The Value Chain Analysis of Dell
Abstract
In the business world, there are veral classic business models that can evaluate a company from different perspectives. The value chain framework is a powerful analysis tool for strategic planning of a corporation. It creatively views a corporation as a rious of value adding activities. This essay attempts to u the value chain framework to analyze one famous corporation – Dell Inc. and tries to figure out how Dell achieves the value creation objective in each parate activity.
Key words: Dell Value chain Marketing and sales Logistics Information system
1.Introduction
Dell Inc. is a reputable multinational information technology corporation. Funded in 1984 by Michael Dell, the corporation has become one of the world’s largest computer manufacturers in merely two decades. Many studies have been done to explain the huge s
uccess of Dell from various angles, such as corporate strategy, organizational structure, etc. However, few rearches touch upon the overall picture of Dell as a value chain. This essay aims to analyze Dell with value chain framework which is compod of two basic categories of value creation activities: primary activities and support activities.
The following ctions attempt to elaborate on the value chain framework and analyze Dell in depth with the theory. Part two provides an overview of the value chain theory, the original Porter’唯美图片s (1985) version and Hill’s (2003) version in the textbook International Business. Part three portrays Dell as a value chain and analyzes the value creation activities in the corporation.
2.L文艺演出iterature review
2.1平壤战役Porter’s (1985) value chain
Porter (1985) identifies a t of interrelated generic activities to analyze a firm’s value-creating process and to figure out a firm’s competitive advantage. Products pass through all activities of the chain, and at each activity, the product gains some value.
网赚钱Porter’s value chain is depicted as below:
Support Activities
Firm Infrastructure |
Human Resource Management |
Technology Development |
Procurement |
|
2.2Hill’s (2003) value chain in International Business
Hill (2003) states that one important objective for most firms is to maximize the value of the firm; thus managers should pursue strategies that increa the profitability of the enterpri. Since value creation is the difference between the value of product to an average consumer and the cost of production per unit (V-C), two strategies can be carried out to increa profitability: differentiation (raising V) and low-cost strategy (lowering C).
The value chain is designed to portray how the interrelated activities manage to create value by increasing product attractiveness and controlling cost in production, marketing and sales, materials management, R&D, human resources, information system, and firm infrastructure.
Hill categorizes the value creation activities as primary activities and support activities. “Primary activities have to do with the design, creation, and delivery of the product; its marketing and its support and after-sale rvice.”(p.268) “The support activities of the value chain provide inputs that allow the primary activities to occur.”(p.269)
Hill’s value chain framework is similar with Porter’s. It is illustrated as follows:
Support Activities
Information System |
Logistics |
Human Resource |
乘法的意义Company Infrastructure |
|
Primary activities
Figure 2 Hill’s value chain五花肉炖鹌鹑蛋
3.The value chain analysis of Dell
Hill’s value chain framework is developed from Porter’s. In Hill’s model, technology development is placed among primary activities (R&D) and logistics are put into support activities. Given the different functions of primary and support activities, and the changes in the business environment in recent years, Hill’s framework is believed to have some improvements. Therefore, this essay adopts Hill’梅桂花s value chain to analyze Dell.
In the following parts, detailed evidence of Dell will be provided for analysis under the value chain framework.
3.1Primary activities
Primary activities are tho that are directly involved in creating value for customers. In D
ell, rearch and development, production, marketing and sales, and customer rvice are of great importance to the value creation of the corporation.
catchon
3.1.1Rearch and Development (R&D)
Rearch and development is defined as "creative work undertaken on a systematic basis in order to increa the stock of knowledge, including knowledge of man, culture and society, and the u of this stock of knowledge to devi new applications" by Organization for Economic Co-operation and Development (OECD).
The R&D activity in Dell is effective in four ways.
First, the core of Dell’s innovation approach remains an unwavering commitment to deliver new and better solutions that directly address customer needs. The company talks to its customers frequently about “relevant technology”, listening carefully to customers' needs and problems and endeavoring to identify the most cost-effective plans. The customer-oriented approach makes its products more attractive to consumers. As a result, the value of product to consumer increas.
