Dell Inc. Business Policy Paper

4223 Words Jul 5th, 2010 17 Pages
Introduction Dell Inc. is one of the world’s largest information technology firms, serving individual consumers as well as small businesses and large enterprises. The company manufactures and sells PCs and related equipment, including network servers, printers, displays, projectors, and storage systems. Founded from Michael Dell’s dorm at the University of Texas in 1984 with a mere $1,000, Dell’s revenues have grown to approximately $61 billion in 2009. This stemmed primarily from a direct-sales model and a well-managed supply chain, which provided Dell with significant operating margin advantages over competitors. Despite its historic success and legacy, in recent years Dell experienced difficulties in an evolving marketplace, which …show more content…
For instance, Taiwan-based computer manufacturer MSI introduced a netbook named the MSI Wind U100 only to have twenty-two exact clones released around the world, some at lower prices.[vi] (See Appendix C: MSI Wind and its Variants) While an individual entrant does not significantly impact larger corporations, their presence collectively increases competition and decreases the ability to differentiate, thereby forcing a price war, which ultimately drives price levels downward. Substitutes. PCs and mobile devices – especially music players and smart phones – are converging rapidly. Smart phones, which currently match notebooks in worldwide sales, are projected to surpass the entire personal computer market by 2012. Hewlett-Packard (HP), the world’s leading PC manufacturer, is criticized for not positioning itself to capitalize on the next great phase of the computing revolution.[vii] Since the industry is incorporating possible substitutes into its own product lines, real substitutes are vanishing. Thus, the power of substitutes is low. Industry Competition. Industry competition in the computing industry is fierce and dominated by five

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