Dell Computers

Down to business approaches, such as being one of the first companies to make e-commerce and internet usage a centerpiece in their corporate strategy has also benefited the personal computer leader. (Dell Case Analysis, 2004) The explosion of business over the internet helped Dell tremendously. As they followed the vision of built-to-order personal computers and direct sales from the company's inception, the internet gave computer buyers a more convenient medium to purchase Dell computers. The quality control measures Dell undertakes also promote customer loyalty. As purchasing products over the internet became more popular in the late 1990's, there is a noticeable increase in Dell's sales and market share during the same period.

From these humble beginnings the company rapidly grew to be a major competitor in the personal computer market. Dell's focus on efficiency of manufacturing, and a direct marketing approach, allowed him to continue gaining ground on the competition. In 1992, his company joined the Fortune 500 list as one of the largest companies in the world. In 1993 their growth placed them in the top five computer system manufacturers. Through this paper I can suggests that with a focus on maintaining a strong position in the core market and strategic involvement in related sectors, Dell can not only maintain its dominant position, but can extend it.

(Hoovers). In terms of Entry Barriers, Dells direct to consumers sales approach has increased their sales each year and they will soon be among their top competitors. Because of this approach, Dell has entered into this highly competitive market in a unique way. The biggest entry barrier that Dell has to face when entering into the technology industry is having customers gain the trust of company over the more popular veteran computer companies. Nevertheless many of competing companies use a range of different suppliers.

Dell arranges for system installation and management, guides customers through technology transitions, and provides an extensive range of other services. The company designs and customizes products and services to the requirements of the organizations and individuals purchasing them, and sells an extensive selection of peripheral hardware and computing software. Nearly two-thirds of Dell's sales are to large corporations, government agencies and educational institutions. Dell also serves medium and small businesses and home-PC users. Dell's Unique Direct Model: Dell's award-winning customer service, industry-leading growth and consistently strong financial performance differentiate the company from competitors for the following reasons: Price for Performance -- With the industry's most efficient procurement, manufacturing and distribution process, Dell offers its customers powerful, richly configured systems at competitive prices.

Michael Dell had steered his company through many phases and obstacles, making it one of the first computer manufacturers in the world. Basing the company on a direct sales model, with Dell being the only company in the beginning to do so, he grew the business many fold and simultaneously kept cost and inventory levels at a minimum (Days of inventory at 6 days, the lowest amongst peers). This formula worked well for the company till the market dynamics were more or less the same. Dell believed in selling computers as products and relied on branding based on the ability to sell computers effectively. While doing that, other companies such as HP and Apple were turning the art of selling computers into a branding exercise.

COMPANY BACKGROUND Michael Dell started selling personal computers and its components, by a company called PCs Limited, in 1984 when he was only 19 years. He had a simple idea in mind that PCs can be built according to specific order and then shipped directly to the customers. He made it possible by buying the surplus stocks from retailers at cost. He upgraded those items and then sold directly to customers. His new company was selling the computers which performance level was the same as IBM’s but he was able to make profit because he was selling at a 40% discount.

Dell takes position in direct communication with customers and delivers build-to-order computers. The value created by using the direct model to sell customized products and by providing on-site service ranked Dell between market leaders IMB, Compaq, HP. It represents good performance machines at a reasonable price as well as unique and distinctive “Direct Model? while targeting corporate, medium and small sized businesses and home office consumers. The advantage of a strong brand, investment in R&D and direct communication with the customers could successfully lead the company into the laptop market.

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).... ... middle of paper ... ... , accessed 31 Aug 2008.

I would recommend this company as a strong investment due to the rise in sales of newer computers and related software. The growth of Dell Company stock was impressive and my sellout price rose to $73.94 per share. My total gain, by investment in Dell, was $73,329.67. My initial purchase was 1,426 shares @ $20.63. I paid the broker a 2% commission making the share price $21.04.

TOP COMPETITOR ANALYSIS HEWLETT-PACKARD Dell and Hewlett-Packard have been competing for the top position in the personal computer industry for years. In 2006, Dell used to have 16.6% worldwide market share in the PC industry when compared with HP’s 16.5% share, but later fell to 14.9% while HP’s share rose up to 18.8% in 2007. Dell offers a broad range of personal computer related products for the consumers, businesses, educations, and government sectors. Amongst its competitors, Dell stands out as a world leader in direct sales of computers. It has a flexible and reliable supply chain management that reduces costs.