The Business Models Used By Dell Information Technology Essay
Business Models are the one of the most discussed most overvalued and least understands aspects of the World Wide Web. A business model is a concept arising out of e-commerce and the Internet age. A good planned and successful business model will maintain their business in the longer term it will give the business a competitive advantage in its business enabling it to earn more profits than its competitors. (Turban, King, Mckay, Marshall, Lee and Viehland, 2008)
Now, Dell Computer Corporation is the world’s leading direct computer systems company, and it grows larger everyday. Dell sells directly to consumers by using Internet. They build products to consumer (customer) to order. Dell eliminates retail mark-ups and costs. They reduce risks associated with large inventories of finished goods. Relationship with consumers is also very important.
Direct business model of delivering a better customer experience through direct, general customers relationships, cooperative research and development with technology partners, custom made computer systems built to customer specifications and service and support programs customized to customer needs. (Turban, King, Mckay, Marshall, Lee and Viehland, 2008)
Dell’s believes that the direct model provides it with some clear competitive advantages. First is the model that eliminates the need to the support a well-known network of wholesale and retail dealers, which allows them to avoid dealer mark-ups; and its avoids the higher inventory costs to connected with the wholesale or the retail outlet and the competition for retail shelf space. The direct model also allows them to maintain their study and update the customer database that can be used to manipulate future product gifts, service and support programs. (Awah, Elias, 2004) The Internet lets customers to configure the product by using online, order online, check the status of their order online, and get support, learn and study upgrade service online.
Dell enables them to list their product at a sale and order it online. And that is the kind of customer’s experience that builds a long-lasting relationship between customers and Dell.
Marketing partner refers consumers to the selling company’s web site for a commission. Dell provides affiliate partners the opportunity to link from their Web sites to dell.com. Dell pays about 2 to 4 percent on any qualifies sale made from clicking on Dell’s link at the partners sites. Many people can click the link that the website provides to understand more about Dell. (Case study and Dell, 2011)
Products and Services customization
Many of the online stores have expanded their online offerings to include customer reviews and product news in addition to their product catalogs. This means people will visit dell.com to view the online catalogs that offer additional information rather than those that don’t offer this product knowledge. It also increases the time the shoppers spend on a website and it increases the chance that they will refer items to their friends. (Victoria Duff, 2010)
Supply Chain Management
Dell supply chain management Dell’s strategy is to provide customised, low cost, and quality computers that are delivered on time. Dell takes orders directly from its customers by using online system (services). Therefore, Dell reduces the cost of intermediaries that would otherwise add up to the total cost of computers for the customer. Dell also saves time on processing orders that other companies normally deserve in their sales and distribution system. By directly dealing with the customer Dell gets a clearer indication of market trends. This helps Dell to plan for future besides better managing its supply chain. (Turban, King, Mckay, Marshall, Lee and Viehland, 2010)
2. Explain the different types of EC transactions used by Dell.
EC transactions used by Dell are B2B, B2C, B2E, B2G, and e-learning.
Business-to-Business is a model in which all of the participants are businesses or other organization. Business-to-business as when one company buys its supplies from another company online. E-business has transformed how the business world operates from the supply side to the selling side and all the banking and commercial transactions in between. This affects everything from small family-run enterprises to international stock exchanges. (Turban, King, Mckay, Marshall, Lee and Viehland, 2008, Awah, Elias M., 2004)
Dell delivers business-to-business transactions that allow your organization to lower their procurement costs. With the B2B transaction, you can shop online from within your Enterprise Resource Planning (ERP) “procurement” application and return the contents of your shopping session back to your ERP system by e-mail. No longer had you required to enter duplicate information in the order to purchase the products. The electronic application can now be routed through your standard ERP workflow where it can be approved by e-mail. Once this electronic application is approved, it can become an electronic purchase order and be transmitted straight away to Dell. These orders flow directly go into Dell’s manufacturing system where your orders are built immediately, this will saving you hours or days in processing time. This brings you the latest technology at the quickest speed. If a customer is not currently able of integrate their procurement systems and processes with their suppliers, Dell can provide the necessary hardware, software, and consultation to help build and set up a solution that not only connects the customer to Dell, but one that can to connect to even other suppliers or customers. (Dell, 2010)
Business-to-Consumer is a model which businesses sell to individual shoppers. Business-to-consumers (B2C), as when you purchase from a shop’s website (Turban, King, McKay, Marshall, Lee and Viehland, 2008, Awah, Elias, 2004). Consumers shop at dell.com by using electronic catalogs. Dell also sell their computer or laptop to consumer (customer), they can search the latest product at the Internet. (Case study) Customers can purchase the product by using online. It is very convinces and easy for customers to purchase a computer by using online services like Dell. Dell provides many different type of computer example: desktop type computer, laptops, printer and so on.
