After the emergence of personal computer in1990, Dell emerged as a strong business entity in the computing industry. With the advent of personal computing, the major players in the industry were IBM, Compaq and HP. Between 1994 and 1998, Dell's growth was faster and twice its major rivals (IBM, Compaq, Gateway, and Hewlett- Packard). It provided high performance PC at a very low price. Through the introduction of Dell's Direct Model, it enjoyed high competitive advantage and earned quite a success.
Using the “Direct Model”, Dell sold primarily to customers directly. Dell's competitors were suing distributors, resellers and retail site at that time. Once orders were received from the customers, Dell rapidly built computers …show more content…
As PCs did not have a high margin, Dell focused on reducing cost. To reduce the cost, Dell introduced "Just In Time". This system helped to make inventory turnover very high. It therefore helped to have "no stock lying around" and as soon as the raw material components arrived, they were assembled and shipped to the customers. This helped Dell reduce large amount of cost as there would not be any obsolete stocks. Furthermore, there was minimal holding cost to the company hence, reducing the cost. Whereas, this system had not been followed by its competitors and this built huge cost for its competitors hence reducing the profit of the company. This has been one of the main competitive advantages for Dell against its competitors. b. Operation
Another competitive advantage Dell had to its rival was the operation. It reduced the time to manufacture and assemble the PCs as much as possible. First by generating part list from a computer and assigning bar codes and the older facilities being organized in assembly-line fashion, as the chasis of the machine travelled down the line, hardware specified by the part list was added. Further, in the new facility five-person manufacturing cells where the parts would arrive in a bin and the assembly would take place. The assembled PCs would be sent to the software loading zone where the specified software would be