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Essay on Five Force Analyses: Dell Computer
The company was founded in 1984 by Michael Dell, now the computer industry's longest-tenured chief executive officer, on a simple concept: that by selling personal computer systems directly to customers, Dell could best understand their needs, and provide the most effective computing solutions to meet those needs. Today, Dell is enhancing and broadening the fundamental competitive advantages of the direct model by increasingly applying the efficiencies of the Internet to its entire business. The five forces model of competition expands the arena for competitive analysis. The five forces include the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products, and the intensity of rivalry among competitors (Hitt, 56).
New entrants to a market can threaten the market share of competitors already in the market. New entrants are interested in entering the US market to try to gain a large market share from existing competitors in the market. By using the direct model strategy, Dell is using a different approach to catch the eye of US consumers. Dell’s Just-In-Time (J-I-T) inventory keeps inventory costs to a minimum. Companies like USA’s market leader HP, are beginning to move to Dell’s J-I-T model, selling directly to their corporate customers.
A barrier to entry in USA is dealing with the government’s political and legal issues. Many foreign firms have to depend on US resellers to make their product available to the public. Foreign companies may need to form joint venture agreements with established US companies.
The bargaining power of buyers is an important aspect in the computer industry. Buyers want to buy products at the lowest possible price. The buyer segment is especially powerful in US because computers are so expensive that consumers do everything they can to get the best deal – for the cheapest price....
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