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Chapter 3

Chapter 3. Dell Computer Example. Value Chain . 2Q 2000. 2Q 2000. Market. 2Q 1999. Market. Growth. Rank. Vendor. Shipments. Share. Shipments. Share. 2000/99. 1. Dell. 2,293,284. 20.07%. 1,808,767. 16.56%. 26.8%. 2. Compaq. 1,693,002. 14.82%. 1,798,279. 16.46%. -5.9%.

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Chapter 3

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  1. Chapter 3 Dell Computer Example

  2. Value Chain

  3. 2Q 2000 2Q 2000 Market 2Q 1999 Market Growth Rank Vendor Shipments Share Shipments Share 2000/99 1 Dell 2,293,284 20.07% 1,808,767 16.56% 26.8% 2 Compaq 1,693,002 14.82% 1,798,279 16.46% -5.9% 3 Hewlett-Packard 1,220,625 10.68% 840,736 7.70% 45.2% 4 Gateway 963,511 8.43% 845,449 7.74% 14.0% 5 IBM 713,137 6.24% 875,853 8.02% -18.6% Others 4,542,323 39.75% 4,753,498 43.52% -4.4% Total 11,425,882 100.00% 10,922,582 100.00% 4.6% Top 5 Vendors, U.S. PC Shipments, Year: 2000 (000) units

  4. Dell’s Tangible & Intangible Resource Analysis The key is Value-Added throughout the Chain • Mass Customization Abilities • Just In Time Inventory Systems • Vertical integrations into sales & marketing activities • Shifting of Value Chain Activities (Sales & Marketing to start of the Value Chain) • Strong Brand Name & Reputation • Economies of Scale & Leveraged Power with Suppliers (Market Leadership) • Strong Customer Service & Support Skills (needs lessened by repeat customers/knowledgeable customer base)

  5. Required Capabilities in Dell’s Mass Customization Process Applies bundled resources & skills in: • Flexible Product Manufacturing Systems • Just In Time Inventory System • Strong, leveraged relationships with suppliers • Fast, accurate, and reliable product ordering systems (both online and phone) • Strong IT Communication & Support Linkages between Logistics, Operations, Sales & Marketing

  6. Required Resources for Dell’s Mass Customization Process • Capital to invest in flexible manufacturing hardware, software, plant & equipment (Tangible) • Strong IT infrastructure & support systems (Tangible) • Management & Employeeswith strong skills and cross-training in logistics, operations & flexible manufacturing, marketing & sales, IT (Tangible) • Strong reputation & brand recognition (Intangible) • Corporate culture and knowledge required to integrate complex systems (Intangible)

  7. What a firm Does... Core Competencies that is Strategically Valuable Core Competencies must be: Valuable Capabilities that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment Rare Capabilities that are possessed by few, if any, current or potential competitors Costly to Imitate/Substitute Capabilities that other firms cannot develop easily, usually due to unique historical conditions, causal ambiguity or social complexity Organizational Activatability Firm is organized to take advantage of the resource

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