Essay PreviewMore ↓
Michael Dell founded Dell Computer Corporation in 1984 with a simple vision and business concept – that personal computers can be built to order and sold directly to consumers. Michael believed his approach had two advantages: (i) by passing distributors and retail dealers eliminated the markups of resellers, and (ii) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components and finished goods. Its build-to-order and sell-direct approach proved appealing to growing numbers of customers in the mid 1990s as global PC sales rose to record level. In 1998, it was already the 3rd manufacturer in the United States with a 12% share of PC market and a nearly 6% share worldwide. The company’s fastest growing market for the past several quarters was Europe. Even during the Asia economic woes in the early 1998, Dell’s sales in Asia rose 35%. Its sales at the Internet Web site were about $5 million a day and expected to reach $1.5 billion annually by the year-end 1998. Since 1990, Dell’s stock price had exploded from 23 cents per share to $83 per share in May1998 with a 36,000% increase and was the top performing big company then.
Dell’s principal products included desktop PCs, notebook computers, workstations, and servers. Its products and services were sold in more than 140 countries. The sales of desktop PCs alone accounted for about 65% of Dell’s total revenues while the rest accounted for about 33%. In early 1988, the company has 16,000 employees.
Dell’s Background and Vision
Dell Computer was first known as PCs Limited in 1984, selling PC components and PCs under the brand name PCs Limited. Dell’s strategy was to sell directly to end users; by eliminating the retail markup, Dell was able to sell IBM clones at about 40% below an IBM PC price. By 1985, the company was assembling its own PC designs and had about 40 employees. Sales had reached $33 million by the year ending 1986.
Michael Dell sought to refine the company’s business model, add needed production capacity, and build a bigger, deeper management staff and corporate infrastructure while at same time keeping costs low. It first international offices were opened in 1987 and was renamed Dell Computer. In 1998, Dell became a public company, raised $34.2 million in its first offering of common stock.
Michael Dell’s vision was for Dell Computer to become one of the top three PC companies.
How to Cite this Page
"Case Study of Dell Computer Corporation." 123HelpMe.com. 18 Jan 2020
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Continental Computer Corporation (CCC) is a $9 billion a year organization that for years has allow their three division to implement different sets policies. According to Ed White, vice president for engineering, “This poses a problem for us at corporate headquarters because career opportunities and administrative policies are different in each division” (Harold Kerzner, 2004, p. 655). Each division has implemented different organizational structures, administrative policies and their own career opportunities.... [tags: Project management, Management]
1252 words (3.6 pages)
- ... Intel’s competitive analysis Value Chain Intel Corporation has an interesting value chain. It has numerous suppliers and even bigger number of customers. The company’s value chain is shown in the diagram below. Intel Corporation leverages its technology to stay high up in the value chain. Intel has leveraged its positioning to become the most widely-used microprocessor in the PC market. The company has a reputation of bringing the fastest and most innovative product in the market and has become the go-to processor for most computer systems available.... [tags: Microprocessor, Technology, Computers]
1650 words (4.7 pages)
- Dell Computer Corporation Dell Computer Corporation was recognized as the leader in personal computers during the 1990’s. However, economic instability and competitors gaining market share, heavily affected the company. In 2001, PC sales declined, layoffs were constant, and employees were disengaged. Thus, to revitalize the company a new philosophy statement called “The Soul Dell” was unveiled throughout the organization. However, the central problem for Dell was the methodology used to develop and communicate its core values to employees.... [tags: Technology, Personal Computers]
1277 words (3.6 pages)
- Wal-Mart, now it is branded as Walmart is the world largest public multinational corporation by revenue in 2010, which runs a chain of large discount department stores and a chain of warehouse stores worldwide. Walmart focuses on the improvement of sales, constant reducing costs to offer goods at the best price, the adaptation of efficient distribution and logistics management systems to ensure the constant flow of the goods and the use of innovative IT and systems to accurate efficient operating processes.... [tags: Walmart Case Study]
1606 words (4.6 pages)
- Background In July 1996, Alert J.Dunlap (also known as Chainsaw Al)was hired as CEO and Chairman by Sunbeams' board of directors to help the company from a period of lagging sales and profits and make it an attractive acquisition target. Dunlap used cost-cutting style method and had a reputation for results that immediately the price of Sunbeam stock price increased by 60 percent. How things begin. In 1997, Dunlap fired thousands of employees, shut down factories and warehouses, and streamlined the company by eliminating products and selling businesses unrelated to its core products.... [tags: Case Study]
