Porter Competitive Forces Model - Dell

Porter Competitive Forces Model

Introduction

The value chain of a company, the concept introduced by Porter (1985) is its

entire product flow from the suppliers to the customers and managing the information

flow seamlessly such that the customer derives maximum satisfaction while the company

maximizes its profits. Dell Computer’s value chain is unique in the sense that the

company sources all its components from vendors across the world, undertakes the final

assembly and sells it directly to the consumer. Dell’s direct model of selling and build- to-order supply chain have been the main driving forces that have enabled it to gain

advantage over other players in the computer industry that can be described as highly

competitive according to Porter’s (1980) Five Forces model.

The Industry Structure computer industry is a highly competitive one. According to Porter’s (1980) theory, the level of competition in an industry is defined by the five forces. Dell is one of an example product that achieve successfully in their business by using Porter's competitive forces model. Personal computers have become commodity. Competition is quite furious in this sector. Lower-end computers with high-speed internet capability become the main selling factors for PC companies. During this rapid change, information technology must remain steadfast to compete with their competitors. In an influential book, Trompenaars and Turner (2002) stated “Michael Dell’s method of direct service helped gain an advantage in the computer industry”. The direct sales process allowed express selling to the customer without through the middleman. This study examines the computer technology field with Michael Porter’s competitive forces and creating improved productivity.

Michael Porter’s (1980) competitive forces, a reliable strategy in the business world today. Porter states that the economic and competitive forces in an industry segment are the result of five basic forces. So every...