Dell’s Competitve Advantage

Dell’s Competitive Advantage

Focusing on cost leadership has allowed Dell to sustain a competitive advantage in the PC market for the last few years. The primary method Dell uses in order to realize and sustain their competitive advantage is a distinctive, direct to consumer business model. The model is known as Dell Direct, this refers to their relations with their customers as being “direct.” This model helps Dell focus on the price for performance, customization, service and support. Additionally, Dell is able to differentiate itself from its competitors with its customized just-in time manufacturing. With this customization, Dell is able to offer customers more value for their money by abolishing intermediaries in their procurement, manufacturing and distribution processes.

Dell’s primary resources include the most up-to-date technology and IT tools that allow it to effectively move along their advanced supply chain and attain the value they are reaching for. Dell’s value chain allows Dell and its suppliers to exchange information and interact with each other. The Internet, Dell’s key IT factor in its success, results in lower costs to customers than other retailers because customers tell Dell precisely what they want and Dell builds PCs for the customer without experiencing inefficient resources in production.

It is obvious that Dell’s competitive advantage is due to its direct model success. Through Dell’s IT performance, which combines its resources, its relationship with suppliers and its consumer communication capabilities, Dell has developed a big advantage over its competitors.

So in order to purchase a Dell you must deal with them directly, there is no going to an outside retailer to buy a Dell. By doing this Dell can save the consumer a whole lot of money. Because of this competitive advantage Dell has been able to grow tremendously over the past few years. Although because of stiffer competition Dell is now offering Dell direct stores where consumers could go into a store and buy directly form Dell face-to-face, which is a first for Dell.

Even as other PC makers such as HP are squeezing suppliers in order to become more competitive on price, Dell still can sustain its distribution advantage. This distribution advantage will allow it to capture extra margin instead of sharing it with distributors and retailers. Because of it’s just in time manufacturing