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Dells Business Model Revenue Model IT Essay

Michael Dell, a student from university or college of Tx, Austin founded Dell Computers. At first Dell sold improvements for IBM suitable Personal computers and then in 1985 they began to sell its brand of Personal computers. Dell handled on the direct sales model, taking orders over the phone and building Personal computers to the customer's specifications. Dell joined the retail Personal computer channel for quite some time in the first 1990s, but a downturn running a business in 1993 led it to return to its root base as a primary vendor (although the business does work with resellers in some market segments). Dell grew rapidly and in the middle-1990s, its sales come to an inflection point, soaring from $3. 5 billion in 1994 to $25 billion in 1999. By 1999, Dell possessed become the number 1 PC seller in the United States, and was number two worldwide.

This success has occurred against the backdrop of falling Personal computer prices, brutal competition, and great losses by other Laptop or computer makers. Dell hasn't only survived, but been successful in this environment thanks to the fundamental advantages of the immediate model, and also to its continued efforts to improve its execution of this model. In addition, it has taken good thing about its immediate model to develop strong, stable human relationships with the large organizations and other organizations who are its core customers. Unlike indirect vendors, Dell knows who its customers are and has a great deal of information which it uses to give a high level of service and support, to focus on customers for retention and widened sales, and sell additional third party hardware and software. But even Dell is not immune system to the turmoil in the Laptop or computer industry. While its latest 26% growth rate continues to outpace the industry all together, it is not in a position to match its preceding progress rates of 50% per year, and was hit hard by the slowdown in Personal computer sales in later 2000. The effect is a sharp land in Dell's stock price and a reminder that Dell is susceptible to the brutal price competition and cyclical demand of the Laptop or computer industry.

Nature of products/services

In making an examination of the corporate information relating to the Dell Inc company, it is obvious that the Group's main activity is thought to relate on the designing, developing, making, marketing, retailing and supporting a very huge selection of computer systems. Dell is said to operates within four main sections and these are large enterprise, public, small and medium business and consumer segments. Essentially, large business customers are thought to include large global as well as nationwide corporate businesses. Among the public customers of Dell include educational establishments, government, healthcare, and also police agencies. What is noted here's that small and medium business targets providing small and medium-sized businesses using what is said to be the simplest & most complete standards-based IT alternatives and also services, that are custom-made to be able to meet their needs. It is noticeable that consumer business offers to customers via Dell's on-line store, over the telephone, and also through retail. Dell is thought to offers an array of product categories and these including machines, mobility products, software and peripherals, desktop Computers, marketing as well as storage space (Corporate and business Information. com - Dell Company, 2010).

Dell's Business Model/Income Model

A busines model taxonomy like this of Dell is capable of being useful to identify competitors and is needed to give a good understanding of their target-market and this is particularly in digital and computing business competitors which can transform very fast. The business enterprise model is said to be the term used to spell it out just how that Dell does indeed business and the income model is said to lay out the procedure by which Dell makes money by specifying how it is going to charge with regards to the services provided (1000 Projects. com Business Models, 2010)

It is published that six main the different parts of a business model like is used by Dell and included in these are the following:

Value Proposition - this is a description of the condition relating to the customer and the answer that addresses the problem as well as the worthiness of the solution with regards to the customer's point of view.

Market Section - This relates to the group to focus on, to recognize that different market sections tend to have different needs and there are likelihood of innovation to be unlocked whenever a different market portion is targeted.

Value Chain Structure - This pertains to the position and activities of Dell in the worthiness chain and just how that it catches an integral part of the value which it is said to creates in the string.

Revenue Generation and Margins - This pertains to the way that earnings is generated, the cost structure, and also the target profit margins.

Position in the worthiness Network - This pertains to the recognition of opponents, complementors, and any sort of network effects which can be utilized by Dell so as to have the ability to be utilized to deliver more value for Dell customer.

Competitive Strategy - This pertains to just how that Dell makes an attempt to build up a lasting competitive advantage and utilize this to boost Dell's competitive position in the market.

