Dell

Dell competitive advantage during the years 1980-1998 was based on its direct-sales model and its vigorous inventory management which have allowed it to consistently post profits. Being the only PC maker among the top ten vendors to report consistency positive operating margins on PCs, with a profit of $2.6 billion at 2003, Dell has managed to sustain its competitive advantage in 1998 to 2003 as well.

The internal perspective analysis reveals that Dell’s direct sales model valuable resource is an organizational capability that is embedded in the company processes and culture. Michael Dell was quoted saying that the company was very distinctive and different “…from the ground up, from the design, from the manufacturing, from the sales, from the support… ”. A core difference was Dell’s freedom to manage its direct sales while its competitors were tied up with relationships with resellers and other distribution channels. It developed competitive distinct unique abilities to reduce the size of the value chain and improve their production, logistics and procurement methods. By 2003, it carried four days of inventory compare to 20 and 30 of their competitors, which could not easily change their methods easily over time.

In terms of external perspective, its resources are obviously successful in the test of durability as they were hard to imitate due to the path dependency factor. Dell’s competitors encountered many obstacles in the path to changes their distribution model and cut operation costs in order to match it effectively. IBM’s NetFinity Direct program or HP’s Partner One program were not sufficient in that path. The inimitability of the model as a resource can be attributed to a causal ambiguity as well. The market identified the receipt for success, however was not capable of re-creating it.

Dell’s competitors attempt to match it could not win the test of competitive superiority. Dell’s direct sales resource had been so fundamental in its overall strategy,...