Dell Computers Strategy 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. HISTORICAL REPORT 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.
Why has Dell been so successful despite the low average profitability in the PC industry?
(BIOS) in the IBM. In turn, they designed a BIOS of their own which could be
In 1953 it was estimated that there were 100 computers in the world. Computers built between 1959 and 1964 are often regarded as the "second generation" computers, based on transistors and printed circuits - resulting in much smaller computers. 1964 the programming language PL/1 released by IBM. 1964 the launch of IBM 360. These first series of compatible computers. In 1970 Intel introduced the first RAM chip. In 1975 IBM 5100 was released. In 1976 the Apple Computer Inc. was founded, to market Apple I Computer. Designed to Stephen Wozinak and Stephan Jobs. In 1979 the first compact disk was released around 1981 IBM announced PC, the standard model was sold for $2,880.00.
computers to hit the market, but it was not IBM compatible, so it did not take
Truly a global company, these suppliers are based out of China, Japan, Taiwan, the United Kingdom and the United States (Apple,
This was the same year when Bill Gates and Paul Allen co-founded Microsoft. In 1981, Bill Gates’ company was hired to develop an operating system but rather than creating a new operating system they decided to buy a preexisting operation system called QDOS (Quick and Dirty Operating System) for the amount of 50,000 dollars. After modifying the operating system they bought, they renamed the operating system to MS-DOS. After MS-DOS began selling it brought in a steady income for Gates due to the fact that the PC market was growing and there weren’t many competitors in the market for them to compete with. In 1986, when Microsoft Corporation went public, it made Gates into a millionaire overnight. The following year, Microsoft released their first ever version of
Dell Inc. weakness was cell manufacturing because their assembled computers were being shipped five to six days after the order was placed. It is an inconvenience for the customers to always send their computer away to have it repaired. First, they are left without internet access. Second, the time it reaches Austin, Texas, have it repaired, and shipped back can take days. The company opportunities were the Dell U.K. that open business in 1987 and in that country it was a lot of companies selling cheap computers. Dell Inc. strides on loyalty among customers and employees, and that could only be derived from having the highest level of service and performing products. Segmentation within the company enables them to measure the efficiency of the business in terms of assets use. Dell Inc. evaluates their return on invested capital in each segment, compare it with other segments, and target what the performance of each should be.
was introduce in 1971. IBM then came out with more advance computers such as System/38 in 1978 and the AS / 400 in 1988.
Speaking about the business model of Dell, it has ability to remain on the higher end of the scale for a particular time period. Dell has business model, which primarily focuses on direct selling line of attack. It in a straight line supplies the PCs to the regulars. It does not believe in intermediary, retailers for the business practices. Undeniably, this gives them an edge to serve customer well. Nevertheless, it understood the importance of retailers and start offering products on the premises of retailers, such as Wal-Mart, Sam’s Club and so on. Next, Dell administration is certain of the exclusive business of PCs. As time goes on, however, observing the
Among the company’s first products is the Apple Macintosh, a computer that was introduced in 1984. According to its
Unannounced to Jobs Hewlett admired his initiative and gave him a summer at HP assembling frequency counter. In 1975 the first apple computer was created and officially sold to the public. At the time Jobs and his business partners where...
Dell, Inc. pursued an aggressive growth strategy which was met with equally aggressive customer demand. Dell delivered a quality product for a reasonable price and this value that Dell created for their customers was initially unmatched by rival computer companies. In fact, Dell saw this as an opportunity to expand their product line to include items such as printers and software. The company’s sales increased from $389 million in 1989 to $2.9 billion in 1993 (McGraw, 1994). However, the management structure did not grow with the company (McGraw, 1994). Financial results were not analyzed properly and the company was not being strategically managed (Hunger, 2006). Dell’s management team decided to slow their growth initiatives in part by eliminating retails sales of their products (Hunger, 2006). This decision created three distinct problems for the company. First, customers were unhappy that t...
Dell is a company leader in delivering the latest technology in computer systems to customers, and a broad range of products that enhance the service. The main concept is to sell directly to customers without intermediaries to better understand their needs and provide personalize assistance to take customers to the next level of service. (1)
Historically, personal computer companies produced most of the components for a computer which they assembled into their final products and distributed to resellers. The manufacturing of these components was vertically integrated into the organisation. Dell, as a small start-up, could not build this infrastructure. Instead, they developed a model where they developed relationships with organisations that could provide these components, allowing Dell to focus on selling and delivering computers. By selling directly to customers, initially through mail orders and later by using the internet, Dell avoided reseller mark-up. Dell also enabled customers to order customised computers, which Dell then assembled after receiving the order (Magretta, 1998, p.73-74). “Customers got exactly the computer they wanted and Dell saved money making the computers only when they were ordered” (Hill & Seggewiss, 2008)....
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.