Recommend How Dell Should React To Slower Growth And Increased Competition In Its Core Market Segments. Explain How Your New Or Modified Positioning Strategy Enables Dell To Leverage Some Of Its Existing Advantages.
Recommend how Dell should react to slower growth and increased competition in its core market segments. Explain how your new or modified positioning strategy enables Dell to leverage some of its existing advantages.
Dell’s advantage is primarily due to cost drivers rather than differentiation drivers. Dell’s cost advantage in 1996 was estimated at 13% of revenues and was derived primarily through lower component prices, lower carrying costs and reduced distribution costs all linked to shorter cycle times. Per Exhibit 11, Dell’s S&A of 10% was appreciably lower than rivals Compaq (16%), IBM (20%), HP (17%) and Gateway (14%) due to their direct sales model. Approximately 70% of the firm’s revenues were attributable to large corporate purchases in which Dell could maintain a negative cash conversion cycle.
In response to lower growth, Dell should isolate the key cost drivers as follows:
Current Cost Drivers:
o Inputs – low due to short lead time
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Recommend How Dell Should React To Slower Growth And Increased ...
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