This essay is principally talking about Dell, Inc. Dell was founded by Michael Dell in 1984 and its headquartered is at Austin, Texas. Dell is well-known for its producing, design, and sales home and office computer. Dell also gets involve in high-end computer market. It also has a great many other products like software, computer printer, smart phone and many other computer peripheral products. You will find two modules will be used in this essay, the first is ansoff matrix, which has four quadrants, Market Penetration, Market development, Product Development and Diversification. You will notice how Dell Inc. uses each one of these methods to get the marketplace share. The other is vertical integration. You will notice additional information of the using of vertical integration, backward integration and onward integration.
Ansoff matrix was put forward by the father of strategic management, Dr. Igor Ansoff, in 1975. It mainly focuses on the present and potential product and market of the company. Therefore, there are four possible mixtures of computer: Market penetration, Market development, Product development and diversification. As the graph below.
Market penetration: Market penetration occurs whenever a company needs to occupy more market share with the prevailing product in their existing market. The simplest way is to seize the clients haven't use your products from your opponents or the clients not utilize this kind of products yet. There are several methods you might use. For instance, you can do some advertising for your product like package, discount etc. This is actually the most affordable risk way to take up the market show.
Market development: Market development occurs whenever a company desires to launch an existing product to a new market or new segments for the product. The aim is to sell more products. There are many methods could be utilized to make the market get bigger. The main necessity is to discover a new region which likewise have demanded customer for this product. Normally the merchandise setting and the sales methods need some change and the primary technology won't change.
Product development: Product development occurs when a company wants to launch a new product into a preexisting market with lines expansion strategy, taking the advantage of current customer relations and the current economic climate of scale and opportunity of current product to release next technology of the merchandise or related service to the present market So as to enhance the market share.
Diversification: The diversification could be split into two parts, some may be related diversification and the other is unrelated diversification.
Related diversification means the business expands or offers its existing products or market. For example, a mobile phone company wants to obtain their own wireless service by buying over one. The good thing about it is that the company has already possessed the special knowledge of the forex market. It's better to know the opportunities and threats from it also.
Unrelated diversification means the business extends or brings an unrelated products or market. For instance, the phone company is the same, but this time they would like to enter the food industry, which has nothing related with its former industry. Obviously, it will boost the economy of scope of the business. That's one of why many company taking the risky to do the unrelated diversification when they have some free cash. When one with their industries is going to collapsed, they can let others to support it.
Product development: Dell is keening on product development by keeping doing technology to be the market leader. They believe that innovating consistently can meet the demand of customers. Latitude laptop is one of the most successful product lines of Dell, Inc.
Latitude is a commercial laptop which is principally focus on administration education and large companies etc. One of the features they need is to deploy a large amount of machines; the next you are convenient for deployment and every machine have to have the similar construction and the same mapping and so on. Moreover, mobile workstation which is mainly for the user need mobile working and doing complex graphics control and graphical presentation may also be needed.
From the product positioning, of course, Inspiron and Latitude are for different customers, but in the actual purchase, there are a few B2C customer desires to buy commercial laptop, and some B2B customer will love personal products. Dell can satisfy the customer like that. However in the designing stage, Latitude pay special focus on four areas, particularly, reliable and durable, stability of the product life cycle, convenient to use and professional services, they are quite not the same as Inspiron different.
Diversification: Dell gross annual total sales is $35 billion in 2002, end up being the largest international computer company round the world. However, it looks like dell would like to do better not only in this industry. It starts in touch with other more fields like, the network move, digital product etc. In prior 2003, Dell accelerates the rate of its diversification. After launched computer printer officially in america at the beginning of that season, Dell commence to step out of the IT industry and enter into household electrical kitchen appliance industry by producing Dell Television.
As another part of these diversification plan, Dell also offers a great deal of proper partnerships. In '09 2009, Dell has be sure to enter Smartphone industry through its two relationship which will be the major telecommunication companies on earth China mobile and Claro, which is famous in brazil.
Michael Porter is a professor of Harvard business institution. He has written many vital proper modals about Strategic management, like Porter five forces, Porter's clusters which one Porter Generic Strategy. Porter experienced divided the strengths of an company into two main parts: cost authority and differentiation. Like the graph below.
Cost command: Normally, whenever a company chooses the price control strategy their aim is usually to be the lowest cost producer in the industry. The company may sell their product at an average price with others to make more revenue than its rival or they can sell the product at a lower price than its rival to gain some more market share. Obviously, in the true market the price war will seem to be a little ridiculous, because in case you acquired it you are also a looser. The desire of the customer is infinity. Once you offer a lower price, they will wish more. In those days, the customers become hard to satisfy. It's unpleasant for a sales person and the whole market. This plan usually will be utilized in a broad market. Like, Wal-mart, which is one of the primary multinational retailers about the world.
