Dell IncValue Chain Analysis The main purpose of this assignment is for you to identify and analyze elements of the value chain and demonstrate your understanding of how they must interact to create...

VALUE CHAIN ANALYSIS 1
Dell Inc Value Chain Analysis
The main purpose of this assignment is to identify and analyze elements of the value
chain and demonstrate your understanding of how they must interact to create value for the
organization. The assignment chosen for analysis in the assignment is Dell Inc. Dell is a large
cap company with the cu
ent market capitalization of $32.16 billion. Dell was incorporated in
1994 by Michael Dell while he was a student at University of Texas, Austin. The company is
listed in the NASDAQ stock exchange and has a cu
ent share price of $17.04 (Key Statistics
Dell, 2012). Dell’s success continued over the following years, but it was not able to avoid the
crisis in PC industry in the new millennium. Dell’s growth rate fell, resulting in the fall of its
stock price. However, over the time, Dell managed to remain a highly successful company, and
its growth rate continued to outperform the industry as a whole. Dell’s strategic choices and
ways of realizing those choices have played an effective role in story Dell’s success. The supply
chain management of the company is the key element in its successful business model. The core
element of the company’s business model is its direct sales model, refe
ed as ‘direct mode’,
with the build to order strategy.
Demand Chain Analysis
This section of the assignment would analyze the demand chain of Dell. The
differentiated model of dell help it creates a niche in the distribution channel and eliminates the
entire mid channel members to a
ive at cost leadership position in the industry. The basic
principle of Resource based view is that the competitive advantage for any particular
organization completely depends upon the resources which are available at any company’s
disposal. It is a management tool to determine the important resources available for any
VALUE CHAIN ANALYSIS 2
organization. It is very important for success of the organization that these resources are valuable
and are not imitable.
Identification of Customer, Market, Wants and Needs
The company has customers all over the globe. Dell directly sells to all its customers,
egardless of a home-PC to world’s largest corporations. The direct relationship with individual
customer creates a great source of competitive advantage for Dell. This creates a valuable
information about the end customers, and thus Dell knows who are the end users of their product,
what they have purchased from the company, what are their future preferences, a fact that allows
the company to stay closer to their customers by offering add-on products and services.
Company distinguishes three customer segments, namely large organizations, medium
and small businesses and personal consumers; and the revenue of the company is not
concentrated as no customer of Dell represents more than 2% of total revenues. This provides a
wide mix of customers served. The focus of the company is majorly on large customers,
accounting of 70% of the Dell’s revenues. Dell has been improving its segment from past years
and with the combination of direct sales model, gives them the ability to better forecast demand.
In the case of large customers the direct relationship by the company is upgraded to
virtual integration. With the help of IT, customers work with Dell as partners. Dell employs two
main facilities that
ing them and their customer’s closer i.e. Premier Councils and Premier
Pages. Premier Councils are the regional meetings of the company largest customers, where
salespersons, technicians and the executives discuss their experiences with Dell, and their future
expectations from the company. Premier pages, now known by Premier.Dell.com, are customizes
support and procurement sites for their big clients, which allows them to manage and decide their
purchases from the company, thus making the role of a sales person a more consultative role.
VALUE CHAIN ANALYSIS 3
This represents Dell’s customized sales channel and the company has increased its premier pages
manifold in these years.
Market Opportunity Analysis
The environment in which Dell operates is technology driven and dynamic in nature. Dell
is technology company build on a global platform where factors like inflation rates, interest rate
and cu
ent exchange rates in bear some impact, but such impact can’t be considered influential
(US Technolgy Sector Analysis, 2010). As the interest rates are slashed as a result of recession in
the economy, the company could bo
ow money at a cheaper interest rate. Same is the case with
changes in cu
ent exchange rates. Change in economic conditions could also materially affect
the performance of the company in an adverse way.
The industry in which Dell operates is in the growth phase of industry life cycle. Dell
also operates within the growth phase of the company life cycle. This is a charaterstic of high
growth rates, expansion of product lines, increasing customer base and market capatilization..
However, according to the Bureau of Labor Statistics, the technology world will maintain to
upsurge with jobs in IT increasing by 16% in the short-run (Fol
e, 2011). IT spending is
expected to remain vulnerable to shocks in key regions like Europe and in industrial sectors
where decisions will be determined by the return on investment.
Identification and Analysis of Value Drivers
The direct sales model refers to the fact that the company does not use any retail channels
for selling its products, but sells its products...