This is a case study on Dell which has been the leader in the personal computer market for years but recently the company that forced its big competitors like IBM, Compaq to scurry has now been reflecting declining sales and losses all on the base of a bad business strategy.
A1) According to the value chain framework by Porter Dell’s core competencies can be identified and analyzed. Dell has two core competencies and they are as follows:
¨ Direct Business Model
¨ Build to Order (customized PC’s online and otherwise)
According to the value chain a firm must create value where its competitors have left a space and then to improve it further. Dell’s direct business model helps it to cut down costs and enhance their customer relationship management process. Since customers do not go to a retailer to buy Dell and the costs of delivering and selling through a wholesaler and retailer vanishes in this case. Customers can buy Dell PC’s through their website that is online, or through the telephone or through the Dell sales representative. Thus this cuts down costs for the company and also helps develop a direct relationship with the customer. Another core competency of Dell is build to order which allows customers to specify what they want in their PC and Dell builds accordingly and customization helps satisfy customers further. But this also cuts their costs because Dell does not make and stock computers because they manufacture a computer only when a customer places an order. This also cuts down costs of researching and providing new designs so Dell follows a market sensing process that gathers all market intelligence and then covers all lacking of the competitors thus resulting in what the customer exactly wants to buy. This not only saves costs but helps to build a lasting relationship with the customer and always helps to stay ahead of the competitor. Dell waits for competitors to come up with something new and then it devises a strategy to produce the same product for a cheaper price thus the company ends up snatching the market share from their competitors.
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