Dell Inc. Case Stuey

Dell Inc. Case Study

Michael Dell, a gifted entrepreneur at the age of 13 began a quest to make money through stamp collecting and trading then expanded to a national catalog business that earned him close to $2000 per month. Not knowing at that time that by 1984 he would be starting his own company with as little as $1000 in startup capital and would go on to grow his own business with a gross profit of $11,671 million as of February 2008.

In 1984 Michael Dell founded his company on a simple concept of selling computer systems directly to the customers, he felt that he could best understand the needs and provide the most effective computing solutions to meet those needs. He registered first started his business under the name of PC’s Unlimited, a company first in the industry to sell custom-built computers directly to the customers. With Dell’s first computer system of its own design in 1985 and by offering risk-free returns and next-day, at home product assistance, Dell was able to establish the customer experience and offer personal service. In 1987 Michael Dell renamed his company to Dell Computer and added and international sales office. With new management changes, the company then started selling to larger customers and government agencies in 1988. Within four years after the company’s founding, Dell increased the market capitalization of the company from $1,000 to $85 million.

In the 1990’s Dell shifted to larger operations by distributing in retail outlets in the U.S. and Latin America; however, by 1994 Michael Dell realized that the profit margins associated with selling through retail distribution were too tight. With this revelation, the company discontinued retail sales to refocus on direct sales efforts. It was this same year that Dell became the first computer company to list a web site that first simply listed price and product information but quickly realized the advantages of direct sales through the web site. By 1999 Michael Dell had grown his company to be the largest retailer on the Internet. By selling primarily through internet sales and custom computer manufacturing per the customers order, there has been a reduced need for warehouse space to house finished products and component parts. The cost and profit advantages have contributed to Dell’s success while many of their competitors have weakened and gone out of business.

Over 25 years of impact on the PC industry, Dell has developed from selling computers from his college room to introduction of their first notebook in 1989, to E-Support (an online tool to provide technical support to customers). In 2004 Dell launched the industry’s first storage area network and the industry’s first standards-based systems using quad-core processors. With all the advancements over the years, Dell tops the list of “America’s Most Admired Companies” in Fortune Magazine.

Every company sums up their goals for their company through their mission statement. Dell’s mission is to be the most successful computer company in the world and to deliver the best customer experience in markets they serve. In order to do that they feel that meeting the customers expectations through high quality, leading technology, competitive pricing, individual and company accountability, best in class service and support, flexible customization capability, superior corporate citizenship, and financial stability. Along with the mission statement, every company has a vision as to where they see them selves going, for Dell their vision is through the way they do business. It’s the way they interact with the community. It’s the way they interpret the world around them, their customers’ needs, the future of technology, and the global business climate. Whatever changes the future may bring, Dell’s Vision will be their guiding force.

Dell Computer’s competitive strategies for future success are: 1. Speed to the market, introduce new products faster than the competition. 2. Measure performance by customer satisfaction, customer care is vital to the survival and success of any company. 3. A fierce commitment to producing consistently high quality, custom-made computer systems that provide the highest performance and the latest relevant technology to the customers. 4. Early exploitation of the internet. Dell feels that they can maintain profitability by reducing operating expenses and by continuing to leverage its lean inventory model to rapidly realize the benefit of component price declines. Dell has aggressive competition in all aspects of its business. Competing on the basis of price, technology availability, performance, quality, reliability, service and support is high focus for Dell’s strategy planning within the market.

Every company has to from time to time take a look at their strengths, weaknesses, opportunities and threats. With careful evaluation of these they are better prepared to plan for future success. Dell Computers has many more strengths than weaknesses and with the technology that it is in the year 2008; the treats can be much more widespread than in most industries. With the company analysis listed below, a better outlook for the company can be planned.

Strengths: Weaknesses:

• No inventory buildup

• Industry leading growth

• Cost efficiency

• Direct to customer business model

- latest technology

• Customization

• Internet sales leadership

- $5M worth of products everyday

• No proprietary technology

• High dependency on component suppliers

Threats: Opportunities:

• Competition (price and market share)

• Currency fluctuation in countries

Outside the US

• Political instability

• Tariff trade barriers • Network-internet, intranet and extranet

• Strong potential market in Europe,

China and India

• Low