Example: Customer can use online services to purchase Dell products. And it is secure for customer to using the payment system that Dell provides. Customer also can make their order easy. We can just sit at home, using the online services to purchase a product or more than 1 product from Dell. After the payment transaction make from the payment system, Dell receives your order they will arrange the time table and send it to you. It is very easy for us to purchase products from Dell. Customers can save their time to shopping, to compare the products, save cost to travel the place and so on. These are the benefits for the customers. (Dell, 2011)
Business-to-employees is a model which an organization delivers services, information, or products to its individual employees (Turban, King, Mckay, Marshall, Lee and Viehland, 2008).
Dell provides EPP – Employees Purchase Program for all the employees that has 1 account number. They can get Best Price to purchase product from Dell. And if have any request the employees can call or chat with Dell expert. (Dell, 2010)
Example: employees from Dell. They can enjoy more than 25% discount for any products from Dell.
Business-to-Government is a model which a government buys or provides goods, services, or information to businesses or individual citizens. Businesses sell goods or services to governments and government agencies (Turban, King, Mckay, Marshall, Lee and Viehland, 2008, Awah, Elias M., 2004)
Dell provides their computers to government. Government will purchase some product with Dell.
Example: The U.S. government is at a critical juncture. Citizens are demanding more accountability and transparency, and government agencies are responding by breaking down barriers that have caused inefficiencies. More than at any point in history, IT is expected to be a driving force of change that moves the government forward. IT leaders are under greater scrutiny to spend budgets effectively and are increasingly being measured on project performance. Yet many are dealing with fragmented IT environments that are complex, outdated, and costly to maintain, leading to further challenges with security, interoperability, and manageability. (Dell, 2010)
E-learning is used a lot organizations for training and retraining employees. It is also practical at virtual universities. E-learning is the online delivery of information for purposes of education, training, or knowledge management. Dell provides e-learning for the customers, who don’t know how to use their products, installing the hardware or software, and so on. Dell not only provides e-learning for customers is also including employees who need to learn and training (Turban, King, Mckay, Marshall, Lee and Viehland, 2008)
Dell provides some training courseware to employees or even students also can join; they can learn more and detail. (Dell, 2010)
Why choose the Dell leaning system? Because employees and students can saves money to help maximize training budget. And E-Learning reduces travel expenses and time away from the office. And it also easy-to-use, the interface through the Learning Management System enables administrators and students to navigate efficiently through e-Learning programs. Dell has 24 hours and 7 days online services; online access to live experts and resources for help with course study, daily work activities, and topics relating to information technology, desktop applications, and business skills. They are many benefits to help you improved. Dell provided. (Dell, 2010)
Analyse the competitive advantages Dell has over its brick-and-mortar competitors.
Brick-and-mortar retailers are retailers who do business in the non-Internet, physical world in traditional brick-and-mortar stores. Traditional retailing frequently involves a single distribution channel, the physical store. In some cases, traditional sellers also may operate a mail-order business. (Turban, King, Mckay, Marshall, Lee and Viehland, 2008)
Dell has operated kiosks in shopping malls in the United States, but the physical stores add a new dimension to their move to click-and-mortar. Various models of computers are ion display in the stores, provide the different model of the computers catologs and Dell staffs are available to recommend or suggestion and support and assist customers in personalizing their purchases. However, the stores hold no inventory, so interested customers must still place their orders online from within these stores (Turban, King, Mckay, Marshall, Lee and Viehland, 2010)
Online services and Delivery
Dell provides online services and delivery services. Online services are customer can purchase products at the online payment system. After purchasing online, the staffs will delivery the product to you. (Dell, 2011)
Dell brings products to market faster than its competitor.
Dell was able to make computers much faster than it produced earlier. Computers have life cycles of only a few months. Thus, dell enjoys early-to-market advantage. (Turban, King, Mckay, Marshall, Lee and Viehland, 2010, Dell, 2011)
Dell will keep the feedback from the customer and will reply them if their customer has any problem with the products. Dell has their own database to save all the customers detail. (Dell, 2011)
Reduce bullwhip effect
Dell provides special web pages for suppliers. Dell let them to view the orders they has made. This allows suppliers to plan based on customer demand. (Dell, 2011)
Advertising and Promotion
Advertising is very important. Dell provides many different advertising so that everyone is starting to concern its products. In addition to let everyone knows that the products, Dell also hopes to attract more customers and so do a lot of different promotional campaigns to boost turnover. (Dell, 2011)
After brick-and-mortar, Dell has made a miracle. Dell do their own business by using internet, customers can purchase products by using online payment system. (Turban, King, Mckay, Marshall, Lee and Viehland, 2010) Doing online services is more easy and convenient for all peoples. And the most important things in now Dell provides online training, online learning for those who don’t know how to use Dell products, or something happen they can just search the information on dell.com to learn more. Is not just good for the employees who know more about Dell products and also good for the student to look for it. (Dell, 2011)
E-Commerce is not that easy to control, but the things is we need to learn from the beginning just like the Dell who’s done the business with a very good result, they earn profits, and many customers like their products and identify their products.
