Development of the Dell business model
Strategic Management 3
Innovation in the Dell Business Model
Dell’s Business Model
Dell Company integrated Enterprise Resource Planning (ERP) and B2B marketplace to generate more revenues and boost its corporate brand. After numerous successes in the past two decades, Dell is now a leading supplier of IT systems and products. By linking ERP systems with Dell’s Premier Pages, the company was able to reduce costs and avoid the need for rekeying. Although it launched B2B marketplace discounted service procurements and office goods, this idea was not sustainable (Hill et al., 2011). As a result, the company launched Ideastorm to encourage users to contribute and vote in new features and products. Besides updating consumers on company actions and activities, it promotes customer service and communicates to customers on the status of implementation of their suggestions.
However, in 2012, Dell’s market share fell from the top to the third place after Lenovo and Hewlett Packard (Synder, 2010). This is because the direct sales model could not match the portable PC market as customers preferred buying from retail outlets. Dell lagged behind in knowledge and worldwide innovation which was taken up by competitors who had leverage on foreign market entry and cross-collaborative efforts. The decision to control over the final assembly and outsource components only was its undoing. While Dell was facing these challenges, Mompo, (2014) observes that its adoption of open innovation and crowd-sourcing became a leading idea. The company was able to create a website where users interacted and submitted ideas to Dell regarding its services and products. The emergence of Ideastorm 2.0 created an interactive site that involved the entire company. The company also benefited from social media technology, storm sessions, and gamification as it attempted to join the conversation of bridging the customer-company gap.
Hill, C.W., Cronk, T. & Wickramasekera, R. (2011). Global Business Today: Asia-Pacific Edition, ‘Restoring Dell’s Competitive Advantage’, pp 531-34, McGraw-Hill, Sydney.
Mompo, F.L. (2014). Ideastorm by Dell: A case of reborn co-innovation with customers. Co-society blogs. http://www.co-society.com/ideastorm-dell-case-reborn-co-innovation-customers/
Synder, B. (2010). The fall of Dell: How a business model innovator lost its way. ComputerWorldUK. http://www.computerworlduk.com/it-vendors/the-fall-of-dell-how-a-business-model-innovator-lost-its-way-3499/