Business Strategy - Dell Computer
suppliers.
Because Dell has sell direct, it gains significant cost advantages over its competitors who sells through resellers and stores. This arrangement would provide direct communications with its customers trough self-helps in Internet, telephone representative assistance and for larger clients, Dell has provided with more sophisticated and personalized sales personnel. With their web-based initiative, customers could check the status of their order online, saving $8 million from Dell’s administrative costs annually. Moreover, when customers are able to check the status of their orders or packages, they are less likely to get irate leading to increases in overall customer satisfaction.
Competition Ground
Dell’s promise to deliver PC in a time frame of 3½ days, has always been the attracting factor. Minimising the waiting time of the customer has built up the trust and loyalty towards the company. Many corporate customers which used to purchase PCs from Compaq and IBM, have redirected their focus on Dell due to their short lead time. However, HP have came out with delivery commitment of within 12-24 hours from time of orders. HP, the leader in printing solutions, have merged with Compaq in September 2001. With the new formation, the Company would have a combination of enhanced IT products ranging from PCs, servers to digital photography and digital media entertainment solutions. In other areas, HP has been slow to develop its own Web services softwares, which lose out to Dell.
IBM, the leader in mainframe, offers high quality technical support but at a high cost. IBM is offering its on-demand computing strategy to create an IT infrastructure that is simplified and flexible to counter Dell’s e-commerce strategy and HP’s Adaptive Enterprise Initiative. IBM name-brand has been known for mainframes and proves as hindrance to their penetration on desktop PCs. However, its huge technical team is desirable by many customers to resolve any complexity in network solutions over Dell’s. This has created mudroads for the latter in attempts to conquer the markets in workstation and servers.
In 2002, Gateway’s CEO, Mr. Ted Waitt, have announced that they will stock up 10 PCs per store in its 258 stores by end of March 2002 in addition to build-to-orders PCs. The move is encouraging, as there is market demand for off-the-shelves PCs and statistical figures showed significant improvement in such sales. Dell has counter attack with ready-made PCs with popular configuration including pre-installed software. They have further enhanced their presence in the IT industry by teaming up with IBM, in August 2003, to tap on their professional technical support while IBM taps on their market knowledge in custom-made PCs manufacture.
Future Challenges of Dell
As the company grows, Dell continuously learns to manage millions of internet exchanges daily, from product orders to e-mail correspondence to information detailing the manufacturing of Dell products and the delivery of complex services. Dell’s distribution facilities demand nonstop availability, instant access to data to ensure on-time customers deliveries and bulletproof disaster recovery capabilities. While you can’t bottle lightning, you can build lightning rods [next page]