Term papers writing service


A discussion of the strategic resources of dell computer corporation

Since its incorporation, it has grown steadily and become one of the largest MNEs in the world. As the market leader, it fell from the top spot to the third place behind Hewlett Packard and Lenovo in 2012.

  • In the past, customers in India would have to wait for up to a month for their computers, which were manufactured in Malaysia;
  • However, Dell was still restricted by its decision to outsource only components and desire to have total control over the final assembly;
  • They were able to do so as they outsourced their manufacturing operations entirely;
  • In 2007, Dell lobbied for the Indian government to reduce its PC tax;
  • Strategies for Sustained Competitive Advantage Strategies and measures that Dell undertook to address its loss of market share were many;
  • One of the conditions is that a foreign market must offer location-specific advantages.

This article seeks to detail how it was able to achieve this initial success in the early 2000s and why it eventually declined towards the end of the decade. The report concludes with the possible strategies that Dell could take to restore its competitive advantage.

Michael Dell's first foray into the computing world was at the age of 7, when he owned his first computer, the Apple II, designed by the great Steven Wozniak. Now, Apple has grown to become one of Dell's greatest competitors.

Replacing Inventory with Information Replacing inventory with information is a supply chain management concept that seeks to manage and reduce inventory through the use of information. The key is to have the right amount of inventory to satisfy supply and demand without compromising the level of service.

Replacing inventories with information allows for a lean and agile supply: This contributes to cost reduction.

Having a large inventory on hand acts as a buffer and protects against uncertainties in the supply chain. This is because supply and demand is difficult to predict and subjected to variation. However, excess inventory is not an asset and it is in fact considered a liability. Thus, having access to vital information e. The software solutions provide valuable real-time information about changes in demand and the market.

With its strategic use of information, such as its internet-based ordering system that updates suppliers with the latest demand trends, Dell was able to perfect the balance between demand and supply. This just-in-time JIT strategy allowed it to operate with the lowest inventory level in the industry. Direct selling has also allowed Dell to bypass intermediaries such as wholesalers and retailers, reducing costs even further.

In addition, Dell offered customizable options that proved to be customer-centric and attractive. This close relationship with suppliers and the direct selling model has allowed Dell to balance demand and supply remarkably well.

Dell conducts its business operations worldwide in many different foreign markets.

Dell situated manufacturing plants across the world, seeking out location-specific advantages such as low labour costs and highly productive workforces.

The manufacturing operations are also in close proximity to important regional markets to minimize delay between purchase and delivery. Bartlett and Beamish 2011 identify three conditions that must be fulfilled for an MNE to internationalise its operations successfully.

One of the conditions is that a foreign market must offer location-specific advantages. Some advantages are lower labour costs and a highly productive workforce. For example, labour costs in Malaysia are lower than in neighbouring Singapore, but the quality of labour remains comparatively high.

Did You Know?

The next advantage is proximity to important markets. Dell chose to locate its manufacturing plants close to such regional markets for better market access, lower shipping costs, and improved responsiveness in delivery. In the past, customers in India would have to wait for up to a month for their computers, which were manufactured in Malaysia. However, this choice of location is not without its disadvantages. Locating manufacturing operations beyond the United States comes with certain disadvantages.

Generally, the greater the distance from the home market, the more difficult it will be to conduct operations. The geographical distance makes control over the manufacturing operations even more difficult.

However, due to similar culture, beliefs and proximity of manufacturing operations, the recovery effort was incredibly fast with the aid of local firms. Recovery would also be difficult due to the distance and liability of foreignness.

Outsourcing Manufacturing One of the main reasons for outsourcing the manufacture of PC components is the ability to choose good components and suppliers rather than having to produce them oneself.

Outsourcing would allow Dell to focus on its own competencies, such as managing its efficient supply chain, customer service, research and development of new products, etc. Since the incorporation of Dell, it has been outsourcing the manufacturing of components manufacture but not the final assembly itself. Dell does not want to outsource its manufacturing operations entirely so as to prevent the unintended creation of competitors.

Introduction

Outsourcing is often described as easy to replicate and the competitive advantage that it provides is not sustainable. Outsourcing is only feasible if it is separated from other supply chain activities, which is what Dell is trying to achieve.

Consumers prefer to purchase laptops in retail outlets, so they can look at and feel the design. Moreover, competitors began restructuring efforts and significantly improved their business models. The decline of the desktop PC was one of the main reasons that Dell lost its ranking as the leading global PC maker. Knowledge as a source of competitive advantage has allowed these MNEs to surpass Dell in market share. They were able to do so as they outsourced their manufacturing operations entirely.

  • Replacing inventories with information allows for a lean and agile supply;
  • The software solutions provide valuable real-time information about changes in demand and the market;
  • The key is to have the right amount of inventory to satisfy supply and demand without compromising the level of service.

However, Dell was still restricted by its decision to outsource only components and desire to have total control over the final assembly. Lenovo became the world's third-largest personal computing company overnight, gaining access to foreign markets beyond China. Strategies for Sustained Competitive Advantage Strategies and measures that Dell undertook to address its loss of market share were many.

For example, it reduced reliance on direct sales by selling through retail channels and launched laptops and netbooks. Bartlett and Beamish 2011 describe three types of strategic approaches that an MNE can use to respond to challenges, defend worldwide dominance, challenge the global leader, and protect domestic niches.

However, doing so eroded its core competencies. Instead, Dell should defend and reinforce their existing capabilities rather than developing new ones.

Dell can do so by taking extra steps to improve its customer service. For example, it introduced a concierge service for customers in April 2013 that provided personalized and remote services for customers. Instead of seeking ways to improve sales through retail channels, Dell could enhance its direct sales model by using social media.

Dell is renowned for its direct sales model that provides lots of customizability. Taking advantage of this strength, it can delve deeper into this niche by providing customers with more customizable options online. For example, Dell acquisition of Alienware in 2006 allowed it to tap into the highly profitable but niche PC-gaming market. In 2007, Dell lobbied for the Indian government to reduce its PC tax.

Dell's Competitive Advantage & Strategy

Finally, it can also go into mergers or joint ventures with other global MNEs. Conclusion Forecasts for the personal computer industry are bleak and IDC expects the sales of personal computers to fall till at least until 2017. The advent of new products such as smartphones and tablets are out shadowing PCs. The impact on Dell's business is great, and it becomes more important for Dell to restore its competitive advantage.

Dell has a gargantuan task of catching up with the rapid changes in technology and the evolving strategies of its competitors. Dell was not able to gain a sustained competitive advantage due to its reliance on the direct sales model and traditional business strategies.

  • For example, it introduced a concierge service for customers in April 2013 that provided personalized and remote services for customers;
  • The impact on Dell's business is great, and it becomes more important for Dell to restore its competitive advantage.

Like its competitors, it must invest more effort in learning and innovation. It should also evolve its global strategy such as responding to local needs and adopting other transnational strategies.