Dell Computer Companyðž¦s Direct Business Model

In traditional digital equipment of the world, they have no choice but to build massive structures to produce everything a computer needed. As the industry grew, more specialized companies developed to produce specific components. ItÐŽ¦s a pretty simple strategy, but at that time it went against the dominant.

In Traditional Business Model we can use following flows to describe the relationship beyond different partners and the information flow and physical goods also follow the same route.

Ñ"Ь Suppliers > Manufacturer > Distributors > Customers

In Dell Business Model

The direct model has allowed Dell to leverage their relationships with both suppliers and customers to such an extent that the company is being virtually integrated. That allows they focus on where they add value and build a much larger firm much more quickly. They focus on how we can coordinate operation activities to create the most value for customers.

The whole idea behind virtual integration is that it lets you meet customerÐŽ¦s need faster and more efficiently than any other model. Virtual integration lets you be efficient and responsive to changes at the same time. Dell use Technology to reduce the layers of supply chain, from telephony to Internet web technology. Dell pursuit the customers or Suppliers could use Internet to do business with Dell directly. The Dell business model can produce the efficiency on information flow and logistic through Build to Order.

Ñ"Ь Suppliers > Dell > Customer

Virtual integration works even faster by blurring the traditional boundaries and roles in the value chain.

Suppliers

Manufacturer

Customers

If you want to divide dell up into a manufacturer or a channel, youÐŽ¦d destroy the companyÐŽ¦s unique value.

How has Dell pioneered a new business model within the computer industry?

1. Dell does not just outsourcing their production to contract manufacturers (suppliers) but also their after sales service.

2. Dell