Dell Computer Corporation

1. What is Dell’s Strategy? What is the basis on which Dell builds its competitive advantage?

Dell’s strategy is to use direct selling to consumers in order to gain market leadership. They focus on delivering the best possible customer experience by efficiently providing the best possible solutions catered to the consumer needs. With the use of real time data and information collection, Dell has become the most preferred Computer Systems Company and premier provider of information technology products and services worldwide.

Their competitive advantage lies on their design of PC industry value chain. This is based on having cost advantage, customer information and technological advancement. By eliminating retailers, they have cut unnecessary time and cost. The customers no longer need to pay for the mark ups done by retailers since they get their products directly from the source. With real time information gathering, they can change their marketing and pricing strategies based on the current trends and needs of the customers. Also, because of their data gathering, they have delved into other products such as servers, mobility products and even printers. For technology, because of their custom built machines, they can customize the orders of their customers based on their preferred specs. Which then satisfies the customers.

2. How do Dell’s control systems help execute the firm’s strategy?

Dell has a localized decision making system. The organization believes in assigning accountability and responsibility to managers of their respective business units. With this, they are able to easily solve problems arising from their areas without having to wait for top management intervention. They’ve seen that bureaucracy does more inconvenience than just allowing unit managers to handle their own situations. The flat organization model also applies to their innovative ideas. When one employee comes up with a good strategy, he/she can voice them out in order to correct or improve their business practices.

Their performance measures are also the same with the rest of their global business units. Their scorecards included both financial measures (such as ROIC, component purchasing costs, selling and administration costs) and non-financial measures (component inventory stock outs, finished goods inventory, A/R day and A/P days) Also,

If one of their units has performed greatly than others, they imitate those strategies to other units so that they too can perform better as well. They transfer their knowledge from other business units so that their organization will flourish as a whole.

Dell has also recognized the need for speed and fast delivery. Thus, they reduced the “touches” products and decisions need to go through in order to provide great customer service.