Mis Case - Dell

Topics: Supply chain, Supply chain management, Vertical integration Pages: 5 (1456 words) Published: July 9, 2013
1|Page Dell's Direct Business Model

Dell's Direct Business Model
Presented by Riti Behal – FT 14459 Gagan Dawar – FT 14221 Vaibhav Agarwal – FT 14276 Great Lakes Institute of Management, Chennai

Riti Behal, Gagan Dawar, Vaibhav Agarwal

2|Page Dell's Direct Business Model
Describe the “Direct Business Model” The direct model has become the backbone of our company and the greatest tool in its growth. – Michael Dell. Dell's direct business model bypasses the dealer in the supply chain and sells computers directly to customers, building each to order. Dell does not manufacture the computer components; they merely assemble computers based on components that are available in the market. The focus is solely on the customer. There are ten key elements in dell’s strategy that has made has successful today:  Go Direct – by eliminating the dealer in the supply chain and selling computers directly to customers, eventually letting them customize the laptop they want.  Provide the Best Value – You have to just say Michael Dell has done a hell of a job. No one has pulled the levers of cost, quality and service better than Dell. – Jack Welch, former CEO of GE.  Focus Fanatically on customers – The do it the customers way mantra has created for Dell the tightest – and the most envied – relationship with buyers in the PC business. – Business Week, 1988.  Celebrate Standardization – Dell has thrived as downward-spiraling prices and commodification washed over the company’s customers and bashing its competitors. – Fortune Magazine.  Have Zero Tolerance for Inventory – The longer you keep inventory, the faster it deteriorates – you can literally see the stuff rot. Because of their short product life cycles, computer components depreciate anywhere from a half to a full point a week. Cutting inventory is not just a nice thing to do. It’s a financial imperative. – Kevin Rollins, former President and CEO of Dell.  Always adapt, always execute – Dell is an execution machine, that’s all there is to it. They’re an operations company and they stay incredibly true to their operating model – Barry Jaruzelski, Booz Allen Hamilton consultancy.  Value information – Information is the key to any competitive advantage – Michael Dell.  Get others to do more of the work – Choose what you want to excel at, and find great partners for the rest – Michael Dell.  Know how to grow – One of three computers sold in the US is a Dell. Hopefully soon, that will be one out of two. – Michael Dell, 2004.  Look at the future – We’ve been migrating the last three or four years out of being a PC company. We’ve moved into servers and storage, mobility products, services, software peripheral categories and printers, and become a diversified IT company – Kevin Rollins, former President and CEO of Dell.

Riti Behal, Gagan Dawar, Vaibhav Agarwal

3|Page Dell's Direct Business Model

How does it differ from traditional business models? Dell's use of technology and information to blur the traditional boundaries between suppliers, manufactures, and users is named virtual integration. To achieve the advantages of an integrated company, Dell treats suppliers and service providers as if they were inside the company. Their systems are linked in real time to Dell's system and their employees participate in design teams and product launches. Vertical integration is the notion of companies acquiring key suppliers and customers in order to control the entire supply chain in an industry segment. Due to the ailing financial health of many companies, entire industries are rapidly consolidating into a few companies. It is certainly a buyer’s market. Virtual integration is the notion that shareholders are best served if companies focus their investments on specific areas of specialization, thereby achieving unassailable efficiencies and output. These companies then rely on third-parties to perform all other aspects of its operations. For example, an architectural design...

Bibliography:       http://supplychainbeyond.com/why-your-supply-chain-needs-a-many-to-many-networkfrom-vertical-to-virtual-integration/ http://squawvalleyprom.net/essays/Dells-Direct-Business-Model-51913.html http://sellingchange.com/discussion/vertical-integration-or-virtual-integration/ http://www.cs.colorado.edu/~homaei/projects/files/ITM-Dell.pdf http://stuff.mit.edu/afs/athena/course/15/15.823/attach/Dell%20CASE.pdf How Dell Does It – Steven Holzner
Riti Behal, Gagan Dawar, Vaibhav Agarwal
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