Dell Inc: Moving Beyond Direct Sales Model


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:
Case Code : BSTR280 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Business Strategy/ Sales & Distribution Management/ Supply Chain Management
Case Length : 26 Pages
Period : 2006-2008
Pub Date : 2008
Teaching Note : Not Available
Organization : Dell Inc.
Industry : Computers
Countries : Global

Abstract:

This case is about one of the leading personal computer (PC) manufacturers Dell Inc.'s (Dell). The case discusses Dell's business model and distribution strategy. Dell, which was known for its direct selling model that was backed by strong supply chain management practices, lost its market leadership to HP in 2006. In the mid2000s, some analysts had criticized Dell for sticking to its direct-only business model. According to them, the business model that had made Dell so successful in the past was not as effective as before and the company was losing its competitive edge. In 2007, Dell announced its intention of moving beyond the direct-only model that it had zealously followed until then.

Subsequently, the company rolled out its retail as well as channel partner initiatives. Though some analysts welcomed the move others felt that significant challenges lay ahead for the company.

Issues:

» Study Dell's direct-only business model and understand the advantages and disadvantages of such a business model.

» Understand the reasons behind Dell's decision to move beyond its direct-only model.

» Understand the issues and challenges faced by companies in managing the supply chain and in launching new channel strategies.

» Understand the issues and challenges faced by companies making a transition from a direct selling model to a multi-channel model.

» Gain insight into the fast changing global PC market and understand the competitive landscape.

Contents:

  Page No.
A Gatling-Gun Approach? 1
Background Note 2
Dell's Direct Business Model 4
Direct-Only Model not Working for Dell Any More? 7
Dell's New Strategy 9
A Smart Move? 13
Is Dell Taking a Big Risk? 14
Initial Results 15
Outlook 16
Exhibits 18

Keywords:

Distribution strategy, Direct selling, Business model, Supply chain management, Direct model, value web model, Lean manufacturing, Channel strategy, Competitive advantage, Low cost leader, Retail, Retail strategy, Channel partner program, Positioning, Emerging markets, PartnerDirect, Dell, HP, Lenovo, IBM

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