also offer, telephone and Internet purchasing; customized computer systems; phone and online technical support; and next-day, on-site product service.

Dell arranges for system installation and management, guides customers through technology transitions, and provides an extensive range of other services. The company designs and customizes products and services to the requirements of the organizations and individuals purchasing them, and sells an extensive selection of peripheral hardware and computing software. With the industry's most efficient procurement, manufacturing and distribution process, Dell offers its customers powerful, richly configured systems at competitive prices. Five Forces Model Analysis Dell is at a constant advantage in the way of technology. They have the inside track on the latest and greatest.

They can also get the new products to market faster, because of the supply chain process. All of this adds up to, their ability to anticipate any potential risks the Dell Computers may experience, and try to resolve any issues before they come to fruition. Rivalry Among Competing Sellers: By being in business you assume risk, and you will mostly likely have to contend with competitors. Below are a handful of competitors for Dell. Hewlett-Packard - Dell's biggest competitor after its acquisition of Compaq. HP became number one across the board.

IBM -In 1999 IBM signed a long-term agreement with Dell to supply over $7 Billion in components as well as increasing these types of sales to other PC makers. Gateway - has a similar business model as Dell. They offered PCs built to order and sold directly to customers. However, they maintained large inventory.

Potential Entry of New Competitors New competitors can enter the market, however, it may be extremely difficult for them to unseat Dell. Emerging business may consider Dell's business model in order to become a threat. Competitive Pressures from Sellers of Substitute Products Substitutes are dependent upon three factors: (1) Prices; (2) Comparable or better products; and (3) Cost of switching to a new product line. Entrance may be difficult for a substitute product; therefore this force is rated as low. Competitive Pressures Stemming from Supplier Bargaining Power and Supplier-Seller Collaboration Dell's suppliers have developed relationships within the organization, and they want to maintain that excellent relationship. Because of their relationship and extremely low pricing.

It would be very difficult for Dell to be under-priced. This would leave little room for outside bargaining power. SWOT Analysis Strengths∑ No inventory buildup∑ Industry leading growth∑ Cost efficiency∑ Direct to customer business model - latest technology∑ Customization. Internet sales leadership - $5 M worth of products everyday Weaknesses∑ No proprietary technology∑ High dependency on component suppliers Opportunities∑ Network-internet, intranet and extra net∑ Strong potential market in Europe, China and India∑ Low costs and advanced technology∑ Growth in business, education and government markets Threats∑ Competition (price and market share) ∑ Currency fluctuation in countries outside the US∑ Political instability∑ Tariff trade barriers.