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Dells business strategy
Dells business strategy
Dells business strategy
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Case Study of Dell Computer Corporation
Introduction
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.
Hewlett-Packard is one of the most innovating companies in today's modern world. They specialize in building and producing computer software, hardware, and networking devices, but their main manufactures in their production lines are personal computers and a vast amount of printers. In addition to manufacturing computer technology, they're also involved in various military contracts that help the United States in their defense systems and infrastructure. As a result, how are these contracts helping our country's military progression and why have we developed a partnership with this private company to build numerous long-term contracts? In this paper, I plan to inform you on the company of Hewlett-Packard and how their help to the military has progressed the United States and their war efforts in fighting around the globe.
In today’s world Global Corporate Social Responsibility is a pressing Topic. In most cases a collaboration between a buyer and a seller or supplier must collaborate and participate in the makeup of Corporate Social Responsibilities. According to the Business Dictionary Ethics are the proper Business Policies and practices regarding potentially controversial issues such as corporate governance insider trading, bribery, discrimination, corporate and social responsibility.
This concept created the big change that causes the competitive advantage. Dell eliminated reseller 's markup and the expenses and the risks associated with conveying huge amount of inventories. This could not have happened without many other action that Dell has taken into consideration. So, other companies had to had to create all the components themselves. Indeed, all the various pieces of the industry had to be vertically integrated within one firm. These companies needed to manufacture enormous structures to create everything a PC required. They had no real option except to end up being expert in a wide array of components, some of which had nothing to do with creating value for the client. On the other hand, Dell has a different approach that they establish a partnership with different companies to help them produce their products. So, they have fewer things to manage, fewer things to go wrong, which enabled them to manage their inventories. As a result, this model the direct model has allowed Dell to leverage their relationships with both suppliers and customers, which helped them to build a much larger firm in no
Michael Dell is the founder and CEO of Dell Computers Inc. one of the largest sellers of personal computers in the world. His contribution to the computer industry is the “one-to-one relationship between the company and the customer— there are no intermediaries, no middlemen” (Krames, 2003, p.59). Not only did he relinquish the middleman, he also perfected combination of the bottoms up strategy and the just-in-time (JIT) by waiting till he received orders from the customer to build computers. In doing this, Dell increased its return on investment (ROI) while reducing its inventory overhead cost.
Why has Dell been so successful despite the low average profitability in the PC industry?
In 1984, Michael Dell invested $1,000 in start-up capital to register his business as Dell Computer Corporation, which was known as PC's Limited. The company becomes the first in the industry to sell directly to end-users by passing the dominant system of using computers resellers to sell mass-produced computers. Dell Computer also pioneers the industry first thirty-day money back guarantee. It became the cornerstone of Dell's commitment to expand its service offerings, superior customer satisfaction, and the industries first on site service program. It also established its first international subsidiary in the United Kingdom, and raised $30 million in its initial public offering.
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
According to Michael Cannon, Dell's President of Global Operations, the key differentiators that have made Dell so effective for nearly two decades are its made to order direct sales model and its innovative supply chain (SCN, 2008).
Armed with $1,000 and the desire to create a PC startup, Michael Dell, a 19 year-old, pre-med student at the University of Texas at Austi...
The company did not show much success until its expansion in 2005. In 2005, Lenovo acquired IBM’s “ThinkPad” business (Martin, 2014). This acquisition was a major strategic move for the company as it allowed the company to gain access to the foreign markets and consumers. It also allowed the company to signficantly increase its product offering in terms of volume. By acquiring IBM’s personal computer business, the company became the third largest PC manufacturer in the world (Martin, 2014).
A business is feasible when it is able to generate profits, standstill despite of risks and achieve the founders’ goals (Hofstrand, 2009). In order to meet all of these achievements, the researcher need to investigate investment, technical market and commercial feasibility (How to conduct a feasibility study, 2015). In terms of Business model Canvas, the ‘customer segments’ component presents the market feasibility. Dell has targeted four main segments which allow the company to design, produce, promote and deliver different products with different features. In comparisons, the ‘value propositions’ contribute to the technical feasibility when the product is formed and advertised, ready to deliver. Dell has used different strategies to maintain and developed the brand including remain the same brand name for different products. This strategy is promised to stimulate customers’ awareness of the company, thus, attract numerous number of clients and increase annual profits. Finally, ‘channels’ characteristic focuses on accessing technical feasibility. Dell disposes different channels in order to reduce the transportation and warehouse costs as well as guarantee customers with aggressive on-time delivery. Consequently, as the cost has been lowered and the reputation has been improved, Dell is expected to maximize their revenues
In 1984, the same year that Compaq introduced a PC that included Intel’s new and more powerful 80386 class of microprocessors, beating IBM to market and Michael Dell began building IBM compatible computers in his college dormitory, Lenovo was form as a shop in a small concrete bungalow in Beijing with a mandate to commercialize the Academy’s research and use the proceeds to further computer science research.
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.
Dell Inc had very effectively used the direct marketing channel for the sales of computers to the end consumer. When all the other pc makers were selling through retailers and distributors, Dell had started efficient use of the direct channels.
“The Dell Theory of Conflict Prevention,” is a theory that is approved by multiple famous authors. The theories main points are valuable and the theory should be looked upon more seriously. In Thomas Friedman’s essay, “The Dell Theory of Conflict Prevention,” he gives examples of how global supply chains would be constructive to promoting world peace. Friedman feels that if everyone is an ally to each other in some shape or form, then no one will want to engage in war. Madeline Albright would agree with Friedman’s theory according to her writings in “Faith and Diplomacy.” Albright felt that religion should play a factor in the diplomatic system of America, in order for us to maintain some kind of peace with other nations. Friedman and Albright both were looking for a solution to world peace. Albright would agree with this theory from the religious perspective. Appiah argued that an ideal global citizen would be essential to America, in his essays “Making conversation” and “The Primacy of Practice.” Appiah felt that people must have an understanding of each other in order to get along with each other. Both Appiah and Albright would agree with “The Dell Theory of Conflict Prevention.” “The Dell Theory stipulates: No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain”(Friedman 125).