Matching Dell

Essay by gaurav29n November 2006

download word file, 10 pages 5.0

Downloaded 531 times

1. What is Dell's strategy and competitive advantage in the PC business?

You could have started with a five forces analysis of the PC industry to show why it's hard for most firms to make money and then describe Dell's business model, explaining how it differs from the others and how these differences have given Dell a competitive advantage that lessens or allows Dell to avoid the margin pressures that the other firms must deal with. Regardless of how you describe the strategy or explain the advantage, you need to assess how sustainable it is.

The prospects for making money are generally low

We did a five forces analysis briefly in class, but you might have done a more detailed analysis. Make sure that you address all forces: suppliers, customers, entrants, rivals, and substitutes.

* Supplier power (of Microsof & Intel) is very high. Though supplier power is relatively low in the mid eighties, over time, the Wintel combination begins to become quite dominant.

As a result, these two suppliers are able to sustain very high margins.

* Substitute power is low but growing. For substitutes you could mention things ranging from Network PC's, workstations, to PDA's and the abacus, but the point is this force is not (yet) very high - because they are all imperfect substitutes, for various reasons - but it's growing.

* Most important to note are the forces of entry, rivalry, and customers.

Entry is easy. The PC's open architecture and common standards - first IBM (recall early PCs were called IBM clones) and later Wintel - have made entry easy and many competitors have joined the fray.

Rivalry is intense. The availability and attractiveness of common standards (given the need for a PC to run as many applications and work with as many peripheral...