Competitive StrategyCompetitive strategy is the approach an organization takes to gain an advantage over its competitors. According to Porter, there are two main sources of competitive advantage: costs and differentiation. Cost-based competitive advantage involves reducing production costs so that an organization can earn a higher profit margin or offer products at a lower price than competitors. Competitive advantage based on differentiation involves offering unique properties that are not offered by competing products. Differentiation allows an organization to charge a premium for its products because they offer additional benefits to buyers. Dell's initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus primarily on differentiation. His strategy was to sell customized personal computer systems directly to customers, which was a rapidly expanding market at the time (1). This was done by targeting second-time buying customers, those who already understand computers and know what they want. Meanwhile, other companies at the time were selling "plain brown case computers" (2). By offering customizations, Dell gained a better understanding of customers' needs and wants. This helped the organization position itself differently than more popular brands, such as Compaq and IBM. This strategy was implemented by selling via telephone, fax and direct sales, instead of selling through retail stores. This approach not only differentiated Dell from other competitors at the time, but also reduced operating costs since it did not have to rent expensive retail space. Additionally, Dell's strategy of selling customized computers has allowed it to hold only a small amount of inventory, which reduces... half the paper... January 25, 2010.] http://www.casestudyinc .com/dell -india-strategy.15. Hill, Charles W. L. International Business: Competing in the Global Marketplace. New York: McGraw-Hill, 2007.16. Brian T. Gladden. Dell.com. [Online] [Cited: February 25, 2010.] http://content.dell.com/us/en/corp/d/bios/BrianTGladden.aspx.17. Customer-oriented innovation. Dell.com. [Online] [Cited: February 25, 2010.] http://content.dell.com/uk/en/corp/d/corp-comm/cto-customer-driven-innovation.aspx.18. Rugman, Alan M. and Collinson, Simon. International Affairs 4th Edition. Essex: Pearson Education Limited, 2006.19. Sodhi, Sunil Chopra, and ManMohan S. Risk Management to Avoid Supply Chain Disruption. MITS Loan Management Review. [Online] October 15, 2004. [Cited: February 25, 2010.] http://sloanreview.mit.edu/the-magazine/articles/2004/fall/46109/managing-risk-to-avoid-supplychain-breakdown/.