Matching Dell Case Analysis
1. Synopsis
After the emergence of personal computer in1990, Dell emerged as a strong business entity in the computing industry. With the advent of personal computing, the major players in the industry were IBM, Compaq and HP. Between 1994 and 1998, Dell's growth was faster and twice its major rivals (IBM, Compaq, Gateway, and Hewlett- Packard). It provided high performance PC at a very low price. Through the introduction of Dell's Direct Model, it enjoyed high competitive advantage and earned quite a success.
Using the “Direct Model”, Dell sold primarily to customers directly. Dell's competitors were suing distributors, resellers and retail site at that time. Once orders were received from the customers, Dell rapidly built computers as per the customers` requirements and shipped them directly. Therefore, Dell had such a relationship with the suppliers that it was able to arrange "just-in-time delivery" of parts. Another major strength that Dell possessed was distinct customer categorization: Relationship buyers and Transactional buyers. Later, this was further subdivided.
With the new competitive leverage, Dell became a billion dollar business, residing along with the IBM for the personal computers. Following the zero channel distribution and just in time supply chain management in the industry when major competitors were hovering for the multiple channel distribution, Dell was able to gain low cost operation in compared to its competitors. 2. Industry Analysis
Industry Analysis is done through Porters Five Forces. A detail of the analysis is drawn below:
a. Threat from new entrants:
As the PC industry was still in the growth stage during the 1980s and the early 1990s, threat from new entrants was high. This added to the low cost to enter the market as capital of $1 million was enough to establish an assembly line to produce 250,000 PC. b. Threat from Competitors:
Dell faced competition from four major rivals. They were IBM, HP, Compact and
After the emergence of personal computer in1990, Dell emerged as a strong business entity in the computing industry. With the advent of personal computing, the major players in the industry were IBM, Compaq and HP. Between 1994 and 1998, Dell's growth was faster and twice its major rivals (IBM, Compaq, Gateway, and Hewlett- Packard). It provided high performance PC at a very low price. Through the introduction of Dell's Direct Model, it enjoyed high competitive advantage and earned quite a success.
Using the “Direct Model”, Dell sold primarily to customers directly. Dell's competitors were suing distributors, resellers and retail site at that time. Once orders were received from the customers, Dell rapidly built computers as per the customers` requirements and shipped them directly. Therefore, Dell had such a relationship with the suppliers that it was able to arrange "just-in-time delivery" of parts. Another major strength that Dell possessed was distinct customer categorization: Relationship buyers and Transactional buyers. Later, this was further subdivided.
With the new competitive leverage, Dell became a billion dollar business, residing along with the IBM for the personal computers. Following the zero channel distribution and just in time supply chain management in the industry when major competitors were hovering for the multiple channel distribution, Dell was able to gain low cost operation in compared to its competitors. 2. Industry Analysis
Industry Analysis is done through Porters Five Forces. A detail of the analysis is drawn below:
a. Threat from new entrants:
As the PC industry was still in the growth stage during the 1980s and the early 1990s, threat from new entrants was high. This added to the low cost to enter the market as capital of $1 million was enough to establish an assembly line to produce 250,000 PC. b. Threat from Competitors:
Dell faced competition from four major rivals. They were IBM, HP, Compact and