Dell Value Chain

Under a differentiation strategy, an organization makes unique products or services for a broad range of customers who are relatively price-insensitive. Differentiation can be based on tangible product characteristics such as superior performance or ease of use; intangible product characteristics such as image or brand; the delivery system; the quality of service; the channel of distribution; the organization’s capabilities (e.g., product innovation), and so on. For differentiation to be profitable, of course, the costs of achieving differentiation have to be kept below the price premium that differentiation can command. Therefore, firms should be Strategic Management page 40

vigilant for ways to increase buyer satisfaction for very little cost (e.g., free continental breakfasts at hotels). Differentiation works best when the product or service can be differentiated in many ways that have value to customers, buyers have diverse needs, and the industry is characterized by rapid product innovation.

Firms using a differentiation strategy run the risk that the unique features of their product or service are not valued by customers enough to justify the higher price. As well, competitors may copy the differentiating features, so it is important to create sources of differentiation that cannot be easily be imitated.

Through deep analysis of Dell company, we can observe that they are following the differentiation strategy. They are selling commodity products, computers, but

Dell Chain Value Analysis

How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain?

-close relationship with customers and suppliers

-First-hand and pure customer feedback

High volume of customer information

These relationship with customers and suppliers allow us to know what we must be able to supply in real time and then very quickly and precisely meet that demand while maintaining low inventory.

How has Dell exploited the advantage of...