It s using pricing as its strategy while it has failed to look at improve itself and its products. Price cannot be used as a competitive edge any longer as consumers are becoming less price sensitive and more product and feature-conscious. HP has been able to improve itself and is using its efficiency as its competitive edge.
The strategy of the firm to supply customized products to customers has worked in the US as it was a controllable area but as a global strategy this does not seem to be working as their revenue in the US is increasing at a decreasing rate in exhibit 8, where in 2004 it decreased by 2%, in 2005 it decreased by 2 % and in 2006 it decreased by 2% again. Revenues in the Asian market remained the same in 2003 and 2004; in 2005 it increased by 1% and in 2006 it increased by 1% showing that the market has more growth potential than the US. Dell customizes the products and handles mass customization. This puts a strain on the supply chain as the specific demands have to be met and quality has to be maintained along with timeliness. This is easier on a small scale but on a larger scale maintaining the same quality and precision becomes difficult and demanding.
The strategy of Dell to play safe and not concentrate on R&D of products is making them loose out. Dell spent 0.8% of its revenue on R&D in 2006 which is 3.1% lower than HP and 2.9% lower than Apple. Innovation is essential for a technological based industry as products are replaced by better technology and Dell would eventually lag behind if it does not keep pace with the changing needs of the consumers. Dell should change its strategy from attacking the product giving the highest profit to inventing a product that will give them highest profit. Then they could have a better market share for longer and retain a competitive edge.
Dell has applied the same strategy in all the countries and has not tried to understand the market in some cases. For instance, Dell sells ...Show more