1.1 Attractiveness of the computer industry in the early years
1.1.1 Initiation of various companies in the computer industry
1.1.3 Attractiveness of the computer sector
Although it appeared to be a booming business, some of the companies appeared to be more successful than others. Take, for example, IBM after launching into the market it was able to attract about 42% of the total market. In terms of production of mainframe computers, it was able to acquire a total of 61% of the total market due to its sales force and organization, and this is how Microsoft came into play, since IBM, required software for its operations. Microsoft launched its services and was able to produce operating systems for all IBM PCs where it was able to adopt the micro possessor architecture originally initiated by Intel.
After many companies had realized the high level of demand for IBM computer products, they began to clown IBM products in order to gain the market that IBM had already acquired. A case example was Compaq, which was able to produce cloned computers that were able to return around one million dollars and became one of the fastest growing computer companies in American History. Later, other companies realized the secret behind success in the computer industries and were able to produce IBM cloned computers in order to follow the lead created by Compaq, which included Dell Corporation and Hewlett-Parcads which shifted from its original computer production architecture to IBM computer structure.
It was evidently clear that Intel-based computers were successful in terms of sales between 1980’s and 1990’s they were able to make enormous profits. This was as a result of the amount of work that the computers could handle in a given amount of time. Intel-based computers could be able to handle about 2.5 million instructions per second. Due to their collaboration with Microsoft Corporation, it was able to attract about 90% of the total market.
Computer industry proved to be one of the most competitive in the global economic sector as different vendors looked for a different way of outdoing the others. In a case example, Compaq looked for all the means possible to take control of the market. This can be proved in terms of the pricing policies and strategies set in the market. Compaq after realizing the competition existing in the market and the battle that was seen in the newspapers led to it slashing down its prices to 32% discount which led to boosting of its sales. Other than the computer producing corporations, the processor companies also were at the forefront of fighting for market globally, rival companies that existed included Intel, AMD, and Cyrix. AMD and Cyrix plunged their prices in order to bring down the dominating semiconductor producing company which was Intel. Generally, the attractiveness of computer industry was mainly to the advantage of the final user. Since as more competition existed in the market, the better the production was, and the better pricing strategies were utilized.
2.1 Competitive strategies used by Dell Corporation
Michael Dell, who was the founder of Dell corporations, used cost leadership strategy as a means of competition from the existing giants in the market. This can be evident since from the time he was selling hard drives from his dorm room in the university. He used to format hard disks from personal cloned IBM computers and sell them at a lower price which was mainly 40% less than the other companies. This clearly shows that cost leadership was the main competitive strategy that Michael Dell was ready to apply to his business before he even decided to assemble his own Dell-branded computer products.
Another strategy that Dell Corporation used was mainly the low-cost focus strategy. This is mainly because the low-cost strategy was used to target a specific segment of the market and offer them high-quality product at the very low price. Dell satisfied this strategy by focusing majorly on the corporate customers. Instead of marketing their products to the whole population it targeted the corporate market and offered them high-performance personal computers and a very low price. All Dell computers were customized according to the customer’s request and assembly would only commence only when a customer has placed an order. To be different from other companies, instead of looking for orders from retailers, distributor’s resellers and retailers, Dell mainly put most of its concentration on the customers who placed their direct orders to the company.
In order to yield more positive results in the market, dell applied tradeoffs as a means of increasing its level of income which appeared to be advantageous. For example, the company gave away targeting all the population as a whole in order to concentrate on producing high-performance computers to the corporate customers. Also, this can be evident through dell concentrating mainly on two types of products which included desktop computers that were designed to be reliable, stable and highly compatible with the corporate network and other that were compatible with the latest technology. In order to increase their efficiency, Dell used Windows NT microprocessors in order to meet the need of the customers.
How Dell made computer industry more attractive in respect to competitive strategies
In respect to the competitive strategies used by dell, it managed to make the computer industry more attractive since it was marked to be one of the best Information Technology based corporation globally. In order to achieve this, dell used various tactics that made them climb the ladder. For example, dell was able to receive high paying orders which included emergency orders that saw them making a lot of revenue. A case example in the month of October 1997, Dell managed to acquire an order for 8 servers which were to be shipped to Nasdaq stock exchange. In addition to these, it was able to receive another order to supply more than 6000 equipment to more than 2000 Wal-Mart stores outlets.
This kind of success never came out by chance, but it was determined by the kind of strategies that were applied by Dell as a corporation. For example, to kept very organized links with its suppliers, this enabled customers to receive their product in time. It also maintained close electronic links with its supplier which also enabled other competing companies to use the some of the services offered by Dell, for example; many customers would acquire Sony Monitors through networks created by Dell electronically. To date, dell has proved to be one of the most outstanding companies in terms of quality services and products to all its clients globally.
Reference
Harvard. (1999). MATCHING DELL (1st Ed.). Harvard: Harvard Business School.
