...CASE: DELL COMPUTER’S STATE‐OF‐THE ART PRODUCTION CENTERS USING VENDOR MANAGED INVENTORY MODELS Michael Dell reshaped the computer industry with build‐to‐order computers directly sold to consumers. His business model positioned the company for emerging internet sales , with one of the highest sales figures in the industry. But Dell has done more than streamlined the selling and distribution process, he has also streamlined the manufacturing process as well. Dell can deliver the latest technology exactly the way the customer wants it at blinding speed, which has earned them the nickname of “Dellocity”. Examples of their speed are; they delivered eight customized fully loaded PowerEdge Servers to NASDAQ within 36 hours of receiving the order, or when they delivered 2,000 PCs and 4,000 servers with proprietary and multimedia software delivered and installed at 2,000 different WALMART stores all in 6 weeks. How does Dell manage to do all this at such incredible speeds ?? Through close customer contacts and carefully orchestrated manufacturing and distribution system. Dell manufactures its’ computer systems in 6 different locations‐ Texas, Tennessee, Brazil, Ireland, Malaysia, and China. Dell has recently added a new factory in Round Rock, Texas, called the OPTIPLEX Plant. This factory is state‐of‐the‐art and there are only a handful of such factories in the world. The OPTIPLEX is a showcase of networked manufacturing. The factory is 200...
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...During the past the five years, Michael Dell, CEO of Dell Inc, has re-engineered his corporate strategy in order to regain lost market share. The firm once dominated the computer market with a successful business model focused on direct-order customization and supply chain efficiencies. This cost efficient strategy provided them with an imitation resistant competitive advantage. However, their current downfall can be correlated to both external industry disruptions and internal missteps. The dynamics of long term success within the computer industry is the ability to become intertwined with Moore’s Law. This industry disruption states that “chip performance per dollar doubles every 18 months.” (Gallaugher, 64) Dell’s cost efficient strategy neglected threats of Moore’s Law and only concentrated on operational effectiveness of their direct-orders rather than strategic positioning. Dell’s competitors, Hewlett Packard and Apple, were able to position their highly elastic products to their end consumers at profitable distribution channels. They were also able to duplicate Dell’s successful online direct- order model, which provided more options for consumers. The consumers buying power quickly became stronger with price transparency over the internet. Dell Computers’ poor internal decision making has impaired the company from significantly increasing their profits. For several years, Dell decided not to acquire any other technology company while competitors negotiated terms of...
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...strategy enabled Dell to provide customers with superior value, high product quality, relevant technology, customized systems, and superior service and support. Eliminating the middleman Dell saves unnecessary time and cost to the process, allowing Dell to offer its customers superior value by avoiding the expenditures associated with the retailers. Such costs include higher inventory carrying costs, obsolescence of old product in stock, and retail markups. In addition, Dell benefits from the direct interaction with the customer by acquiring constant information about costumer plans and requirements, enabling Dell to continually refine its products. Dell is able to have a direct relation with its customers thanks to the friendly user website that they have (www.dell.com). Customers can purchase custom-built products and custom –tailored services. Dell’s build-to-order manufacturing process allows them to introduce the latest relevant technology faster than companies that use indirect distribution channels. The Customization Strategy Product customization has been expensive and it was only available to customers willing to pay a significant premium over the price of a standard manufactured item. However, Dell was well aware that product customization was a service that has always been demanded by customers so they decided to take advantage and offer its clients the opportunity to purchase custom build computers. Having a successful customization strategy allowed Dell to grow from...
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...Dell Computer Corporation Performance Metrics Every component of a corporate sustainability model should be associated with performance indicators such as inputs, processes, outputs, and outcomes. By determining the appropriate performance measures needed for each component of the sustainability model, companies can evaluate the performance and financial benefits of the sustainability initiatives. Dell Computer Corporation knew that balance is especially important in performance measurement and wanted to make a change to improve their reputation and also their consumer sales. The performance metrics that are most valuable to Dell from the inputs are mostly from the business context performance measures which include number and size of competition, diversity from competition, market size, and their competitive position within the industry should be the most important to them since they have so much competition in the industry (Epstein, 2008, p. 169). One way that I found through research that Dell has come up with to stay unique and making them competitive with their competition was by creating “the Dell Precision T5500 and T7500 which deliver up to 90 percent better multi-threaded digital content creation application performance versus previous generation systems” (Bolen, 2009). “The new systems are purpose-engineered for professionals in engineering, media, entertainment, biosciences, exploration, economic modeling and risk analysis” (Bolen, 2009). Dell feels that this will...
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...What Started as “PC’s Limited” by founder Michael Dell in a dorm room at the University Of Texas in 1984, Dell blew up in the 1980’s and 90’s to become, for a time, one of the largest sellers of personal computers and servers within the industry. The company currently sells not only computers and servers but includes a wide array of home and personal electronics from both its own line of products and other manufacturers as well. These products vary from mp3 players, to High Definition TV’s to data storage devices, smartphones, cameras and much more. In 2011, Fortune 500 ranked Dell at number 41 in its list with revenues of over $62 billion in 2012. It is the third largest PC maker in the world after HP and Lenovo. The company’s strategy for successful marketing lies around a number of important elements: Just-in-time parts inventory, Award-winning tech support and customer service, Build-to-order production, Pioneering in the field of e-commerce, Partnerships with suppliers, , and direct sales to customers. Using one of its greatest and most unique marketing strategies, Dell builds its computers, workstations, and servers to order. This direct-sale strategy gives the company no in-house inventory. Dell customers can order custom-built computers and laptops based on their individual needs, likes, wants, and price range. You can order whatever configuration of processor, ram, hard disk capacity, rom drive, monitor size, speakers, and other accessories to accompany the package...
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...Dell Computer Corporation is one of the world’s largest computer systems organizations. They design, build and customize products and services to satisfy a range of customer requirements, from the server, storage and professional services needs of the largest global corporations, to those customers at home. Dell is a perfect example of how harnessing the power of the Internet can lead to total market dominance. Through the company’s direct sales model, Dell has managed to grow from a $6 million to a $23 billion dollar company in 15 years. This is largely due to their extension of the direct model with information technology and the World Wide Web. The Internet became a worldwide tool for reaching Dell’s customer base and gave the company the ability to directly do business with partners and customers all over the world, one at a time, at no additional overhead. This successful business model put much emphasis on the customers. From the beginning to the end of the transaction, