Paper Topic:

Economic Case Study

Executive summary

Dell Inc . has been following the strategy of the direct distribution model in to meet the external environmental factors as determined by the five forces . The company has minimized the threat of new entrants by creating a supply chain management infrastructure which will be too capital intensive for new entrants to match . However Dell is increasingly losing market share to the existing competitors because they have been improving their own processes to maximize the effect of cost minimization , a critical success factor for Dell . This has necessitated the company

to diversify to other industries . However this has increased the threat of competitive rivalry by drawing competition from software development companies and systems integrators

Dell is considerably dependent on its suppliers in to make the direct distribution model viable . In this respect , it builds long term relations with suppliers by creating a common interface for information sharing . In this respect , the cost burden is shared equally by the manufacturer and its suppliers . As a result , suppliers in this industry do not have that much bargaining power . However customers do have bargaining power because of the wide variety of choices available to them from the existing competitors and therefore Dell and its competitors are investing in their operations to further reduce costs In this respect they are considerably dependent on suppliers of complementary products as the microprocessor manufacturers and operating systems developers . These are the factors that are impacting Dell 's profitability in the computer hardware manufacturing industry...

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