1. Revitalizing Dell

2. Central Question
In the face of changing consumer preferences and adapting competitors, how can Dell refine its business model to improve profitability and position itself to regain market share?

3. Key Questions
How has consumer behavior changed that it has disrupted Dell’s business model?
What has changed among the competition that has disrupted Dell’s business model?

4. The Dell Model Direct to consumer All computers customized to order
Big business / Education focus
Just-in-time manufacturing
Provide tiered after-sale support
Offer drop-shipped, branded peripherals
This model allowed Dell to remain nimble, carry little inventory,
and offer mass-customization at a highly competitive price.

5. How has consumer behavior changed that it has disrupted Dell’s business model?

6. Ratings of PC Vendors Dell IBM HP
2003 Business Buyer Ratings
Dell
IBM HP
Price & performance
81 - 1st
75 - 2nd
74 - 3rd
Vendor reputation
80 - 2nd
78 - 3rd
Product reliability & quality
80 - 1st
79 - 2nd
75 - 3rd
Desired feature set
79 - 1st
76 - 2nd
Web-site ordering & support
78 - 1st
70 - 2nd
69 - 3rd
Customer Service
75 - 1st
73 - 2nd
71 - 3rd
Product Innovation
72 - 3rd
Ergonomics
71 - 2nd
Collaboration
69 - 1st
67 - 2nd
2003 Consumer Ratings -
70 - 3rd
This data suggests that in 2003 Dell’s model was working for Dell’s largest consumer groups that accounted for 93% of sales. Despite a slight decline by 2009 to 75 and 2nd place to Apple, consumer ratings seem to continue to support Dell’s model.

7. GENERIC STRATEGY CUSTOMIZATION PRICE
HIGH
CUSTOMIZATION
LOW
PRICE
LOW
HIGH
Despite having a lower level of customization, HP has experienced more success, suggesting that consumers do not value customization as they once did, or Dell confused consumers by straying from its marketing message by perusing indirect sales.

8. Recommendations
Create a hybrid sales system using indirect channels as a demonstration/sales/order taking force and custom make the item and ship direct to the consumer.
This maintains the successful manufacturing system while allowing consumers to “test-drive” the product prior to buying.
Redouble effort to position itself as “The Source” for large businesses. Include the after-sales support to bolster value of offering.
This reinforces the idea for big businesses that Dell is overall best value.
Refocus product lines to core groups, offering mass-customization and latest technology without the unnecessary “bling”.
This gets Dell away from trying to compete on style with Apple (an expensive proposition) and back to providing the best performing computer for each customer.