Dell Business Model (B): A Case for Business Model Innovation

Publication Year : 2008

Authors: Maulik Bhatt, Amy Sonpal

Industry: Engineering, Electrical and Electronics

Region:US

Case Code: BSM0056A

Teaching Note: Available

Structured Assignment: Available

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Abstract:
Dell Inc. was the world’s second largest PC Company in 2007 in terms of market share. Dell was the market leader in 2004, but it lost its position to Hewlett-Packard following changing competitive dynamics in the PC industry. To regain its leadership position, Dell started selling its PCs through retail chains. This was in sharp contrast to Dell’s legendary business model of selling customised PCs directly to customers. Dell had attempted to sell through retail chains previously in the 1990s, but abandoned it due to low profit margins. The case discusses the concept of ‘active inertia’, which results from an inappropriate response to changing competitive dynamics, and how Dell fell into the trap of ‘active inertia’. The case also discusses internal and external challenges facing Dell in its attempt to regain its leadership position in the PC industry.

Pedagogical Objectives:

  • How important is modifying a business model for an organisation’s success?
  • To study the growing importance of the retail segment compared to the business segment.

Keywords : Dell; Computers; Business Model; Michael Dell; PC retailing; Segmenting; Targeting; Positioning; Innovation Management Case Study; Active Inertia; Hewlett-Packard; Compaq; Lenovo; Transformation; Strategic Inflection Point; SIP

Contents :
Dell’s Business Model: The Retailing Strategy
Dell’s New Business Model: The Judgement Call
Financial Highlights of Dell
Dell Inc.Historical Market Share

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