1949 words (5.6 pages)
- Interactive Computer Systems Business Case Study Summary of Decision Situation Interactive Computer Systems was a multinational manufacturer of computer systems and equipment. The Company was primarily a U.S based corporation with the majority of its engineering and manufacturing facilities located in the eastern United States. The company was headquartered (parent company) in the U.S and worldwide offices referred as subsidiaries. For example, when a customer in France orders a system, the order is processed by the local European subsidiary.... [tags: Papers]
1282 words (3.7 pages)
- Microsoft Corporation Case Analysis Microsoft is the leading and the largest Software Company in the world. Found by William Gates and Paul Allen in 1975 Microsoft has grown and become a multibillion company in only ten years. It all started with a great vision – “a computer on every desk and every home” - that seemed almost impossible at the time. Now Microsoft has over 44,000 employees in 60 countries, net income of $3.45 billion and revenue of 11.36 billion. Company dramatic growth and success was driven by development and marketing of operational systems and personal productivity applications software.... [tags: Business Analysis]
1254 words (3.6 pages)
- Rite Aid Corporation which ranks as the third largest retail drugstore chain in the United states, control about 2,380 drugstores in 28 states across professionals pharmacy service, a full selection of health and personal care products, an assortment of general products in the nation and in the District of Columbia ( Rite Aid, 2007 ). Rite Aid has a great management team to help them with their success their team includes Chairman, President and Chief Executive Officer, Special Advisor, Corporate Strategy ,Chief Operating Officer ,Chief Administrative Officer ,Executive Vice President – Pharmacy, Executive Vice President, Store Operations ,Executive Vice President and General Counsel(... [tags: Business Analysis]
1096 words (3.1 pages)
- Optical Fiber Corporation SWOT ANALYSIS Environment Fiber optics is a new technology that uses rays of light instead of electricity to transmit information over optical fibers at very high speeds. The optical fibers are usually thin strands of glass that are combined into cables and used to send information and computer data in the form of pulses of light. The optical fibers provide much clearer transmission than conventional copper cable and satellite links. The world market for optical fiber continues to grow rapidly, with shipments increasing 14 percent from an estimated 7.0 million kilometers of fiber in 1990 to approximately 8.0 million in 1991.... [tags: Business, Case Study, solution]
1070 words (3.1 pages)
- Abstract In today’s highly competitive business world, companies face new challenges daily. Good Sports is not the first company that changed their strategy in order to better manage the organization. The company’s organizational structure, culture, conflict management and emotional intelligence were analyzed. Good Sports’ strategies were compared and contrasted with Microsoft and Xerox. When faced with issues similar to Good Sports, both Microsoft and Xerox opted to change strategies. Realizing the problem and implementing change helped both companies move toward becoming more successful.... [tags: Business, Case Study, solution]
1951 words (5.6 pages)
Q1. Why has Dell managed to achieve its current status in the PC production area?
Dell Computer achieved its status due to its competitive advantage as an integrated PC manufacturer by selling its PCs directly to customer according to their specifications and requirements. Dell employed a shorter value chain, bypassed retailers to eliminate markups, time and cost associated with distribution. It also reduced the high costs and risks associated with carrying large stock of parts, components and finished parts. Dell was able to custom made PCs for individual owners who were buying their 2nd and 3rd computers by providing powerful multiple features they desired. These individuals did not need much technical support chose Dell because of the convenience of buying direct, ordering what they wanted and having it delivered to their doors within a matter of days. Dell even set up an internal sale and marketing group dedicated to serve the individual consumers segment and introduced product line designed especially for individual users.
Michael Dell himself is a charismatic leader with an instinct for motivating people and winning their loyalty and respect. He delegated authority to his subordinates, believing that the results come from turning loose talented employees to do what they are supposed to do. With an aggressive and extremely competitive risk-taker personality, the people Dell hired were aggressive and competitive as well. These traits had translated into an aggressive, competitive, intense corporate culture with a strong sense of mission and dedication.
Q2. What are the key elements of Dell’s strategy?
