Dells Business Model Revenue Model Information Technology Essay

dells Business copy Revenue Model Information Technology EssayMichael dingle, a educatee from university of Texas, Austin founded dell Computers. At first dingle sold upgrades for IBM congenial PCs and then in 1985 they started to carry its own brand of PCs. dell operated on the direct sales mock up, taking casts over the phone and building PCs to the customers specifications. dell entered the retail PC channel for several years in the advance(prenominal) 1990s, but a downturn in argumentation in 1993 conduct it to return to its roots as a direct vendor (although the friendship does work with re venders in some markets). dingle grew rapidly and in the mid-1990s, its sales reached an inflection point, soaring from $3.5 billion in 1994 to $25 billion in 1999. By 1999, dingle had become the calculate one PC seller in the United States, and was number two worldwide.This success has taken stick against the backdrop of falling PC prices, brutal competition, and enormous l osses by other PC makers. dell has not only survived, but succeeded in this environment thanks to the fundamental advantages of the direct model, and to its continued efforts to improve its accomplishment of that model. It as well has taken advantage of its direct model to build strong, stead turbulent affinityships with the large corporations and other organizations who ar its core customers. Un equal indirect vendors, Dell knows who its customers are and has a great deal of instruction that it uses to go forth a high level of service and support, to tar follow customers for retention and expanded sales, and to sell additional third party nastyware and software. But even Dell has not been immune to the turmoil in the PC industry. While its closely recent 26% growth rate continues to outpace the industry as a whole, it has not been able to match its earlier growth place of 50% a year, and was hit hard by the slowdown in PC sales in late 2000. The result has been a sharpl y fall in Dells stock price and a reminder that Dell is vulnerable to the brutal price competition and cyclical demand of the PC industry.Nature of proceedss/servicesIn making an examination of the integrated information relating to the Dell Inc company, it is apparent that the Groups principal activity is tell to relate towards the designing, civilizeing, manufacturing, marketing, interchange and supporting a very vast range of computer systems. Dell is said to operates within four main segments and these are large enterprise, public, mid pull out and medium business and consumer segments. Essentially, large enterprise customers are said to let in large global as well as national corporate businesses. Among the public customers of Dell include educational institutions, government, health care, and as well police enforcement agencies. What is noted here(predicate) is that meek and medium business focuses on providing small and medium-sized businesses with what is said to b e the simplest and most complete standards-based IT solutions and also services, that are customized in order to meet their postulates. It is apparent that consumer business sells to customers via Dells on-line chisel in, over the phone, and also through retail. Dell is said to offers a wide range of merchandise categories and these including servers, mobility products, software and peripherals, desktop PCs, interlockinging as well as storage (Corporate Information.com Dell Company, 2010).Dells Business Model/Revenue ModelA busines model taxonomy like that of Dell is capable of macrocosm utilized to identify competitors and is compulsory to provide a good understanding of their target-market and this is especially in electronic and calculate business competitors which cigarette change very fast. The business model is said to be the term used to describe the behavior that Dell does business and the revenue model is said to lay out the process by which Dell makes money by s pecifying how it is going to charge in relation to the services provided (1000 Ventures.com Business Models, 2010)It is submitted that six main components of a business model like is used by Dell and these include the following apprize Proposition this is a description of the trouble relating to the customer and the solution that addresses the problem as well as the value of this solution in relation to the customers perspective.Market Segment This relates to the group to target, to recognize that different market segments lead to wealthy person different needs and there are chances of innovation to be unlocked when a different market segment is targeted.Value concatenation Structure This relates to the position and activities of Dell in the value chain and the way that it captures a part of the value which it is said to creates in the chain.Revenue genesis and Margins This relates to the way that revenue is generated, the cost structure, and also the target profit margins. maculation in the Value Network This relates to the identification of competitors, complementors, and any sort of network effects which can be utilized by Dell so as to be able to be utilized to deliver to a greater extent value for Dell customer.Competitive Strategy This relates to the way that Dell attempts to develop a sustainable matched advantage and to utilize this to improve Dells competitive position in the market.How Does Dell Use E-Commerce to Improve Supply twineWhen internet technology arrived, Dell was quick to set up the ecommerceProcesses that would modify it to also sell straightway online to customers. Selling online quits the whole process to be automated and more efficient. Since 1996 when Dell opened its website www.dell.com for ecommerce, the company has had huge sales success. By 1997 the company recorded $1 million in online sales. By 2000 the companys internet sales had reached $50Million a day If we go back to our example above, the customer, Liam, would go to Dells Irish website