The purpose of this report was to examine an organisation that has different types of electronic commerce interfaces. We chose DELL Inc Which was founded by Michael Dell in 1984.

In the beginning it was based on direct sales approach, and then it became quickly one of the leading companies in PCs markets. It is one of world’s most admired business. It has 3 categories of customers Large, Public Sectors and Home and small sized businesses. Dell uses its website www.dell.com as one of the main channels to sell products directly to customers and provide products based on customer’s customized orders. Dell’s organizational structure is divided into four main regions (Americas, Europe, Asia and Japan), each of which includes their own functional departments. Dell utilises the Internet and other advanced technology in all aspects of its relations with customers, from ordering, sales, delivering and services to customers’ research and forecast

Dell’s information system also allows customers to use their ERP procurement application to order products Dell provides customers with personal support sites where information about the products and their history conditions are kept and processed. Dell works with various suppliers for components and softwares. The effective use of information systems to collaborate with suppliers gives Dell several important advantages. Dell’s phenomenal success has been largely due to its strategic use of IS to complement its unique business and organizational strategies.

Introduction

Dell was founded by Michael Dell in 1984 and started as a small computer selling company. Right at the beginning, its business based on a direct sales approach. Dell quickly grew into one of the leading companies in PCs market and one of the most admired businesses all over the world. Its significant success has been mainly due to its distinctive strategic model in general and its information systems strategy in particular. Two core elements of its business strategy include its direct sales and build-to-order approach (Manataki, 2007).

Dell uses online sales and services as their main way of doing business. However, other methods like ordering and technical services through phone and recently, its introduction of retail stores also contribute to its business process.

This paper will limit the analysis of Dell’s strategic use of IS in response to two main competitive forces: the bargaining power of buyers and the bargaining power of suppliers.

Literature review

We will use Michael Porter’s competitive forces model and other studies to analyse the strategic use of information systems in the case of Dell Inc. This report will use Michael Porter’s model to analyse how Dell Inc has used information systems (IS) strategically and accordingly with its business and organizational strategies to gain competitive advantages. In doing so, a brief literature review is necessary

Michael Porter’s five competitive forces model

The rapidly development of information technology in general and the internet in particular has largely changed business process. However, the effectiveness of IT application for the success of a business depends largely on its capacity of systems planning. This process is very important but also very difficult and thus, good frameworks or planning techniques are of great value. Michael Porter’s five competitive forces model is one among widely used methodology for planning of strategic usage of IT. In this model, there are five important forces that companies have to deal with, including:

(1) Threat of new entrants as a result of emergence of new businesses like e-commerce;

(2) The bargaining power of buyers who demand for better prices and quality;

(3) The bargaining power of suppliers such as those who monopolise in an area, or can cause high switching cost when changing suppliers;

(4) Substitute products or services which are enabled by the introduction of the internet, for instance, travel online is a substitute for travel agents;

(5) The intensity of rivalry among competitors (Porter, 2009).

Information Systems (IS) Quality Triangle

IS Quality Triangle represents the interdependency and integration of three levels of strategies – business strategy, organizational strategy and IS strategy, of which IS strategy must complement the other two strategies (Porter, 2001). The aim of a business is to use IS strategically in accordance with business and organizational strategies rather than simply using IS (Pearlson & Saunders 2010, 46-69).

IS strategy aligned with business and organizational strategies, should be implemented strategically to alter company’s competitive forces to achieve its business goals (Pearlson & Saunders 2010, pp46-69).

Reasons for choosing Dell as the case study

Dell is one of the biggest companies in the PCs industry. Its phenomenal success depends largely on its strategic choices, of which IS strategy is a significant factor. Dell is the leading company in effectively applying IT into its business. An in-depth analysis of how Dell has strategically used IS to achieve its business goals will offer practical and useful knowledge for other businesses in improving their usage of IS and for further research into organizations’ IS.

The bargaining power of buyers

Identify Dell’s buyers

Dell’s customers consist of 3 major categories: (1) Large enterprise; (2) Public sector (state and local government, federal government and educational institutions); (3) Home and small business. Michael Dell stated that Dell core customers are large ones who do not need various services from resellers and are always able to pay their bills. “Dell does not have any customers that represents more than 1% to 2% its revenue, 90% of Dell sale go to institutions- business or government- and 70% to very large customers that buy at least $1 million in PCs per year” (Margetta, 1998).

The power of buyers is represented by its demand for lower prices, better quality and services, which lead to increase in cost and competition for companies (Porter, 2008). In the PCs industry, Dell’s customers are powerful for several reasons:

Dell has to compete with several strong rival companies in terms of attracting customers, such as Compaq, IBM and Hewlett- Packard. Dell also has to compete with local sellers for market share, for example Sony and Toshiba in Japan, Samsung and Asus in Asia.

Another reason is that PC products in the market are in many cases, not very differentiated and thus, there is possibility of customers play one seller against others (Porter, 2008).

One more reason is that in a high fixed cost market, Dell’s core customers are large-volume customers, who, according to Porter (2008), have power of demanding for discount from selling competitors. Dell’s core customers – corporate buyers – are