Dell 4: Dell's Process-Oriented Strategy

Dell is not a product innovator. His penny-pinching ways leave little room for investment in product development. And, he has no patience for the costs of entering new markets. He kills off products when they don't show quick profits.

But, for Michael Dell, inventing the Next Big Thing is not the goal. He wants to focus on his strength as a super-efficient manufacturer and distributor. That's why Dell continues to hone the efficiency of its operations. The company has won 550 business-process patents., for everything from a method of using wireless networks in factories to a configuration of manufacturing stations that's four times as productive as a standard assembly line.

Dell's expansion strategy is to capitalize on that asset. The game plan is to move into commodity markets -- with standardized technology that's widely available -- where Dell can apply its skills in discipline, speed, and efficiency. Then Dell can drop prices faster than any other company and prompt demand to soar.

In markets that Dell thinks are becoming commoditized but still require R&D, the company is taking on partners to get in the door. Dell is putting its own brand on products from Lexmark and co-branding with EMC. Dell took on low-end storage production from EMC and cut its cost of goods 25%.

Comment: It sounds a bit like McDonald's. You don't go there for the "leading-edge" food. The appeal is price and fast, efficient production and delivery.

For links see Dell 1

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