Matching Dell Harvard Case Solution & Analysis

Bargaining Power of Buyers

There are a few big players in the industry that comprise around 42% of the market share that indicates that consumers have choices and selection opportunities that allows them to select the brand that fulfills their needs. Keeping this scenario in mind the consumers can easily switch as the switching cost is also low. The reason that the switching cost is at the lower end is due to the competitive pricing strategy followed by the majority of the players in the industry.

 On the other hand, some suppliers in the industry are also practicing integration and transforming their business into manufacturing and assembling PCs. This creates more opportunities for the buyers and gives them the leverage to dictate prices and other trends. Thus the entire scenario suggests that consumers in the industry are in power to bargain high as the trends are favoring them.

Bargaining Power of Suppliers

The bargaining power of suppliers varies from the type of material that is required by the companies in the industry. The suppliers of hardware possess low power to bargain as there are ample of them and the companies can easily switch. However, the microprocessors and the software are the components in which few players have a monopoly like Intel. Therefore the suppliers of these components possess high power to bargain as they can easily threaten the companies for restricting the supplies due to their uniqueness.

Threat of New Entrants

Overall the industry is an attractive option for new entrants after viewing the growth rate that the industry has accomplished in these years. However, the entry barriers like the initial capital requirements are high, but this also is supported through loans that can be granted from banks. Furthermore, leveraging the assembly line method any newcomer can easily establish its ground in the industry and also the cost related to managing the inventory is also declining. All these characteristics suggest that the entry of new entrants is a threat and at a high rate.

Threat of Substitutes

The PCs industry is not at a threat from substitutes as they are not readily available and PC it is an attractive e product with no apparent substitutes. The technology is not that advanced top develop new alternative products for PCs. The PC industry is at the advantage in this regard and the threat from substitutes is very low.

Competitive Rivalry

The rivalry in the industry is very high and intense due to the presence of some big players as they are fighting to snatch market share from each other. Furthermore, the product differentiation is also very low that do not allow players to easily differentiate and attract consumers. On the other hand, the overall sales of the industry are declining that is making the competition further intensified and urging the players to introduce a new and innovative feature to attract consumers.

Dell’s Strategy Creating Value

Dell has three major components in its strategy that helps the company to create value and reach a high level of customer satisfaction. Besides that, these key features have played a vital role in enhancing the sales and market share of the company. The first key feature that is playing an essential role for Dell in creating value is the focus towards being a service provider rather than a manufacturer.

The company has well established relationships with its suppliers that help the company deliver services and products quickly and efficiently. Dell is utilizing the zero inventory models to provide quick and efficient service and following the build to order perspective is also supporting its service perspective. In an industry where the components salvage value is very low and the value of the components declines rapidly, this model is helping Dell to seem attractive to customers and make profits.

Matching Dell Case Solution

Furthermore, the direct contact with the customers is the significant advantage that allows the company to create value and enhance its business model. Using this model the company has eliminated the role of intermediary and has brought the cost down and has also provided an opportunity to gain a direct communication opportunity with the customers. Thus the company can gain feedback from customers to further enhance its features.

Dell’s Strategy

Dell’s strategy is to sell directly to the customers, providing them value and gaining a differentiated image in an industry where product differentiation is very low.  ..........................

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