Resource based view (RBV) of strategy concentrates in recognising and utilising the organizations resources. It is an important, essential and an inside out management concept that is useful in developing a successful strategy. The company evaluates the environment on the basis of available resources at its expense. Market based view (MBV) of strategy designs the company policies and strategy based on the trends and the nature of the industry’s environment. It helps in selecting the market combination for the product, in which the company utilises its strategy. The strategy helps in designing the structure and strategy of the company based on the market analysis of the industry.
Dell had moved on from its prior resource based view of strategy to market based view of strategy, due to the hurdles faced after recession and from its market competitors like HP. Dell started outsourcing for its product manufacturing like Taiwan’s Foxconn Group and sales to stores like PC World, Wal-Mart and many more. The company started to restructure its strategy just as it lost the position as the worldwide market share leader in computer industry to HP. According to research firm IDC, HP had a worldwide PC market share of 19.3% for the quarter ending June 30 compared to Dell’s 16.1%. In 2005, Dell dominated the playing field with 18.2% market share compared to HP’s 15.7%. (Can Dell’s Turnaround Strategy Keep HP at Bay, 2007). Dell’s success had been its customer approach, “You tell us what you want and we will build it for you”. That approach has worked well with corporate [information technology] people and professional users. But that is a cut-throat market since these people have a good knowledge of prices. Dell always had a hard time with the non-expert buyers. (Can Dell’s Turnaround Strategy Keep HP at Bay, 2007). Dell started to refashion the company’s strategy to largely compete with its rival HP. With the change in the company’s strategy challenges were faced, with its two pillars of business model – “supply chain efficiency and built to order product sales to its customer” (Can Dell’s Turnaround Strategy Keep HP at Bay, 2007).
Product Development – Pursue Mid-Range Server Growth – By 2001, Dell was the market leader in entry level servers, but had no presence in the mid-range server market. Pursuing this growth option could result in increased market share and higher profits due to the higher selling prices and markups of these units, but could be risky if technology suddenly changes. Increased post sale costs are also a concern, as server sales don’t just stop upon delivery; they require continued service regarding reliability, serviceability, availability, and manageability. Pursue Associated Services Growth – within the US, 2000 service revenues accounted for over 37% of $2 billion in total revenues. This business unit was becoming an increasingly important part of Dell’s portfolio with longevity, able to stand the test of time and market uncertainty, no matter what turn technology took.
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