Core competency has three characteristics: it is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits, it has applications in a wide variety of markets, and it is difficult for competitors to imitate. (Kotler 24) In other word, core competencies refer to a company¡¯s critical and unique capabilities that make the company successful and distinctive from the others.
One of Dell’s core competencies, direct sale and build to order, allows Dell to keep high inventory turnover, reduced overhead, and cash conversion. Outsourcing is another competency for Dell. It works closely with external partners to produce its PC products and to offer its customer an array of products and services. Dell coordinates a global product network to manufacture its products, combining in-house final assembling with high reliance on outside suppliers and contract manufacturer. It also relies on outside partners for services, such as system integration, installation, on-site repairs, and consulting. Because of the direct sale model and outsourcing, Dell can lower the cost of products and handling expenses. Therefore Dell is able to provide competitive price and reliable products for its customers.
Strategic business units
A strategic business unit (SBU) has three characteristics: it is a single business or collection of related businesses that can be planned separately from the rest of the company; it has its own set of competitors; and it has a manager responsible for strategic planning and profit performance who controls most of the factors affecting profit. (Kotler 28) SBU is a significant organization segment, and it varies from organization to organization. In large companies, SBU could be a company division, a single product, or a complete product line; in small companies, SBU might be the entire company.
Dell, which defines its business as manufacturer of personal computers would have both individual...