Key factors of successful e-commerce - what HP can learn from Dell

Term Paper, 2006

19 Pages, Grade: 58


Table of contents

Executive Summary

Importance of the Internet
E-Business and E-Commerce
Dell as an e-business pioneer

1. Success factors of e-commerce
Innovative culture
Focusing on Core Competences
Customer Relationship Management (CRM)
Efficient E-Supply Chain Management
Mass Customization

2. Importance of the integration of information across the whole supply chain
External integration of information
Internal integration of information

3. Benefits and risks
3.1. Benefits
E-business facilitates operating globally
24-hours open stores
Cost reduction
Efficiently constructed supply chain
Mass customization
Customer relationship
Availability of the latest information materials
3.2. Risks
No face-to-face contact
Products cannot be touched

4. Critical appraisal of the Dell e-business initiatives versus HP’s current model
Business model of Dell
4.1. Distribution channels
Direct sale system of Dell
4.2. Supply chain management
Information flow
4.3. Customer Service


Reference list

Executive Summary

Today Dell is a market leader that constantly gains competitive advantage with its effective e-commerce strategies. The following report was prepared for the Chief Executive Officer of HP in order to demonstrate the opportunities his company could realize by changing its traditional distribution system and starting to make use of e-commerce as a main distribution channel and to efficiently manage the supply chain through the internet.

Advanced e-commerce strategies hold many benefits. Dell was able to benefit from opportunities as they consequently considered some key factors of successful e-commerce:

- A continuous information flow enabled them to improve the relationship between all participants of the supply chain. As a result the company could reduce its inventory costs and deliver customers products and services they require.
- Dell further recognized the importance of a premium customer service as a key element for success. The selling of products directly through the internet without an intermediate is including cost saving potential but also risks due to the missing face-to-face contact between buyers and sellers.
- Further to that Dell aims to meet exactly the needs of its customers by offering mass customized products.

A company like HP should first start to establish e-commerce initiatives as an additional distribution channel as the electronic sale platform is getting a key role in the business life of today.

For a short-term step-by-step introduction of e-business the following recommendations could serve as a guideline:

1. integration of the internal databases in order to provide comprehensive information
2. create an e-business platform and make product range offered through catalogues available through an internet store.
3. establish electronic supply chain management.
4. Offer an effective online customer service through personalized web pages and the establishment of customer interaction centres.

This way the company can prevent losing market share to competitors like Dell and other successful e-business companies.


Importance of the Internet

The internet has a dramatically impact on every kind of organisation. It forms completely new challenges on the one hand but on the other hand it offers entirely new facilities. Through the establishment of digital networks, a considerably faster and less expensive way is created to change information with others. Additionally spatiotemporal borders disappear (Pörner, 2002). Totally new business models were developed during the last decades and companies discovered completely new strategies to gain competitive advantage (Phillips, 2003, p.33).

E-Business and E-Commerce

According to Turban et al. (2005, p.4) e-commerce is the realisation of all business activities realised via computer networks. E-Business in contrast does not only include the buying and selling process but everything else like e.g. the customer service, the corporation with suppliers and every internal process of the organization handled via an established digital network.

Dell as an e-business pioneer

Today Dell Computer Corporation is considered to be the market leader in doing successful e-business through the Internet. Dell was the first company that was using the direct-marketing business model to sell such an expensive good like a PC directly to its customers without the intermediation of a reseller (Turban et al., 2005, pp. 2–3).

The new Chief Executive Officer of HP instructed the author as the business consultant to write a report about the opportunities the new e-business strategy can offer for HP’s product marketing. The following report will give an overview of general requirements to a company to operate successfully in e-business. Further it will highlight the importance of the continuous integration of information in business workflows. Furthermore benefits and risks of e-commerce are given. To put all findings in context, the third section is giving an evaluative comparison of the business models of Dell and HP. A short conclusion is listing recommendations for HP.

1. Success factors of e-commerce

According to Turban et al. (2005, pp. 15-19) to become successful and able to gain competitive advantage organisations must take into account technological, economic and social forces. Thus all below-mentioned key elements cannot lead to successful e-commerce if connected decisions are not made in consideration of external conditions.

Innovative culture

Continuous efforts to improve products, services and internal operations are crucial to sustain competitive advantage. Nowadays competition is getting harder and harder due to a larger number of competitors as a result of the globalisation, and faster product life cycles. Therefore a key for success is that companies never stop thinking about how they can improve all business processes. To guarantee a constantly high innovative rate, organisations should create teams who are responsible to develop new creative ideas. Also employees should be asked to come up with own ideas and suggestions that could lead to improvements - above all employees who communicate directly with customers (Saunders, 2000, pp. 131-135).

Focusing on Core Competences

Core competences are certain skills on which the success of a company is based on. These skills enable the company to differentiate from their competitors in a specific area, and they are recognized from customers as a very beneficial enrichment. Companies should concentrate its available resources to its core competences. After identifying its extraordinary skills organizations should find out its non-core qualifications. These non-core elements should be subject of outsourcing (McIvor, 2005, pp.47–49). Outsourcing can create lots of benefits to companies like e.g. increasing flexibility, saving costs or always being up to date in the area of its core competences (Grembergen, 2003, p.312). Further outsourcing offers the chance to establish long and beneficial partnerships with other companies (Turban, 2006, p.601).


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Key factors of successful e-commerce - what HP can learn from Dell
Northumbria University
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The task was to create a report prepared for the Chief Executive Officer of HP to demonstrate the opportunities his company could realize by changing its traditional distribution system and starting to make use of e-commerce as a main distribution channel and to efficiently manage the supply chain through the internet.It provides an analysis of the key elements, which characterise successful e-commerce initiatives. Further, it critically appraises the e-business initiatives deployed by Dell.
Quote paper
Juliane Kuballa (Author), 2006, Key factors of successful e-commerce - what HP can learn from Dell, Munich, GRIN Verlag,


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