Dell Case Study

raising questions as to the viability of unrelated diversification strategies. [Textbook,

p186] Dell’s relatedness in diversification manifests itself in corporate relatedness. Dell

often introduces new products that while consumer electronics or computing devices,

may not share production resources. Instead, the knowledge about these various products

and services is very similar, and workers can transfer it across the corporation.

A firm can best implement an integrated cost leadership/differentiation businesslevel

strategy when a company can “adapt quickly to environmental changes, learn new

skills and technologies more quickly, and effectively leverage its core competencies

while competing against rivals”. Dell has successfully meets all three of these criteria.

Dell’s direct model allows it to communicate directly with customers, which eliminates

intermediaries and provides Dell with real- time feedback and market information. This

rich information allows Dell to respond quickly to changes in consumer demand or

overall market conditions. A successful pioneer of mass customization of computer

manufacturing, Dell has quickly demonstrated its ability to learn new technologies and

successfully apply them in its manufacturing system. Dell has leveraged this core

competency to provide a low-cost, highly customized product to end users. To maintain

this strategy, Dell must be continuously adaptive and demonstrate strategic flexibility,

quickly responding to opportunities to reduce cost or increase differentiation. One

example of how Dell has managed to maintain strategic flexibility is through the tight

integration between its online e-commerce consumer-direct website and its flexible

manufacturing system. The flexible manufacturing system in itself allows Dell offer

mass customized products that exactly match customer specifications. This degree of

customization distinctly differentiates Dell from other batch-process manufacturers, but

can be a costly system to maintain. By streamlining its production procedures by

connecting consumers to warehouse assembly workers, Dell has reduced the overhead a

flexible manufacturing system can introduce, and it increases customer satisfaction as

well as opens new opportunities for new sales.

With the introduction of an online purchasing system, Dell also created ‘Premier

Pages’ that integrated into corporate intranets. This innovative approach capitalized on

an already existing resource, its online system, and flexible manufacturing system, to

offer tailored hardware to corporate IT departments. In addition, as corporations choose

9

to integrate Premier Pages into their intranets, they essentially lock into a future of Dell

as their vendor. Dell has essentially provided an integrated toolbox