Question

Dell's factories can assemble a complete PC in 3 minutes. With a build-to-order strategy at the heart of its business model, Dell's sales staff maintains close ties with customers. This approach represents which aspect of the Porter's five forces model?

A) rivalry among competitors
B) bargaining power of buyers
C) threat of substitute products
D) threat of new entrants
E) bargaining power of suppliers

Answer 1

Dell's build-to-order strategy and its quick assembly time enhances its competitive advantage by focusing on the bargaining power of buyers, which is an aspect of Porter's Five Forces model.

Step-by-step explanation:

In the context of Porter's Five Forces model, a company that assembles a complete PC in 3 minutes, like Dell, and maintains close ties with customers through a build-to-order strategy is primarily focusing on the 'bargaining power of buyers'. By engaging customers directly to tailor their offerings, Dell can respond quickly to customer needs and preferences, which enhances buyer loyalty and reduces the buyer's inclination to switch to competitors.

This personalization and agility in manufacturing and sales strategy allow Dell to better meet the demands of their customers, creating a competitive advantage that can mitigate the influence of buyers by increasing their reliance on Dell's unique value proposition. Such an approach does not correspond directly to threats from substitutes, new entrants, supplier bargaining power, or competitive rivalry in the context of Porter's analysis. Instead, it strengthens buyer relationships and potentially increases their cost of switching to another provider, which is a central dynamic within the bargaining power of buyers.