Matching Dell

DSME6930I

Supply Chain and Logistics Management

Assignment 1

Topic: Dell Question

GROUP

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Chung Chun Yin 1155003752 6129 4731 1155003752@link.cuhk.edu.hk | Feng Si Yu 1155066152 68163642 1155066152@link.cuhk.edu.hk | Fongmin Fang Fermi 1155015122 9450 9326 fermi.fang@gmail.com | Li Huan 1155066271 69331728 1155066271@link.cuhk.edu.hk |

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Case Questions - Dell

1. Why did the personal computer industry come to have such low average profitability? (20 points)

* Low Capital Requirement to Enter the Industry

It was not expensive (roughly a million) to set up an efficient assembly line. Therefore, with the systems specification published by IBM, it was easy to enter the PC manufacturing industry, thus it was difficult for manufacturer to earn much, keen competitions such as price war was arise, this lowered the profit margins of the whole industries.

* Rapid Innovation in Technology

Computers made up of components such as microprocessors, random-access and read-only memories, and etc. Therefore, the price of a PC is greatly influence by its cost. The cost of components declined rapidly (microprocessors as an example, the cost per MIPS had fall a lot), this lower the profit margin. In addition, the...