• What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion?
Dell’s strategy for success in the marketplace is a grouping of their direct customer model and emphasis on standards-based technologies. Dell does rely primarily on customer intimacy to ensure market success. Dell has the following key tenets at the forefront of their business strategy (Dell 10-K, March 2005):
1. Dell removes the third parties by permitting customers direct access.
2. Customers can purchase custom made merchandise and made-to-order service. This provides the consumer with what they want and offers a faster distribution than others companies in similar industries.
3. Dell is the leader low cost service. It has an extremely competent supply chain that allows them to keep up with the lowest cost structure as well as directly providing their customers with low prices.
• What business risks does Dell face that may threaten its ability to satisfy stockholder expectations? What are some examples of control activities that the company could use to reduce these risks? (Hint: Focus on pages 7-10 of the 10-K.)
Dell may face several different business risks, which can threaten satisfying stockholder expectations. Dell’s net revenue could deteriorate due to U.S. and global macroeconomic trends (Dell 10-K, 2005, p.7). The industry is very competitive and if Dell’s competitors decide to match their pricing or offer similar product for less, it could cause a loss of profit and market share. Dell’s net revenue is dependent upon international sales. If the local economic and labor conditions start on a down ward trend globally, the expectation of the stockholder will begin to dissolve. If the profit border of the product, customer, and geographic culture is substantially different, the expectation begins to weaken.
• How as the...