Dell Computer’s strategy was built around a number of core elements: build to order manufacturing, partnerships with suppliers, mass customization, direct sales, just-in–time components inventories, market segmentation, customers service and extensive data and information sharing with both supply partners and the customers. With the above elements integrating into the Dell’s strategy, the company hoped to achieve the “virtual integration” – a stitching together of Dell’s business with its supply partners and customers in real time that all three will appeared to be part of the same organizational team.
Q3. What are the likely key policies, practices, support systems, and the management approaches Dell has used to implement its strategy?
Key Policies - Dell customized its computer, workstation, and servers to customers’ liking and pocketbook, and none of them were manufactured for inventory. Customers could order them based on the needs of their application, multiple features and configurations they preferred. This direct sales strategy meant that Dell had no in-house stock of finished goods inventories and did not have to wait for resellers to clear out their own inventory before it could push new models into the market place. In addition, direct selling gave Dell firsthand intelligence about customer preferences and needs, as well as immediate feedback on design problems and quality glitches.
Practices – Dell believed long-term partnership with reputable suppliers of PC parts and components made much better sense rather than integrating backward and manufacturing its own. Some of the advantages were, firstly, using branded name components and parts enhanced the quality and performance of Dell’s PCs. Secondly, Dell was assured of getting the volume of components it needed on timely basis even when demand exceeded the market supply. Thirdly, the partnership allowed feasibility to have some of the suppliers’ engineers in Dell’s product design team. Fourthly, Dell’s long-run commitment to it suppliers laid the basis of just-in-time delivery of suppliers’ products to Dell’s assembly plants. Just-in-time inventory emphasis yielded major cost advantages and shortened the time it took for Dell to get new generations of its computer models into the marketplace.
Support Systems – With much emphasis on service, virtual integration and information sharing with both its partners and customers, Dell began to provide a guarantee free-on-site service for a year with most of its PCs. Dell contracted local service providers to handle customers’ request for repairs, on site service and technical support. It also bundled service policies to win corporate accounts. By maintaining a close customer relationships had allowed Dell to be knowledgeable about customers’ needs and their PC network function. Dell adopted “virtual integration” feature by using on-line communication technology and information sharing with both supply partners and customers for easy inventory control and replenishment. Its used sales and support mechanism to stay close to customers to stimulate information flow with customers. Dell developed customized intranet sites to give customers immediate on-line access to purchasing, sales and support contacts, detailed product description, service and warranty records, pricing and available technical support in every country.
Management - Accurate sales forecasts were keys to keeping cost down and minimize inventories. By maintaining a diligent close relationship with large corporate and institutional customers, and by direct sales, it enabled Dell to keep a finger on the pulse of demand. Market segmentation strategy paved in-depth understanding of customers’ requirement and expectation. Dell passed that knowledge of forecast demand to suppliers so that they could plan their production accordingly. The management deemed that quality control and streamlined the assembly process to ascertain now new development in component can be used to PC users. Dell sorted out new technology and helped steer customers to options and solution most relevant to their needs. Management also believed the power of advertising and frequently espoused its importance in company’s strategy.
Q4. What problems do you see ahead of Dell?
There were a number of factors that could affect Dell substantially. The drops in components prices resulted in dramatically lowered PC prices. Dell had to re-price its PCs under $1500 range. The economic woes of Asian countries put a big damper on PC sales in Asia. Sharp appreciation of US dollars against Asian currencies had made US-produced PCs less affordable. Beside economic difficulties in Asia, market maturity was potential for PCs makers. These few factors resulted rival PCs makers to use PC sale as an entree to providing bigger lineup of other products.
There were stiff competitions from other competitors as they are shifting their business models to build-to-order manufacturing to reduce inventory and speed up new model to market. Other PC makers even come out a new policy of trading in the old computer for new computer system once every two years. With all the above coupled with the latest financing scheme of low monthly repayments plan targeting at individual and household provided by these rivals PC makers, this will affect the profit margin and the market shares for Dell. Dell will face a greater competition and challenges from competitors as well as the up and coming giant mobile phones companies like Ericsson, Motorola and Nokia, whom are incorporating the PC system into the latest range of mobile phones. To stay ahead of the competition, Dell’s strategy has to be differentiated in order to protect their market share.