Research Paper

Importance of having a Sustainable Differential Advantage in a competitive market

Introduction
HP the 2nd largest computer maker has decided that it may spin off its computer business. HP's market-startling move follows that of IBM, which was the biggest technology company until it was usurped a few years ago by HP. IBM sold its PC division to Chinese manufacturer Lenovo in 2005. Welcome to the world of PC manufacturers where competition is cut throat. But there is one company that has stood and fought its rivals. The name of that company is Dell. Started on November 4 1984 by Michael Dell, Dell grew by the early 90s to become the largest seller of PCs and servers. The company currently sells personal computers, servers, data storage devices, network switches, software, computer peripherals, mobiles and televisions.

So what makes Dell the largest computer maker and how has it sustained its ranking while others have buckled under pressure. What does Dell do and others have not done.

Seized Opportunities that came its way

Within 4 Year of its establishment it expanded globally. First in Ireland and now almost all over the world. With the advent of the Internet, E-Commerce took off. Dell did not waste time and started selling via the website which was an instant hit in US. It strategically acquired companies to increase its market share and to introduce new technology. Eg Dell acquired Alienware which introduced several new items like AMD microprocessors to the Dell stable.

Direct To Home selling model

Michael Dell was of the belief that by selling personal computer systems directly to customers, (A fact that he learned as a kid while selling newspapers) Dell could better understand customers' needs and provide the most effective computing solutions to meet those needs. By selling

directly to the customer, the company was able to reduce inventory and introduce new products without needing months to clear out old inventory in the channel. Dells rapid growth and superior financial performance in particular put enormous pressure on the rest of the industry, eventually driving some competitors out of the market and forcing others to revamp their distribution channels and supply chains. Initially while different models were applied over the years, Dell moved to selling direct to the customer or to working closely with retailers to match supply and deman`d through sophisticated marketing, forecasting and supply chain management. A key element has been the use of the Internet as a distribution channel and information technology more generally to streamline processes within the firm and across the supply chain. The impacts are greatest in the U.S., where direct sales increased from less than a quarter to over one half of the market between 1995-2005. The direct channel is especially important in serving the commercial market, where PC makers offer a variety of services together with hardware to support IT departments in organizations. +++++++++++++++++++++++++++++++++++++++++++++++

Configure to Order
To minimize the delay between purchase and delivery, Dell has a general policy of manufacturing its products configured by the customer. This also allows for implementing a justin-time (JIT) manufacturing approach, which minimizes inventory costs. Low inventory is another signature of the Dell business modela critical consideration in an industry where components depreciate very rapidly. Dell not only sold directly to the customers but also gave them the option of customizing the product to suit their needs. So the customers could choose from different screen sizes, processor speeds, memory, storage devices etc. This is something that no other PC manufacturer provides. This is a perfect example of selling by the marketing concept where focus is given to the needs of the buyer. It is Customer Centered. This involved the Organizations well thought out strategy in terms of the product and the customers targeted. It gave them a Differential Advantage over its rivals. +++++++++++++++++++++++++++++++++++++++++++++++

Manufacturing
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After Sales Service

Dell has a very systematic after sales services which very few PC manufacturers can boost off. It has a next business-day on-site support/ Return-to-Base, or Collect and Return Services (based on contracts purchased at point of sale) other than the basic 24x7x365 telephone and online

support. Dell has again given its customer to choose the service he would like depending upon how important the product is for his daily business. The customer can also choose a unique feature ie Mission Critical option with two-hour onsite support, for customers who choose the highest level of support for their most critical hardware assets.

Because of these measures followed by Dell it still remains to be the top. The success of Dell lays in large part with market segmentation and specialization strategies that Michael Dell has used. +++++++++++++++++++++++++++++++++++++++++++++++
Introduced new Technology

Dell launches a VMware-based cloud; Azure next

Dell has officially become a cloud computing provider with the launch of an Infrastructure-as-aService cloud built atop VMware technology. The move is just the first in Dells three-pronged IaaS attack, which will soon include clouds based on the Microsoft Windows Azure and OpenStack platforms. While Dell is busy adding a strong software play to its flagship server business, it looks to be rebuilding that business model in the cloud.

Searching for greener pastures

Dell eyes Turkish market for new product growth

United States computer and information technology products giant Dell is eyeing growth in the Turkish market through new products designed according to the latest trends in the sector and personalized designs that fit the desires of users, said the top executive of Dell Turkey at a meeting Wednesday.

Dell has grown nearly 300 percent in one year, said Glfem akmak, country manager of consumers and small and medium enterprises, at the meeting held in Istanbul. Turkeys

young population drives the international IT companies to emerging countries, mostly to Turkey. Dells share in the Turkish computer market was 2.5 percent but has increased to 7 percent, according to akmak. We used to rank among the top 12 computer brands in the Turkish market in 2009, but by the end of last year we were in the top five.