Differentiation: Normally, the firms who choose the differentiation strategy need to have a unique feature or function for its products, unique enough to let the customer inclined to pay a little extra price for it. Nowadays, quite a few companies are employing this plan. Because everyone would like to vary from others, using different product is one the ways. For companies, be different from your competition is an excellent means of avoiding facing directly to your competitor just like that which you learn in the blue and red oceans strategy. For instance, in the fast-food industry, SUBWAY is quite not the same as the others by quality and making process. The slogan from it is "Think Fresh. Eat Fresh". You can even see it from the making process, you can choose the vegetable you like and the sauce you want etc. That's also the best way to reduce the risk of substitutes.
Focus: the focus strategy is AKA a "area of interest" strategy. Normally, the companies who choose the target strategy just focus on a quite small segment and tend to build strong brand loyalty because of its products, no subject cost management or differentiation. Naturally, if you did it you may charge a premium price for your product, because your products are worthy of it. The typical illustrations in automobile industry of the company using focus strategy are Ferrari and Rolls-Royce. They just take up few market shares but can also make an enormous profit annual.
Stuck in the centre: According Michael Porter, all the company should choose one of its strategy, cost leadership, differentiation or concentrate. Otherwise you will be in a situation called "stuck in the middle". The company who stuck in the centre will have no competitive advantage. That means there will be quite small chance to make a lot earnings.
Nowadays, internet is one of the most important things for no subject students, the people already work or even the elder. Which means the users and potential users of computer systems and notebook computers are huge. Different people look into different functions of a laptop, like acoustic fidelity, how big is hard disk drive, image quality or gameplay. The gameplay is one of the significant elements will be looked at for age under 35 when they buy a laptop.
The strategy Dell use in Porter General Strategy is both cost authority and differentiation
Cost authority: This plan requires enterprises to determine efficient, large level creation facilities, try their best to reduce the cost, and control the price of marketing research, services, marketing, advertising and every other areas of cost strictly. To be able to achieve these goals, the venture needs to supply the high value in taking care of cost. That is the way to make your total cost is leaner than your competition.
Dell has their special way to lessen the price at a lower point, which is a model called direct business model. Dell direct business model, which remove middlemen sales products immediate to the customer. Permit the company provide all types of product to the clients at lower prices and also provide the door-to-door delivery. Also dell also means that dell products have been exclusive while the product not produced yet.
Dell has turned into a global leading distributor in computer operating-system and also step in the major manufacturers list. The so called immediate model in dell is a couple of communication route with the customer, from customer direct to dell; the order can include many details like the configuration. Dell said that the "direct sales model" in essence is simplified eradicating the middlemen.
Dell stimulates further the use of the Internet to order the merchandise online, continuously bolster and develop its competitive benefits. Dell launched a website in 1994, and in 1996 signed up with the electric business function, develop the business enterprise to the web direction. The next yr, dell became the first internet company and its sales reach one million US money. Today, based on Microsoft's Windows operating-system, dell manages the largest global Internet e-commerce site. Dell PowerEdge server operation site covering 86 countries site, provide and language or dialect, 29 different monetary offers, at the moment there will be more than 1 billion visitors surf it each one fourth.
Differentiation: Realize differentiation strategy can have a number of ways, such as design brand image, has the unique technology, unique performance, provide special customer support, have special business network, etc. Preferably, the company must have differentiation in a number of aspects.
Dell's success is the success of the implementation of differentiation strategy, not only the so called "direct selling model" Dell differentiation strategy, important is embodied in the three fantastic rules: the "stick to the direct sales", "drop inventory", "the alliance with the client"
Adhere to the direct selling: Dell create a set of route to bypass the middlemen, immediate to the customers of the marketing mode, the enterprise directly to the customer's order, and direct revenue to "final customer", immediate to provide customers with the complete procedure for the service.
Abandon inventory: Corporations in the inventory problem substance is two aspects: one comes by the key supplier of spare parts reserve inventory, and the second is for marketers reserve inventory products and in the supply of finished in transit. These two elements of the stock cause the venture capital backlog. Because Dell is "produce according to the order" can realize the product "zero inventory", don't need to reserve inventory for marketers.
The alliance with the customer: "the alliance with the client" is the most dominant point of dell's differentiation strategy. The view of Dell to the client and rival is: "thinking about customers, don't always focus on the competition". Many companies are too value rival, spent too much time in the rival, but haven't any a chance to look forward, and then ignore the customer's demand. Dell put the main energy concentrate on customers. For large customers, dell will send their specialized personnel stationed, help customers to solve the specialized problem, and customer be in harmony an organic whole, and be a customer of the computer information division. Such big customer like Boeing totally has 100 thousand dell computers, and purchases 160 dell computers a day on average, so dell dispatched 30 technicians resident Boeing, field sharing demand and technical information, and then press the demand information company production.
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