Dell’s Success Factors Dell has been highly successful in its business operations primarily because it was able to cater to the latent needs of the customers. Dell created a capability to deliver customized computers to its customers which enabled it to make deep inroads into the market in a very short span of time. Dell dealt with most of its customers directly and offered them the best prices in the market. In spite of its early success, Dell did face some significant obstacles in the way. Dell was unsuccessful in selling its computers through retail channels.
Also it faced quality issues with its laptops. However, Dell took immediate actions and realized that the retail strategy was not in line with its organizational strategy. Similarly, the decision to foray into laptops was postponed till sufficient quality standards were established in the market. These initiatives allowed Dell to focus on its strengths (Pinegar, 2002). Dell implemented the Dell Direct Model for achieving its phenomenal success. This was a combination of direct customer relations, lowest costs and virtual integration. Dell’s model was based on a make to order manufacturing strategy.
While it took more time than the traditional make to stock model, it enabled customers to get highly configured products. The large time taken for delivery was cut short by its highly efficient supply chain and distribution system. Dell had many corporate clients as compared to retail customers because this model was more suited to their needs and they were ready to wait in order to get cheaper products and according to their needs. Dell also made effective use of web configurator to achieve success. This configurator performed the role of a sales representative and allowed the company to directly know customer needs.
Also Dell segmented its market to have a better understanding of its customers. It divided its business into 3 segments – Relationship business, Small & Medium business and Consumer business. The segmentation enabled Dell to use different targeting and marketing strategies for different segments of customers (Qureshi & Muffich, 2004) Dell’s position in the industry Dell’s core competency has always been its ability to form strategic partnerships with the best in class manufacturers and to have an efficient supply chain to deliver its products at lowest costs.
Therefore, Dell forged partnerships with companies such as Microsoft, Intel and Sony to get best products. It moved ahead of its competitors on the basis of its positioning of high quality at low price. This positioning allowed Dell to have the topmost position in the desktop industry leaving behind conventional players such as IBM and Compaq. Recommendations for sustainable growth and their implications In order to build a substantial and sustainable sales growth, Dell must work on a few things.
Firstly, it must start focusing more on consumer side of the business as there is still a huge potential in this untapped market. Having said that, Dell must consolidate its position in Relationship business. Secondly, Dell’s major progress has been in the desktop space. However, in the medium term, Dell needs to shift its business towards sales of laptops, notebooks and smaller gadgets as there is bound to be a technology shift as proved by companies such as Apple. Dell should not be caught unaware during this shift. Thirdly, Dell must focus on storage space which is a growing segment (Manataki, 2007).
Dell must not only concentrate on selling servers, it could also venture into renting storage space which is other words is called as Cloud computing (Korzenowski et. al., 1999). Last but not the least; Dell has to come out of an image of a complete manufacturing company. Dell needs to offer services such as consulting on a wider scale. As the manufacturing business saturates with deeper penetration of computers, Dell’s low cost model may not remain relevant.
In those conditions, the services business could act as a cash cow for the company in order to boost its sales. These recommendations could go a long way in enabling Dell to enjoy a sustainable success over the years. References Korzenowski, Paul. ,McDougall, Paul. 1999. Dell finds success in its custom-build strategy. Information Week Professor Pinegar. 2002. Market Trends and SWOT analysis Manataki, Areti. 2007. A knowledge based analysis and modeling of Dell’s supply chain strategies Qureshi, Ijaj. ,Muffich, John. 2004. Case Analysis: Dell Corporation