Dell had a business model: entry level, low cost PCs which were sold by mail or over the web. They decided to start outsourcing capabilities to one of their component suppliers, Asus. Asus came to Dell with an interesting proposition: Weve done a good job making these little circuits for you. Let us supply the motherboards for your computers, too. After it had reorganized to accommodate this arrangement, Asus came to Dell and said, Weve done a good job manufacturing these motherboards for you. Why dont you let us assemble the whole computer for you, too? The Dell analysts realized that this, too, was a win-win. That process continued as Dell outsourced the management of its supply chain, and then the design of its computers themselves. Dell essentially outsourced everything inside its personal-computer businesseverything except its brandto Asus. Then, in 2005, Asus announced the creation of its own brand of computers. Asus had taken everything it had learned from Dell and applied it for itself. It started at the simplest of activities in the value chain, then, decision by decision, every time that Dell outsourced the next lowest-value-adding of the remaining activities in its business, Asus added a higher value-adding activity to its business. Dell started out as one of the most exciting computer companies around. Dell doesnt build those computers. It doesnt ship those computers. It doesnt service those computers. It simply allows companies in Taiwan to put the name Dell on the machines. This is a cautionary tale about the dangers of outsourcing a firm's core capabilities. There are some functions and processes, for which augmentation and NOT outsourcing is the best option.

A. Describe the competition in PC industry according to Porters 5 Force Model.