Case Study: Critical Success

Factors of Dell

DELL’s direct-to-customer business model is the key to the company’s dramatic

growth and success and has focused on selling directly to customers. This helps
eliminate the middleman and offers customers more powerful configured
systems than most competitors. The direct model enables DELL to develop a
thorough understanding of customer expectations, which strengthens customer
relationships and increases customer satisfaction and loyalty. One of the
characteristics that distinguishes DELL from its other competitors is that DELL
provides the mode to custom the computers of the customers’ choice and taste
and deliver the system to the customer as it is the most crucial and critical success
factor behind DELL Computers. Therefore, DELL must be aware of the benefits
they wish to realize, how it will be realized and ensure only investments of
appropriate amounts of resources to obtain benefits. DELL relies on reputation in
the US market of award-winning service and a high-quality product. Customer
satisfaction and consumer awareness surveys should be conducted quarterly to
ensure the image that DELL creates for itself within a culture has not existed
before there is a positive one. Market timing and speed are critical to many
industries, such as technology, pharmaceuticals, and some consumer goods.

DELL’s competencies are their cost/ strategy. In consistent to being an

integrated cost leader, DELL produces high quality PCs by using their Direct
Business Model approach and sells them directly to the customers. DELL’s
weaknesses are single sourcing, new product and reliance on corporate clients.
DELL has opportunities like the potential growth in overseas markets as the
industry is still in growth phase and the entering of the new product markets.
Henceforth, the threats are technological changes that are expected since
technology can only get better. Global economy and increased competition in
which DELL’s financial ratios identifies that the company is no match for their
competitors. DELL’s most competitive force is the Direct-Model concept which
helped them to reach above-average returns and remains in business today.
Customers have developed a brand-name loyalty to Dell because of their low cost
differentiation strategy. The huge threat faced by DELL is the fierce competition in
the industry. If DELL enters into a merge it would not have to spend so much
money and time trying to develop a face-to-face communications, if the local
business is already well known. According to cost saving benefits, the company
will not have to spend any extra money for product development if it is already
developed. Furthermore, there will be plenty of joint financial support. If there is
synergy between the two companies, their market penetration will be that much
easier to achieve. DELL initiated ways to overcome its weaknesses and use its
strengths to gain advantages over its competitors- by careful analyzing of the
factors that contribute to the company’s success in business strategies that had
implemented created the path for the company’s continued success. Today, in
fast-moving areas such as wireless and hybrid cars, you can see how market
windows open and close relatively quickly. The economic rents accrue to those
who can thoughtfully scan the market environment and quickly spot profitable
opportunities. One of the hottest areas in technology and business process today
is around predictive analytics, which is all about helping companies to determine
their next move and stay one step ahead of the competition. One way to analyze
a competitor’s strategic intent and migration path is to assess its expansion plans
into new market segments and offering sets for example, think of Dell moving
into printers or Microsoft moving into the CRM space.

Although time-to-market is important, it doesn’t mean doing things haphazardly

or without some analysis. Often, companies do get stuck in an “analysis-paralysis”
loop and don’t take action until it’s too late. In companies, strategy means
nothing more than a plan based largely on today’s markets, today’s product set
and today’s competitors and emphasizing the financial forecast and such a
strategy may successfully identify opportunities to capture the upside of the
current business over the next few years but can rarely anticipate extreme
competition, much less show how to reposition a business to face it. Effective
strategy should steer companies toward where an industry is heading and where
it is today.

Dell Corporate Strategies

The economic activities performed by Dell encompass the development,
manufacturing, sale and support of personal computers and computer-related
products.

Since its foundation, the company has been based on the Direct Model, i.e. Dell
has always tried and managed to create direct relationships with its customers,
by selling products directly and without the participation of intermediaries. The
sale has always taken place through a telephone service or via the Internet.

In order to accomplish its goal of being as fast as possible in the delivery of the
customized products it supplies, Dell has created an ample network of
manufacturing plants around the world. The corporation is present in each
continent and in most of the states with national basis. For instance, in Italy Dell
has established its Italian department — Dell Italia.

What’s more, Dell has forced many of its suppliers to set their plants alongside its
own facilities in order to minimize the time of the transactions that occur between
them and the company itself. They provide the company with a constant flow of
information regarding their inventory levels and, by contrast, the company
contributes to the development of their performance and the decrease of their
costs of production by providing them with the necessary training to keep
reducing costs at a fast pace and meet its strict targets. In fact, suppliers are
quarterly met and classified according their levels of reliability, cost, quality and
speed, and these are compared to their industry average. Once a supplier meets
the targets imposed by Dell, the latter establishes a long-lasting relationship in
which even know-how and new achievements are shared so as to enable Dell to
meet its financial fundamentals and ensure the highest return on investment to
its shareholders.

Dell Business Strategies

Business strategy involves leveraging the core competencies of the
organization to achieve a defined high-level goal or objective. It also includes the
analytic and decision-making process surrounding what to offer (e.g., products
and services), when to offer (timing, business cycles, etc), and where to offer (e.g.,
markets and segments) as a competitive plan.

Michael Dell, chairman and chief executive officer, summed up the strategy by
saying, “We are combing Dell’s Internet expertise, and our unique ability to
organize resources around distinct needs to create new Web-related capabilities.
The Dell advantage is based on direct relationships, low cost, speed to market
and e-commerce expertise as much as it is on Internet hardware, appliances and
customers services and support.”

Included in this strategy is “Service Provider Direct,” a three tiered package of

service, support and co-marketing programs designed specifically to benefit ISPs,
ASPs and Web hosting companies. Current program users include Exodus
Communications Inc., NaviSite Inc. And Corio Inc.

A second initiative is Infrastructure Computing. Dell announced PowerApp

appliance servers designed for specific Internet infrastructure tasks such as Web
serving, caching and load balancing. This will provide customers will a full range
of server and storage solutions for building their Internet infrastructure.
“Expert Services is a new and expanded service offering that will help businesses
take advantage of the power of the Internet, according to Dell.

Its fourth initiative is Universal Access, a drive enabling universal Internet access
through a combination of leading-edge devices, connectivity offerings and access
choices, encompassing narrow band services, broadband offerings and wireless
products and services.

The final aspect of Dell’s business strategy is Dell Ventures. Through strategic
links to companies with technologies, products and services that create
breakthroughs related to the Internet, Dell will provide equity investments and
incubation services for selected early-stage private companies to accelerate
development.

Supply Chain Strategy

Supply chain strategy also focuses on driving down operational costs and
maximizing efficiencies. For example, an organization may choose a strategy
directed at supplier management as a way to remain competitive. By providing a
clear purpose, the organization keeps sight of the strategy and is able to devise
tactical steps to achieve these goals. Another reason for having a supply chain
strategy is to establish how you work with your supply chain partners, including
suppliers, distributors, customers, and even your customers’ customers. As
the marketplace becomes more competitive, it is critical to reinforce existing
relationships and work together. And for all these reasons, a well executed supply
chain strategy results in value creation for the organization.

Marketing Strategies
The Dell marketing strategy was simple and basic. Cut out the middleman and
sell the product cheaper. Offer great customer service by giving the customer
exactly what they want.

There you have it. That is how Dell is about to become the largest company in the
world selling computers. They did it by building computers made to order for the
customer. By handling all the sales (retail) themselves. If you want a Dell computer
you can only get it from Dell. Their marketing strategy allowed them to pass the
savings onto the customer.