What is the source of Dell’s competitive advantage?

Topics: Supply chain, Personal computer, Supply chain management Pages: 3 (735 words) Published: October 28, 2013
Essay questions on case study for International Business & Management 《国际商务与管理》案例论述个人作业

Competitive Advantage at Dell

Michael Dell started Dell Inc. in 1984 when he was an undergraduate student at the University of Texas. Two decades later, Dell has grown to become one of the world’s great computer companies, with a leading share in the personal computer and server businesses. In 2003, a year in which most computer makers lost money due to slumping global demand for PCs, Dell saw its revenues jump by $5 billion to $36 billion, made $2.8 billion in operating profit. Approximately 1/3 of Dell’s sales were made outside the U.S. Dell credits much of its strong performance in a tough environment to a cost structure that is the lowest in the industry. That cost structure is in part the result of Dell’s global manufacturing and supply-chain management strategy.

Dell has manufacturing sites in Brazil, Ireland, Malaysia, and China, in addition to the U.S. The sites were chosen for low labor costs, high productivity of the local workforce, and their proximity to important regional markets. Dell prefers to manufacture close to regional markets to reduce shipping costs and increase the speed of delivery to customers. In addition to manufacturing, much of Dell’s customer support operations are also performed outside of the US with a major center in India.

Dell’s supply base is also global. Dell has some 200 suppliers, more than half of which are located outside the US. Thirty suppliers account for about 75% of Dell’s total purchases. Over 50% of its major suppliers are in Asia.

From inception, Dell’s business model was based on direct selling to customers, cutting out wholesalers and retailers. Dell’s direct selling has been made largely over the Internet, and Internet selling has enabled Dell to offer its customers the ability to customize their orders so that customers can get the system that best suits their particular requirements.

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