Abstract

This case is about one of the leading personal computer (PC) manufacturers Dell Inc.'s (Dell). The case discusses Dell's business model and distribution strategy. Dell, which was known for its direct selling model that was backed by strong supply chain management practices, lost its market leadership to HP in 2006. In the mid2000s, some analysts had criticized Dell for sticking to its direct-only business model. According to them, the business model that had made Dell so successful in the past was not as effective as before and the company was losing its competitive edge. In 2007, Dell announced its intention of moving beyond the direct-only model that it had zealously followed until then. Subsequently, the company rolled out its retail as well as channel partner initiatives. Though some analysts welcomed the move others felt that significant challenges lay ahead for the company.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Study Dell's direct-only business model and understand the advantages and disadvantages of such a business model.
• Understand the reasons behind Dell's decision to move beyond its direct-only model.
• Understand the issues and challenges faced by companies in managing the supply chain and in launching new channel strategies.
• Understand the issues and challenges faced by companies making a transition from a direct selling model to a multi-channel model.
• Gain insight into the fast changing global PC market and understand the competitive landscape.

Keywords

Distribution strategy, Direct selling, Business model, Supply chain management, Direct model, value web model, Lean manufacturing, Channel strategy, Competitive advantage, Low cost leader, Retail, Retail strategy, Channel partner program, Positioning, Emerging markets, PartnerDirect, Dell, HP, Lenovo, IBM