Essay by EssaySwap ContributorUniversity, Master's February 2008

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One of the advantages that Dell has over the competition is that they have eliminated the middleman by letting their customers buy directly from the company. The aim of this business model was to lower inventories and cost, while increasing profit margins. Dell?s model seems to have worked as their average inventory turnover is four days, which is faster than any of their competitors. The business plan allows its customers to buy directly from the company via the Internet. In the year 2000, daily internet sales were $50 million per day. There is an emphasis on the direct sales model approach in the Dell Computer Corporation. The sales model allows the organization to price beneath competitors like Hewlett-Packard/Compaq who sell by means of retail sales stores. Couriered distribution allows for significant savings through lower inventory levels. In addition to lower prices, the Dell sales model allows customers to customize their computer to their own preferences.

Dell is able to under price competitors because of its gross margin, which is 20.2% of revenue. (www.dell.com) INTERNAL STRENGTHS Business Model The first internal strength of Dell is how their business model caters to their customers. To better understand the situation a brief description of that business model is required. A very good description of this business model comes from an article Michael Dell wrote himself in 1994 called ?Managing Service Quality?. Although this model has been modified, evidence will show that much of the original business model still applies to the business today and will continue to apply to future business endeavors. Dell?s business model is comprised of many different components, which link together in an effort to better service the customer. Another aim of the business model is to provide the highest quality machine at the lowest possible price. Some of...