How Does Dell Use E-Commerce to boost Supply Chain

When internet technology arrived, Dell was quick to set up the ecommerce

Processes that would enable it to also sell directly online to customers. Advertising online allows the complete process to be automated and more efficient. Since 1996 when Dell opened its website www. dell. com for ecommerce, the company has already established huge sales success. By 1997 the business saved $1 million in online sales. By 2000 the company's internet sales possessed reached $50

Million every day! If we get back to our example above, the client, Liam, would go to Dell's Irish website www. dell. ie to buy his notebook computer. The full

Product range is online with comprehensive information to help him make his decision. He simply follows the easy, automatic instructions which come up

on display. These allow him to customise the computer he wants with the features he needs. They can increase, say, his hard disk drive space and see the difference that increase makes to the overall price. Then he's given a variety of options on how to pay, either straight online or, with a customer support operator. There is certainly even an programmed leasing option available by way of a financing design that Dell has here with Everlasting TSB. Liam's order is then handed automatically through to the production section at Dell's manufacturer in Limerick where it'll be manufactured to his specs, tested and sent out to him. All the systems relating to the deal are done through e-commerce: order positioning, order tracking, repayment processing, inspection, screening and delivery. Likewise, internally at Dell, the complete purchase and procurement of materials is automated between Dell and its own suppliers. At www. valuechain. dell. com, Dell stocks information with its suppliers on a variety of subject areas, including product quality and inventory.

The crucial profit is the total automation of the complete process, which not

Only helps it be faster and better, but also a lot more affordable,

Especially given the volume of business involved. Dell's global website

Receives more than 1 billion web page requests per one fourth at 80 country sites

in 28 languages and 26 currencies. Dell's approach to e-commerce simulates the great things about face-to-face contact between your buyer and owner. This means that personnel can be centered on delivering a quality product and providing excellent customer support and support

How Dell's E-Commerce Target Improves Customer Service

Dell has created many features and services online to help the client see the complete purchasing process clearly. The premise of Dell's business is offering right to customers - customers tell Dell precisely what they want and Dell provides them with the goods directly. Aswell as being in a position to customise the product, customers can monitor the improvement of the order as it is produced and shipped. This can help the customer see the stages of the process and likely delivery times. Customers can create and view their service records online. This includes product support, shipment and delivery schedules. Each purchase includes a service tag code, which can track the model bought and its service requirements. This allows Dell customer support staff to quickly and effectively handle demands. This degree of 24 hour customer support and fast response time helps Dell build strong customer relations, which of course is crucial for the business in its understanding of customer needs. Additionally it is a very cost-effective way of providing sales and support - cost benefits which can be passed on by means of better prices to customers. Success will depend greatly on the reliable management of the website. The customer must have a convenient experience when shopping on the internet and have beliefs that Dell will successfully complete the order and safeguard financial details. Customers have to be comfortable using paperless deals without face-to-face contact. It is very important that customers consider purchasing online as an alternative to the traditional method of entering a retailer and buying a product off-the-shelf. Dell is focussed on boosting its image and romantic relationships, not only with customers, but also with employees and the wider community. To get this done, the website is also used as a communication tool for information, pr announcements and standard information to help customers, employees, the mass media and potential employees find out more about the business.

Limitations of E-commerce to the business enterprise (DELL)


Lack of universally accepted criteria for quality, security, and reliability

Telecommunication bandwidth is inadequate (mostly for m-commerce)

Software development tools remain evolving.

Difficulties in integrating the internet and EC software applications and directories.

Special web machines are needed as well as the network servers (added cost)

Internet accessibility continues to be expensive and/ or inconvenient

Order of fulfillment of large-scale B2C requires special computerized warehouses


Security and personal privacy concerns deter some customer from buying

Lack of trust in EC among consumers

Many legal and general population plan issues, including taxations, remain unresolved

National and international authorities regulations sometimes get in the way

Difficulty in calculating some benefits in EC. (e. g. advertising, ) lack of matured dimension methodology

Some customers like to touch and have the product

Adamant to improve from physical to digital store

Lack of trust in paperless, faceless transactions

Insufficient amount (critical mass) of sellers and potential buyers (some cases) needed to make profit

Increasing amount of fraudulence on the net

Difficulty to obtain venture capital because of the dot-com disaster

Limitations of E-commerce to consumers

Physical product and delivery doubt (the buyer cannot make sure of the health of the merchandise he/she is buying. The delivery time can often be much longer than expected)

Perishable goods (Gadgets devices such as pcs have to be completed carefully. If not they might get ruined during shipping and delivery)

If something is damaged, going back the good is difficult and sometimes even impossible. The buyer has no warranty to getting a refund. The expense of returning the goods (publishing) should be sometimes managed by the buyer.

Privacy and security (The repayment details of the consumer might get taken online due to insufficient security thus resulting in fraud)

The customer has to go through the products with the limited knowledge he/she has. You will discover no employees to help guide them into buying exactly what they want for.

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