Dell Value-Chain Analysis

Dell Logo4 150x150 Dell Value Chain Analysis Dell has been the world’s largest personal computer vendor in 2001 and achieved the highest online sales of computers which exceeded $1 million.The company still continues to gain market share and consistent profit growth over many years. Dell has been successful due to its direct selling strategy as it sells more than 90% of its products to final user.

 

 

Another source of Dell’s competitive advantage over its competitors has been its pre and post sales support for customers. The company gives the chance of logging into the company website and configures their own systems and work out the specifications and prices.

 

value chain analysis1 Dell Value Chain Analysis

Operations

 As the company has been trying to produce new products such as printers, servers and storage services, their internal operations will change. This is due the fact that the company has no previous experience in the field, and to be successful in them by keeping the costs low and quick customer response, it needs to implement the same strategies as it has been applying to its computer products.

The operations of Dell has been very effective in terms of managing the inventory levels near to zero and making its suppliers locate their warehouses and factories near to Dell’s own manufacturing and assembly unit. This indicates that the company has been applying the JIT manufacturing (Riley 2008).

Moreover, this has resulted in the improved efficiency. And due to this, Dell has extremely low transfer time due to strict inventory control and high productivity. As it has been stated in the article, “when the system is working well, it can be just 90 minutes from the time the order is placed for the computer on www.dell.com, to the time it begins its journey through the factory.”

Furthermore, as a result of its efficient structure, the company increased its profit margin by selling the computers directly to the end users which also boosted the customer relationships of the company (Gray, 2007).

As 19% of its $32 billion revenue in 2002 came from non PC business, the company has to adopt new value chain based on variety of products, otherwise the company has been using the same value chain when it started it’s operations which was based on specific products, computers.

 

Inbound Logistics

The way Dell has been managing its supply of inventories and suppliers is very popular, however, the company still has to do further investment in order to set a reliable system as the company has been dealing with more than just the computers.

As the range of its products are increasing, even if the company is not producing itself (Agreement with Lexmark to produce Dell branded printers), Dell has to closely monitor all new ranges and implement the same good response and low cost strategies to them.

 

Outbound Logistics

As long as Dell has been increasing its new product ranges, they will eventually have a larger demand. And in order to keep up with increased levels of demand, the company has to increase and improve the way it distributes its ready products to the customers as before.

The company has been famous for order systems online which helps to track orders from manufacturing through shipping should also be inexistence and application for new ranges of products as it is one of the advantages of the company over its competitors. Therefore, the logistics of distribution has to be evaluated and redefined to be fit for the purpose.

 

Sales and Marketing

According to stated obligation of Dell to its customers the company has to differentiate its products from its competitors, therefore, to keep this promise, the company has to increase customer awareness for its new range of products such as printers, storage services and etc.

To enter into already existing market with new products, Dell has to carry out series of promotional sales and advertisements to make customers aware of its new products, as it is not easy to compete with other market giants such as IBM in the same market.

Moreover, Dell has competitive advantage over its competitors in online sales (Dell is the first company to make $1 million online sales on computers); therefore, the company has to focus on promoting its new products online.

 

Service

Dell is very famous for providing good customer service both before and after the sales. The company has good relationships both with small and big enterprises such as EDS, Cox Communications, Inc and etc.

And the company has been offering post sales services through Premier Dell.com website where customers can log in and select the appropriate configurations for their IT systems. Pre and post sales support of the company is a very good image for the company and it can be incorporated as part of the company’s competitive advantage.

Moreover, in order to keep and maintain its good customer reputation for pre and post sales, the company has to ensure that new partners such as Lexmark (for printers) should also adopt the same customer and sales focus, otherwise it mad adversely impact on the corporate image of the company.

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