www.dell.ie to buy his notebook computer. The rightProduct range is online with detailed information to help him make his decision. He simply follows the easy, automatic instructions that come upon screen. These allow him to customise the computer he wants with the features he needs. He can increase, say, his hard disk space and see the difference that increase makes to the overall price. indeed he is wedded a variety of excerpts on how to pay, either directly online or, via a customer service operator. at that place is even an automated leasing option available through a financing arrangement that Dell has here with Permanent TSB. Liams order is then passed automatically through to the production segment at Dells factory in Limerick where it will be manufactured to his specification, time-tested and shipped out to him. All of the systems relating to the sale are done through e-commerce order placement, order jumper ahead(p), payment process ing, inspection, testing and economy. Similarly, internally at Dell, the whole purchase and procurement of materials is automated between Dell and its suppliers. At www.valuechain.dell.com, Dell shares information with its suppliers on a range of topics, including product quality and inventory.The crucial realize is the total automation of the whole process, which notOnly makes it faster and more efficient, but also much more cost effective,Especially given the volume of business involved. Dells global websiteReceives more than 1 billion paginate requests per quarter at 80 country sitesin 28 languages and 26 currencies. Dells approach to e-commerce simulates the benefits of face-to-face contact between the buyer and the seller. This en positive(predicate)s that staff can be focused on delivering a quality product and providing thin customer service and supportHow Dells E-Commerce Focus Improves Customer ServiceDell has created many features and services online to help the custo mer see the whole purchasing process clearly. The premise of Dells business is selling directly to customers customers tell Dell exactly what they want and Dell provides them with the goods directly. As well as being able to customise the product, customers can track the progress of the order as it is produced and delivered. This can help the customer see the stages of the process and likely deliverance times. Customers can create and view their service records online. This includes product support, shipment and delivery dates. Each purchase comes with a service tag code, which can track the model bought and its service requirements. This allows Dell customer service representatives to quickly and expeditiously handle requests. This level of 24 hour customer service and fast response time helps Dell build strong customer relations, which of wrinkle is crucial for the company in its understanding of customer needs. It is also a very cost-effective way of providing sales and suppo rt cost nest egg which can be passed on in the form of better prices to customers. advantage depends greatly on the efficient management of the website. The customer must have a convenient experience when shopping online and have faith that Dell will successfully complete the order and safeguard financial details. Customers need to be comfortable using paperless transactions without face-to-face contact. It is crucial that customers consider purchasing online as an alternative to the traditional method of going into a retailer and buying a product off-the-shelf. Dell is focussed on enhancing its image and relationships, not only with customers, but also with employees and the wider community. To do this, the website is also used as a communication tool for news, press releases and widely distributed information to help customers, employees, the media and prospective employees find out more round the company.Limitations of E-commerce to the business (DELL)Technological neglect o f universally accepted standards for quality, security, and reliability telecom bandwidth is insufficient (mostly for m-commerce)Software development tools are still evolving.Difficulties in compound the internet and EC software applications and databases.Special web servers are needed in addition to the network servers (added cost)Internet accessibility is still dearly-won and/ or inconvenientOrder of fulfillment of large-scale B2C requires special automated warehousesNon-technologicalSecurity and privacy concerns deter some customer from buyingLack of trust in EC among consumersMany legal and public polity issues, including taxations, remain unresolvedNational and international government regulations sometimes get in the wayDifficulty in measuring some benefits in EC. (e.g. advertising,) lack of matured measurement methodologySome customers like to equal and feel the productAdamant to change from physical to virtual storeLack of trust in paperless, faceless transactionsInsuffi cient number (critical mass) of sellers and buyers (some cases) needed to make profitIncreasing number of fraud on the netDifficulty to obtain venture capital due to the dot com company disasterLimitations of E-commerce to consumersPhysical product and delivery uncertainty (the consumer cannot be sure of the condition of the product he/she is buying. The delivery time can sometimes be longer than expected)Perishable goods (Electronics devices such as computers need to be handled carefully. If not they might get damaged during shipping and delivery)If a product is damaged, returning the good is difficult and sometimes even impossible. The consumer has no batten down of getting a refund. The cost of returning the goods (posting) has to be sometimes handled by the consumer.Privacy and security (The payment details of the customer might get stolen over the internet due to lack of security thus leading to fraud)The customer has to go through the products with the limited knowledge he/s he has. There are no employees to help guide them into buying exactly what they are looking for.