Noting that Turkeys computer market grows by approximately 15 percent on a yearly

Dell in India

So what is Dells achievement in India?

In 2010, Dell became the largest laptop as well as desktop seller in India crossing the likes of HP and Acer among others. Now thats some achievement!

But how did Dell do it?

Every company setting up shop in India has discussed about the increasing disposable income, booming economy and increasingly brand conscious population of India. And Dell too seems to have captured the imagination of this population.

The first thing it did was to get the right talent and after getting them putting them in the right place. And the place was India. Today they have more than 23,000 out of the total of 96,000 employees in India. All the divisions of the organizations are represented in the country. A manufacturing plant set up in Sriperumbudur, Chennai at a cost of US $30 million has proved to be one of the biggest backbones of Dells success. This has enabled them to not only decrease the cost of their products but also decrease the time between ordering and delivery.

Across the world, their business model of eliminating the middle men and selling directly to the customers has gained strong acceptance. If its Dell, people are used to ordering online and setting the features they want. But Dell realised that Indians are used to touching and feeling their products before buying them. And therefore they started retail stores and also direct selling model inside retail outlets.

A customer could customize his laptop or desktop then and there depending on his requirements. For tier II and III towns, Dell also started embracing channel partners.

Now thats what you call a localized strategy which can really prove to be successful.

Total PC Market Growth in India

The combined desk-based and mobile PC market in India totalled nearly 2.6 million units in the first quarter of 2011, a 6.2 per cent increase over the same quarter last year.

This growth was mainly driven by Mobile PCs (Laptops/Netbooks), while the Desktop PC sales have shown negative growth. Mobile PC shipments grew 23 percent in the first quarter of 2011, as compared to the first quarter of 2010. All the vendors registered double digit growths in Mobile PC shipment numbers.

According to Gartner, in 4th quarter of 2010, Dell had shipped 13 percent of all the PC shipments in India which climbed by over 3.7 percentage points in Q1 2011 (Est.). During the same time, HP lost exactly same amount of market share and fell from 15.80% to 12.10% in Q1, 2011! A total of 2.5 million desktop and mobile PCs were shipped in the second quarter of 2011.Dell, Acer, HP, Lenovo and HCL remained the top 5 brands. These were the top brands in Q1 2011 too with the sole exception of Acer and HP swapping places. The overall growth is dominated by laptop PCs which grew at a rate of 17%. Gartner however doesnt provide the split between laptops and desktops. Indian PC market is largely foreign brand driven. 50.4% of the market is dominated by four foreign PC makers. HCL is the lone Indian brand in the top 5 with 6.6% market share. Though 43% of the PC shipped or close to 1.1 million PCs shipped are from other brands (probably some local too).

While Dell has added retail partners and resellers in India, including Tata groups Croma stores, the company said it has no plans to shift its focus from the direct strategy that serves it so well in India.

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One very interesting story about Michael dell Most people dont know that one the key marketing strategies that has made Dell Computer so unbelievably successful had nothing to do with the computer business. Dell actually discovered it as a 12-year old kid in Houston. He decided one summer to be a paper boy. He wanted to make some extra money, and, as an entrepreneurial kid, that means running a paper route. He went down to the paper where he received a bundle of papers and a list of names to call or visit. The names were randomly picked people who did not have a subscription to the paper. Dells job was to begin calling everyone on the list and get some subscriptions sold. He sold one here and he sold one there, but he pretty soon began to notice a pattern. There were two categories of people who were much more likely to buy a subscription from him than anyone else. First, people who had just moved into a new home. And second, people who had just married. Most kids and most adult businesspeople would say, thats neat and stop there. But Dell took the next step. He began to ask how can I target these people and only these people, so that Im spending my time, resources, and my energy where I know its going to pay off best? The answer came when he discovered public information available at the local courthouse could give him access to exactly who he wanted to target. He gathered a small army of 12-years-old kids and sent them all down to the courthouse on a regular basis. They wrote down everyone who had purchased a new home and everyone who had applied for a marriage license. Michael Dell then spent his time selling to those people predisposed to buying. He didnt try to be all things to all people, he narrowly and specifically defined who he wanted to spend his limited time and energy on, he had a much smaller list of potential buyers, and he did an enormous amount of business (for a paper boy!) because of it. When summer ended and Dell went back to school, he was actually making more money from his paper route than the teachers in his school. Most people look at Dell Computer today and think they are being all things to all people. It is an illusion created by their size. The success of Dell lies in large part with market segmentation and specialization strategies that Michael Dell learned that hot Houston summer, pioneered at Dell Computer, and that the company still does today.