Dell's Porter generic strategies.
Porters generic strategies include:
Dell operates on a negative cash conversion cycle. It has developed a collaborative supply chain with its suppliers and dealers/partners that helps it to always remain cash rich. Dell delays its Account Payables while its receivables are always on or before time. Instead of selling through stores, Dell believes in direct selling to individual and business customers. this helps it to absorb the middlemen margins keeping all the profits to themselves.
As far as Porter's generic strategies are concerned, Dell follows a cost leadership strategy. It offers best value for best price as compared to its competitors. Dell has a sophisticated supply-chain system that helps it to alter product pricing and product mixes in real time giving them considerable competitive advantage. For example, if they were short of 17-inch-screens, they offered 19-inch-screens at a lower or even the same price. Their competitors, relying on their retail channels, cannot manage demand like this.
Dell's pricing strategies change depending on the product's life-cycle, while their main objective is to provide the best product for the best price. This reflects as well in the customisation process that Dell offers. The customer, depending on needs, demands and affordability can configure the product which is then priced accordingly. To continuously gain market share Dell undercuts competitor's prices as possible.
Dell quickly became incredible successful in its early years growing within short time from a start-up into one of the market leaders. Their business model and philosophy, and their sophisticated supply-chain-management-system enabled them for a long time to sustain their competitive advantage by providing low price products while still delivering high quality.
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