Unlike PC market, the support service was more critical for server market since a problem in server even for a short time could cause serious problem in the customer’s business. Competitors such as Hewlett-Packard and IBM had begun offering variety support service aggressively to enhance the quality of their service. DELL, through a business model that focuses on direct PC sales, make to order model, low-cost production, and superior customer service, will definitely face some challenges or even have to change their strategy in order to guaranteed their high quality service when they enter the larger-scale server.
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4. Focus on core strategy: As stated in Q1, if DELL enters to the server market, it would be hard for them to do it all in-house without going against Dell’s basic operating philosophies. Outsourcing is a good solution here, for it allows Dell to focus its efforts on implementing new initiatives while the supplier maintains existing day-to-day functions. By outsourcing while retaining the core management style, Dell can spend far more time in the strategy, which allows it to maintain a large enough, pricing advantage over its competitors, that it is guaranteed a large share of the market.
Risks associated with outsourcing
1. Supplier Selection Risks: When you choosing the supplier, it is impossible to get all the information of the potential suppliers. Therefore, it would be hard to choose the proper outside vendor. The outside company might be an expertise in the server market but it still has the possibility that they fail to provide the service as Dell required. One scenario could be service not being provided within 4 hours, which means consumer demand wouldn’t be met. Also, the outside supplier might have