The Dell Model II

A. Resource Based View on Dell’s Success The driving force behind Dell’s success has been the “Dell Direct Model.” This model is based on providing low cost, direct customer relationships, and virtual integration. Dell’s corporate resources – tangible assets, intangible assets and organizational capabilities - are broken down as follows: Tangible Assets Intangible Assets Organizational Capabilities • Manufacturing and assembly facilities focused on build-to-order processes. • Large direct sales force. • Low priced new technologies presented to market (Windows NT on workstations) • Build-to-Order model • IBM open system architecture knowledge • Developed corporate customers over time – allowed corporation to modify product to their own unique needs • Dell Direct model – Virtual integration of low cost direct customer relationships. The unique feature of a build-to-order manufacturing of computers also encompasses an efficient distribution system with specific targeting of products and services at different market segments. B. Core Advantage The core products of Dell’s value creation are seen in its ability to deliver customized solutions at a low cost, with a minimal amount of time and associated production costs. Although no one has been able to duplicate the efficiencies of Dell’s Direct Model, there exist credible present and future threats in the computer and computer related industry. Rapid growth by Dell in servers, external storage devices and enterprise services will allow Dell to capture market share and profits from other competitors that may be slow to develop this area. When these opportunities are combined with greater attention to available international markets, Dell has great potential for realizing continued success in the future both in the US and overseas. C. Products and Services Dell continues to penetrate different sectors of the marketplace by promoting highly stable and manageable computer products. The market of computer related products lacks a meaningful differentiation between vendors, but Dell has used its pricing and services to successfully

differentiate itself from existing vendors. Dell’s product strategy is based on standardizing existing product platforms as opposed to new innovations per se. They offer a full range of computer systems, including desktop computer systems, notebook computers, workstations, network servers, storage products, storage area network (SAN), solutions, peripheral hardware, computing software and related services. Dell also offers many services and support to its customers through online its services.