March 4, 2011
Case-Revitalizing Dell I. Diagnosis
Question 1: The most critical shifts in Dell’s contextual factors, including industry dynamics, trends, technology changes and shift of the competitive landscape are following: The industry has changed significantly over the last 20 years. The traditional business model in the PC industry was inside-out, supplying machines based on orders from distribution, resell and retail channels, thus following the indirect selling concept. Dell’s direct model was at this time a new, challenging concept, taking orders directly from the end-consumer, and thereby, eliminating the middleman, costs and time. This was the initial crucial shift away from the traditional schema, allowing Dell’s quick…show more content… e) Apple: When speaking of spotlight and sleek designs, Apple has to be identified as the dominant player in this category. However, even though its market share “ hovered at low levels”, a series of moves in the 2000’s, i.e. launching complementary goods and services, like the iPod and iTunes or the iPhone catapulted Apple right into customer’s sight and favor. In addition, Apple also opened its own retail stores and thereby successfully sells it products directly and with the traditional indirect way to customers.
As a conclusion, Dell’s competitive edge of direct selling has abraded gradually as a consequence of various trend changes in the PC industry and shifts of competitive dynamics, as elaborated upon above. In summary, we believe that three major contextual factors account for Dell’s current decline: Firstly, the market (especially the less saturated, emerging markets) leads to a shift towards cheaper, but yet hip products, and available in retail stores, which Dell simply cannot offer. Secondly, Dell has not anticipated enough the movement towards and importance of retail accessibility. Finally, a chain of negative incidents, including poor leadership by Rollins, growth decline due to bad customer support reputations (which initially was one of Dell’s core competencies), the dramatic recall
