Dell Leverages the Internet

1. Dell Leverages the Internet Group D MGS 3040 Section 3 Professor Melworm

2. 1. Selling directly has given Dell a competitive advantage. • Michael Dell changed the whole way his company was selling computers be eliminating the retail channel by selling directly to the consumers. • Dell’s strategy is being the cost leaders across the industry. • Dell gained it’s competitive advantage by developing a superior business processes. • Dell eliminated the retail channel by selling directly to the consumers • They eliminated the cost of distribution and sales by taking out the extra cost and eliminated its cost of inventory. • Dell builds every computer to the customer’s order which mean Dell’s finished goods inventory has been already sold.

3. 2. What information systems does Dell need to have to sell directly to consumers? • One of the most important information systems is a website. The website provides customers with information on the different products they offer and that are available to them. Their existing website offers products for homes and the business sector. The website is also available in different languages to make it easier to customers. • They also need to have a system that once a order is placed it will provide the customer with order status updates automatically. For example, send a confirmation once the product is shipped out from the warehouse and when it is expected to arrive.

4. 3. Besides selling direct, what other programs has Dell created that give it a competitive advantage ? Dell's efficiency comes from two factors. First, they sell directly to their customers so their distribution channels are simple and cheap. Second, they focus on the build to-order philosophy. • Keeps inventories low. • Provide customers the ability to choose what they want in their computers. • Each product is assign to only one technician, this way is much easier to assist customers with questions about a particular product.

5. 4. Does this situation mean that Dell Computers will be cheaper than HP and other computers? Why or why not? • In the case that Dell computers are purchased by consumers on its website only, not in any retail store, yes their computer will be cheaper than others. The price for a computer Inspiron 13, is $549.00 similar computers in www.cnett.com rate between $650.00 in above. This clearly shows that Dell sell computer in a lower price than other website. Dells reputation of lower prices allows them to have more consumers to access to their website more frequently. • On the other Hand, Sony or Hp needs to sell its inventory to below the consumer’s price or in a discount price to Internet stores or retailer, if they want to be competitive and attractive to them. This strategy allows them to get more access to consumer. Nowadays, one of the most popular Retail Stores is Best Buy and more, more companies use it to offers their products. This is interesting strategy from companies to reach all types of customer; from teenager to parents who would go to the store and see their computer whether it is what they went to purchase or not.

6. Continuation of Question 4 • Dell is cheaper in this example for these reasons. One it is a direct sale (there is no middleman) Dell sells to a customer and it makes a profit. If it were in a store Dell would sell to best buy and make a profit then Best buy would sell to the consumer and need to make a profit also. The second reason is that Internet sales do not require a "brick and mortar" location. There isn't a storefront which eats into profits by having lights employees and an actual physical location.

7. 5. How can HP successfully compete with Dell? • Dell is well knowing for desktop production for many years. desktops are cheaper, so unless need to travel or take their computers to meetings, select a laptop. For years HP focus their business in laptops production, making easy for those who needs to travel and attend meetings. laptops are smaller and easy to carry around, so customers tend to choose a brand more reliable and well knowing for laptops production leader.

8. 6. What information system can HP set up that will better enable it to compete with Dell? • To enable them to compete with Dell they would need to use a better Transaction Processing System, which would make the transactions of new purchases be made with lesser problems. • By simplifying the transactions there is less time processing and more time building the computer. • Purchasing a desktop from Dell and HP at the same time HP would have it shipped by 10/13/09 and Dell would have it 10/19/09 which is a six day difference.

9. 7. Do you think Dell would have been successful if the internet had not been invented? Why or why not? • In 1994 Dell introduced its website www.Dell.com and only seven months after the release they had internet sales of approximately $1million per day. Throughout the years Dell has implemented its website by product configuration, order entry, and technical support, helping the company to grow. The Internet has helped Dell to extend the reach of Its direct sales business. Dell knows who the end user is, what equipment it has bought from the company, where it was shipped, and how much the customer has spent with Dell.