Business strategy: How Dell Computer uses technology to gain competitive advantage and keep its leader position on the PC market ?

Résumé du document

When Dell's CEO, Michael S. Dell and President, Kevin B. Rollins met in the fall of 2001, they were confident that the company was recovering from the global crash of personal computer (PC) sales. In fact, Dell is the master at selling PCs directly and bypassing middlemen and thus delivers PCs cheaper than any of its rivals. Some would argue that it's the model of efficiency, with a far-flung supply chain knitted so tightly that it's like an electrical wire that is humming 24/7. Yet, all this has been true for more than a decade. And although the entire computer industry has tried to replicate Dell's tactics, none could spot a blemish on the company's results. Today, Dell's stock is valued at a price-earnings ratio to the multiple of 40 that is loftier than IBM, Microsoft, Wal-Mart Stores, or General Electric.
As it turns out, the management of Michael Dell has elevated it far above its sell-direct business model.
The Chairman, the CEO, and other executives analyzed the actual position and determined Dell's strategic orientation based on a middle term outlook. In other words, they had to understand how technology must be used to sustain Dell's competitive advantage and to reinforce its leadership position inthe PC market up to 2006.

Extraits

[...] Key success factors (competing on value chain) The following are some of the key success factors in the value chain. -Concentrating on efficient assembly and marketing their brand of computers. - Direct selling eliminated retailer costs and markups (retail dealer margins are typically in the 4 or 10 percent range). Value chain analysis can reveal a great deal about a firm's cost competitiveness. One of the fundamental insights of strategic cost analysis is that a company's competitiveness depends on how well it manages its value chain relative to how well competitors manage theirs. [...]

[...] - E-Support: Dell had developed advanced technology called "E-Support- Direct from Dell" that helped Dell systems detect, diagnose, and resolve most of their own problems without the need for users to interact with Dell's support personnel. The goal of Dell's E-Support technology was to create computing environments where a PC would be able to maintain itself, thus moving support from a reactive process to a preventive one. Michael Dell saw E-Support as the beginning of what we call self-healing systems that we think the future of online support will be. Dell expected that by the end of the year 2000, more than 50 percent of the customers needing technical help would use E-Support-Direct from Dell. [...]

[...] If the customer so desired, Dell would place the customer's asset tags on the PC at the factory. Dell charged customers a minimal charge of only $ 15 or $20 for the software-loading and asset-tagging services; the savings to customers were thus considerable. One large customer reported savings of $500,000 annually from having Dell load its software and place asset tags on its PCs at the factory. In 1997, about 2 million of the 7 million PCs Dell sold were shipped with customer-specific software already loaded on the PCs. [...]

[...] Value Added Services: Selling directly allowed Dell to keep close track of the purchases of its large global customers. Country by country and department by department-information was found valuable to the customers. Its close customer relationships resulted in Dell being quite knowledgeable about what each customer needed and how its PC network functioned. Aside from using this information to help customers plan their PC needs and configure their PC networks, Dell used it to add to the value it delivered to its customers. [...]

[...] The company received nearly 3 million visits weekly at its website. So, it became a world leader in migrating its business relationships to both customers and suppliers in the Internet. Value-addition: Fundamentally, Dell sells computers that are extremely valuable to all primary and support activities of a business. Dell's use of quality components and competitive pricing strategy makes them a very attractive vendor. Bargaining power of suppliers: Dell uses Intel chips in their computer products, giving Intel some bargaining power over Dell. [...]