Relate this case to supply chain management improvements.
The term of supply chain is comes from the concept of how the partnering organizations are linked together. (Turban, King, Mckay, Marshall, Lee and Viehland, 2008)
Dell has become famous for its use of the Web to sell computers to individuals and businesses and even government are now started to use; it has also used technology-enabled supply chain management to give customers exactly what they want. Dell reduced the amount of inventory it keeps on hand form three weeks’ sales to six days sales. Eventually, Dell wants to see inventory levels measured in minutes. By increasing the amount of information it has about its customers, Dell has been able to significantly reduce the amount of inventory it must hold. Dell has also shared this information with members of its supply chain (Schneider, 2007).
Now, Dell use internet online and web technologies in managing supply chains has yielded much increased process like example speed, reduced costs, and increased flexibility. All of these attributes combine and to allow a coordinated supply chain to produce products and services that better meet the needs of the ultimate consumer.
When you purchase a product online at dell.com, the system from dell will receives your order. The staffs will delivery your product just in time, with the services that they provide. (Dell, 2011)
E-learning and e-training are provided online at the website dell.com. And there also provides online chat, to chat with the technical assistance. Dell provides 7 days 24 hours for the online services. Customers can online purchase any products. (Dell, 2011)
Close to customer
Dell gives discount to customer if the customer purchases more products.
Relationships with customer 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. (Dell, 2011)
RFID – Radio Frequency Identification
RFID is suitable to the effectiveness of the information that it provides leading to much better real time data. Dell has plans for the retirement and decommission of the old technologies as a forecasting technique as well. By using the RFID, customers are able to follow the progress of their computers and decide the delivery dates automatically. Due to the fact that Dell now manufacturers almost all of the products that they sell, there can be little to no problems with excessive storage in warehouses. The benefits of RFID and real world awareness aid in keeping Dell’s supply chain extremely successful. (Goitsolutions.net, 2005)
Reference and bibliography
Awah, Elias M., (2004) Electronic commerce from vision to fulfilment (second edition) Pearson education Inc United
Available at: http://www.business2000.ie/pdf/pdf_7/dell_7th_ed.pdf
[Accessed 28 December 2010]
Available at: http://www.csulb.edu/web/journals/jecr/issues/20014/paper4.pdf [Accessed 3 January 2011]
Dell 2010, Business Model [Online]
[Accessed 27 December 2010]
Dell 2010, Dell Business to Business (B2B) E-Commerce Solutions
[Accessed 27 December 2010]
Dell, 2010, Dell Federal Government – Services, Consulting and Discount (Online)
[Accessed 27 December 2010]
Dell, 2010, Dell Member Purchase & Employee Discount Program (EPP) [Online] Available at:http://www.dell.com/content/topics/segtopic.aspx/epp_why_buy_dell?c=us&cs=2236&l=en&s=eep&~ck=mn [Accessed 27 December 2010]
Available at: http://www.ebscohost.com/uploads/imported/thisTopic-dbTopic-1074.pdf [Accessed 3 January 2011]
Fredman, Catherine. “A Moment of Transition: A Chat with Tom Merideth”, [Online] Available at: http://www.ee-online.com/oct/oct_qna.htm
[Accessed 28 December 2010]
Available at: http://www.goitsolutions.net/rfidpaper.pdf
[Accessed 4 January 2011]
Available at: http://www.indiana.edu/~tisj/readers/full-text/16-1%20kraemer.pdf
[Accessed 28 December 2010]
Schneider, Gary, (2007) Electronic Commerce (Seventh Annual edn), Canada, Thomson Course Technology
Turban, King, Mckay, Marshall, Lee and Viehland, (2008) Electronic Commerce 2008, Canada, United States, Pearson Education
Turban, King, Mckay, Marshall, Lee and Viehland, (2010) Electronic Commerce 2010, Canada, United States, Pearson Education
Victoria Duff, eHow Contributor, (2010) [Online]
Available at: http://www.ehow.com/about_4793990_ecommerce-business-models.html [Accessed 18 Jan 2011]Order Now