Dell's strategy was based on market leadership through excellent customer experience. Dell built competitive advantage through lower costs, deep customer knowledge from direct sales, and configuring computers after order rather than inventory. Dell's control systems helped execute this strategy through performance measures of finances and operations, expediting assembly, localized decision making, and business unit metrics.

1. Presentation By,
Parth V. Purohit

2. 1) What is Dell’s strategy?
• Dell’s strategy was based on:
– Market leadership as a result of a persistent focus on delivering
the best possible customer experience. Direct selling, from
manufacturing to consumer, was a key component of its
strategy.
– Its reputation as one of the world’s most preferred computer
systems companies and a premier provider of products and
services that customers worldwide needed to build their
information-technology and internet infrastructure.

3. What is basis on which Dell builds its competitive advantage?
• Dell redesigning PC industry value chain as a tool in developing competitive advantage based on:
– Cost advantage: This was done in three areas. Component purchase costs,
inventory costs and selling and administrative costs.
– Customer knowledge advantage: Dell understood consumer needs and
efficiently met those needs by selling computer systems directly to customers.
The direct business model eliminated retailers, who added unnecessary time
and cost, and shipped directly from its factories to end customers. It took
orders for hardware and software over the phone or via the internet. Dell
designed an integrated supply chain linking Dell’s suppliers very closely to its
assembly factories and order-intake system. Dell outsourced all components
but performed assembly.

4. Cont..
• Technology advantage: dell custom-built its machines after receiving an
order instead of making machines for inventory in anticipation of orders.
Dell introduced the latest relevant technology much more quickly than
companies with slow moving inventories; turning Dell to become the
number-one retailer of PC, outselling IBM and Hewlett-Packard.
• Dell moved into IT portfolio; it moved into servers, and storage, mobility
products, and also challenged Printer leader HP.

5. 2) How do Dell’s control system help execute the firm’s
strategy?
• Performance Measures: Dell’s scorecard included both financial measures
(such as ROIC, component purchasing costs, selling and administration
costs) and non-financial measures (component inventory stock outs,
finished goods inventory, A/R day and A/P days).
• Expedited the assembly process: Dell recognized early the need for speed,
or velocity, quickening the pace at pace at every step of business.

6. Cont..
• Localised decision making system: Dell used its structure as a flat
organization as a competitive advantage and localized its decision-making.
If an issue did not require a higher up’s attention, then decision would be
made without involving him. This would not have been possible in
companies bogged down by layers of bureaucracy.
• Business unit Performance: in 1993, Dell developed a set of metrics to
judge business-unit performance.

7. Thank You..