Dell Computers Strategy
Length: 1587 words (4.5 double-spaced pages)
Global companies play an important role in the business environment, because they connect their business together around the world. A good example of a global company is Dell Inc., an American computer-hardware company, headquartered in Austin Texas, which develops, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. They design, build and customize products and services to satisfy a range of customer requirements: from the server, storage and Premier Services needs of the largest global corporations, to those of consumers at home. According to the Fortune 500 2006 list, Dell ranks as the 25th-largest company in the United States by revenue.
Dell Inc. has realized that the most efficient path to the customer is through a direct relationship, with no intermediaries to add confusion and cost. With the power of their direct model and their team of talented people, they are able to provide to their customers high-quality, relevant technology, customized systems, superior service and support and products and services that are easy to buy and use.
Dell Inc, was founded as “PC’s Limited” in 1984 by Michael Dell, while still a student at the University of Texas at Austin, with just $1000. From Michael Dell's off-campus dorm room at Dobie Center, the startup aimed to sell IBM-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs. In that year, the company became the first in the industry to sell custom-built computers directly to end-users, bypassing the dominant system of using computer resellers to sell mass-produced computers.
In 1985 the company produced (in China) the first computer of its own design (the "Turbo PC").
In 1986, Dell unveiled the industry's fastest-performing computer, pioneers the industry's first thirty-day money back guarantee, and offers the industry's first onsite service program.
In 1987, PC's Limited set up its first on-site-service programs in order to compensate for the lack of local retailers prepared to act as service centers. Also, the company set up its first operations in the United Kingdom; eleven more international operations followed within the next four years. In June 1988, Dell's market capitalization grew by $30 million to $80 million from its initial public offering of 3.
5 million shares at $8.50 a share. The company changed its name to "Dell Computer Corporation" in 1988.
In 1990, Dell Computer Corporation tried selling its products indirectly through warehouse-clubs and computer-superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model.
In 1992, Fortune magazine included Dell Computer Corporation in its list of the world's 500 largest companies.
In1994, Dell launched its new Latitude notebook line with record-breaking battery line. The company launched also Dell Japan and opens its first operations in the Asia-Pacific region, which has become the fastest growing international startup in the company's history.
In 1996 Dell began selling computers via its web site. The company's quiet bid to sell custom-built computers over the Internet quickly became a public revolution when the company announced that sales over www.dell.com had exceeded $1 million per day. Dell introduced also its first custom custom-made web links for customers.
In 1998, Dell became the number two manufacturer and marketer of personal computers in the world. The company grew five times faster than the industry rate. Its stock rises more than 200% - the largest share-price gain in the S&P 500 and the NASDAQ 100. Dell solidified its Internet leadership when its sales top $12 million per day over the Internet. The company opened an integrated sales, manufacturing and support center in China. Dell established web-based connections with its suppliers to speed the flow of inventory and quality information.
In 1999, Dell became the No.1 PC’s company in the United States. To accommodate its growth, Dell opened new manufacturing facilities in U.S.A. and Brazil. Sales over www.dell.com top $35 million per day. Dell overtook Compaq to become the largest seller of personal computers in the United States of America with $25 billion in revenue reported in January 2000. To recognize the company's expansion beyond computers, the stockholders approved changing the company name to "Dell Inc." at the annual company meeting in 2003.
In March 2004 Dell attempted to expand by tapping into the multimedia and home-entertainment markets with the introduction of televisions, handhelds, and digital audio players. Dell has also produced Dell-brand printers for home and small-office use. Michael Dell stepped aside as Chief Executive Officer (CEO) on July 16, 2004, but retained his position as Chairman of the Board. Kevin Rollins, who had held a number of executive posts at Dell, became the new CEO.
In January 2005 the share of sales coming from international markets increased, as revealed in the company's press releases for the first two quarters of its fiscal 2005 year.
In February 2005, Dell appeared in first place in a ranking of the "Most Admired Companies" published by Fortune magazine.
On 23 March 2006, Dell purchased the computer hardware manufacturer Alienware. The plan envisaged Alienware continuing to operate independently under its existing management. Alienware expected to benefit from Dell's efficient manufacturing system.
On January 31, 2007, Kevin Rollins, CEO of the company since 2004, resigned abruptly as both CEO and as a director, and Michael Dell returned to the CEO role.
DELL’S VISION STATEMENT
"With the power of direct and Dell's team of talented people, we are able to provide customers with superb value; high-quality, relevant technology; customized systems; superior service and support; and products and services that are easy to buy and use".
Dell's vision includes a culture where environmental excellence is second nature. Their operations will place a high priority on waste minimization, recycling, reuse programs and pollution prevention, align with the principles of their direct business model - efficiency delivers customer value
“To be the most successful computer company in the world at delivering the best customer experience in markets we serve”
Dell was created on a simple concept: it’s Direct Business Model, which starts and ends with our customers. Michael Dell firmly believed that by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. This direct business model eliminates retailers that add unnecessary time and cost, or can diminish Dell's understanding of customer expectations. The direct model allows the company to build every system to order and offer customers powerful, richly-configured systems at competitive prices. Dell also introduces the latest relevant technology much more quickly than companies with slow-moving, indirect distribution channels, turning over inventory every four days on average. Dell Inc. is at the top of innovation and technological development in computer’s industry; and Innovation is the only sustainable competitive advantage available to the business.
Dell is enhancing and broadening the fundamental competitive advantages of the direct model by applying the efficiencies of the Internet to its entire business. The company is increasingly realizing Internet-associated efficiencies throughout its business, including procurement, customer support and relationship management.
Dell is the world's most preferred computer systems company, and a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Dell's climb to market leadership is the result of a persistent focus on delivering the best possible customer experience by directly selling computing products and services based on industry-standard technology. Revenue for 2006 totaled $55.908 Billion USD (2006), Net income $3.572 Billion USD (6.39% profit margin) and the company employs approximately 65,200 team members around the globe.
• Customer-Driven: Dell innovation starts with customers. These requirements drive Dell technology initiatives, innovations, and product directions. For that reason, Dell has made alliances with its customers, sharing risks and profits, allowing the customers to participate in the making decision processes. Therefore, Dell Inc. manufactures and sells only what the customer needs; they can suggest alternatives to adding values to the products. Consequently the relationship Company-Customer becomes stronger and probably the customers develop more loyalty to the brand.
• Effective Research and Development (R&D): A fierce commitment to producing consistently high quality, custom-made computer systems that provides the highest performance and the latest relevant technology to the customers Dell products may be developed in house or by working closely with strategic partners. Customer feedback throughout this cycle reinforces Dell's focus on relevant technologies that address real customer requirements.
• Open Innovation: Dell R&D organizations steer enabling industry standards and technologies through industry groups and strategic partners, and develop innovative, nonproprietary, open standards-based products. Dell's focus on product leadership and continuous improvement produces significant innovation. The U.S. patents granted to Dell for its developments in product, online and operations technology provide examples of this innovation.
• Build-to-Order: They provide customers exactly what they want in their computer systems through easy custom configuration and ordering. Build-to-order means that they don't maintain months of aging and expensive inventory. As a result, they typically provide their customers with the best pricing and latest technology for features they really want.
• Scalable economy/Low-Cost Leader: By simplifying operations and improving utilization, organizations can take advantage of cost-effective scaling. Industry-standard enterprise hardware and integrated systems management tools enable organizations to pay as they grow and as demand dictates. They focus resources on what matters to our customers. With a highly efficient supply chain and manufacturing organization, a concentration on standards-based technology developed collaboratively with their industry partners, and a dedication to reducing costs through business process improvements, they consistently provide their customers with superior value.