How One Can Learn from the Dell Effect
HOW ONE CAN LEARN FROM THE DELL EFFECT
Fall 2008
HOW ONE CAN LEARN FROM THE DELL EFFECT
ABSTRACT
Dell has entered the computer industry for a short period of time but the impacts of Dell will last a lifetime. Dell introduces a new business plan that no other computer producer has ever used and this just in time production allowed Dell to cut many costs. Because of the advantages in costs Dell was able to offer their products at a very competitive price. With the competitive pricing came the “Dell Effectâ€Â. The “Dell Effect†is the drop in prices and increase in value that occurs when Dell enters a product category or market. The Dell effect has greatly impacted the intensity of competition in the computer industry. There is much to learn from the Dell Effect.
INTRODUCTION
Dell has greatly affected competition in the computer industry; Dell’s special and innovative business plan and just in time inventory has lead to a system of production at minimal costs at Dell. Because Dell is able to produce products at minimal costs, the offering price of its products to the consumer is much lower than that of Dell’s competitors. These lower costs have allowed Dell to offer their products at a lower price and have hence driven competitors to lower their prices; this phenomenon is now known as the Dell Effect. In this paper I hope to give you a deeper understanding of what the Dell Effect is and how it works as well as what one can actually learn from the Dell Effect. I will begin by explaining what the Dell Effect is and how it happens, I will then continue with my insight on what we can learn from the Dell Effect and how it can be implemented in the production process to minimize costs. I will then conclude with my opinions and thoughts on the matter.
THE DELL EFFECT
Many factors contribute to the Dell Effect. The Dell Effect is only made possible by
Fall 2008
HOW ONE CAN LEARN FROM THE DELL EFFECT
ABSTRACT
Dell has entered the computer industry for a short period of time but the impacts of Dell will last a lifetime. Dell introduces a new business plan that no other computer producer has ever used and this just in time production allowed Dell to cut many costs. Because of the advantages in costs Dell was able to offer their products at a very competitive price. With the competitive pricing came the “Dell Effectâ€Â. The “Dell Effect†is the drop in prices and increase in value that occurs when Dell enters a product category or market. The Dell effect has greatly impacted the intensity of competition in the computer industry. There is much to learn from the Dell Effect.
INTRODUCTION
Dell has greatly affected competition in the computer industry; Dell’s special and innovative business plan and just in time inventory has lead to a system of production at minimal costs at Dell. Because Dell is able to produce products at minimal costs, the offering price of its products to the consumer is much lower than that of Dell’s competitors. These lower costs have allowed Dell to offer their products at a lower price and have hence driven competitors to lower their prices; this phenomenon is now known as the Dell Effect. In this paper I hope to give you a deeper understanding of what the Dell Effect is and how it works as well as what one can actually learn from the Dell Effect. I will begin by explaining what the Dell Effect is and how it happens, I will then continue with my insight on what we can learn from the Dell Effect and how it can be implemented in the production process to minimize costs. I will then conclude with my opinions and thoughts on the matter.
THE DELL EFFECT
Many factors contribute to the Dell Effect. The Dell Effect is only made possible by
References: • Park, Andrew, Ante, Spencer E. Who will Master the Server Biz? Business Week 6/24/2002, Issue 3788 • Dell Defines Its “Effect†on Educational Market, Introduces Intelligent Classroom at NECC T H E Journal, 0192592X, Aug 2005, Vol. 32, Issue 1 • DiCarlo, Lisa The Dell Effect on Corporate America Forbes.com • The Dell Effect Dell.com • Micheau, Ed The Dell Effect begins to Wane The Sunday Business Post Online, 8/20/2006