Dell Boy Computers relies on its brand name, the promise of support and its massive market presence to balance higher costs. As Dell Boy Computer Company is selling into an increasingly sophisticated and price-sensitive marketplace, it needs to do forward integration to market its profitable high-end computer products. To fortify its profit generating objective, Dell Boy goes into real estate development by creating apt settings for human activity that are in harmony with the environment and providing distribution services for its suppliers and customers.
The top management of Dell Boy is restructuring the organization around common capabilities to achieve better strategic focus. The Company will renew profits and growth by focusing resources and management attention on three key areas: a.)Increase the volume and value of the market share in computer products through forward integration consisting of special warehouse services and an excellent service delivery platform; b.) Expand profit and revenue growth in personal computers by promoting aggressive and consistent marketing and promotional activities; and c.) focus on new business in the existing demand from the educational segment and in the small business and home personal computers segment.
The company needs to be more selective about its property purchase as location is an important consideration for this project. The company can construct a big commercial lease building which can house its distribution operations and it can also be rented out to other commercial tenants.
Through forward integration, Dell Boy Company will achieve important cost synergies, eliminate redundant management layers, and decrease other ancillary operating expenses including discretionary spending, which are expected to result in annual cost savings for the company.
As Dell Boy Computer Company integrates forward into real estate, warehousing and distribution, the company needs to understand the benefits, and the development process this development entails. Property development for computer companies requires a clear perspective of public administration, physical planning, municipal regulation, market research, legal system, site appraisal, economic evaluation and assessment, financial contracts, contractual and bidding procedures, building design, construction designs, and marketing strategy aspects. The crucial costs of time, quality, and asset value are seriously considered. (Ratcliffe, et. al., 2003)
The other leading computer companies such as Red Fox USA and Toshiba had relied on indirect distribution channels such as various retail stores and large shopping malls while Apple Computers, markets its products directly to the end users. For instance, Kwantinetz stated that Compaq's traditional sales and distribution technique covers a total of 90-day period for building, transporting, inventorying and setting the cost value of its manufactured goods to its existing indirect distribution channels. This very long lead time has added a tremendous 6 percent to Compaq's cost of business operations. To enable