1. Chapter 3 Dell Computer Example

2. Value Chain

3. 2Q 2000 Market2Q 1999MarketGrowth RankVendorShipmentsShareShipmentsShare2000/99 1Dell2,293,28420.07%1,808,76716.56%26.8% 2Compaq1,693,00214.82%1,798,27916.46%-5.9% 3 Hewlett- Packard 1,220,62510.68%840,7367.70%45.2% 4Gateway963,5118.43%845,4497.74%14.0% 5IBM713,1376.24%875,8538.02%-18.6% Others4,542,32339.75%4,753,49843.52%-4.4% Total11,425,882100.00%10,922,582100.00%4.6% Top 5 Vendors, U.S. PC Shipments, Year: 2000 (000) units

4. Dell’s Tangible & Intangible Resource Analysis The key is Value-Added throughout the Chain Mass Customization Abilities Just In Time Inventory Systems Vertical integrations into sales & marketing activities Shifting of Value Chain Activities (Sales & Marketing to start of the Value Chain) Strong Brand Name & Reputation Economies of Scale & Leveraged Power with Suppliers (Market Leadership) Strong Customer Service & Support Skills (needs lessened by repeat customers/knowledgeable customer base)

5. Required Capabilities in Dell’s Mass Customization Process Applies bundled resources & skills in: Flexible Product Manufacturing Systems Just In Time Inventory System Strong, leveraged relationships with suppliers Fast, accurate, and reliable product ordering systems (both online and phone) Strong IT Communication & Support Linkages between Logistics, Operations, Sales & Marketing

6. Required Resources for Dell’s Mass Customization Process Capital to invest in flexible manufacturing hardware, software, plant & equipment (Tangible) Strong IT infrastructure & support systems (Tangible) Management & Employees with strong skills and cross-training in logistics, operations & flexible manufacturing, marketing & sales, IT (Tangible) Strong reputation & brand recognition (Intangible) Corporate culture and knowledge required to integrate complex systems (Intangible)

7. Core Competencies Core Competencies must be: Valuable Rare Organizational Activatability Firm is organized to take advantage of the resource Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity Capabilities that are possessed by few, if any, current or potential competitors Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment What a firm Does... that is Strategically Valuable Costly to Imitate/Substitute