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Session 6: Business Model, Business Processes, and Information systems Presentation on Case study: A tale of Two Cities’ Information Systems (pp.122-123) CASE: Dell COMPUTER CORPORATION Analyse the PC industry and its market segments PC Industry Product life cycles in the PC industry have shrunk from about 22 months in 1988 to six months in 1997, and the price/performance of key components has continued to double every 18 months or less. As a result, excess inventory depreciates rapidly (an estimated 10% per month . ) driven by rapid technological improvements getting new, quality products to market on time is critical to maintaining competitiveness in an industry where customers are willing to pay a premium for the latest technologies and reward quality by repeated purchases. PC Industry companies that minimize inventory and bring new products to market faster can reduce costs, increase market share and maintain higher margins. the standardized, modular nature of the PC. the structure of distribution. Dell’s Direct Distribution Channel Selling direct removes two links in the supply chain where inventory could build up and also enables Dell to know its final customers, provide better service to them, and promote repeat or expanded sales to them. Build-to-order production allows Dell to introduce new technologies as soon as customers want them and makes it possible to adjust production to demand very quickly. It also means that Dell does not purchase components and assemble PCs until it has received payment from the customer, giving the company a negative cash conversion cycle in which it receives payment from customers before it must pay suppliers. Dell: Build-to-Order Production The build-to-order production system is the focal point of Dell’s business operations, the common contact point for sales, procurement, logistics, manufacturing and delivery. This requires very close coordination between Dell’s sales and manufacturing arms and between Dell and
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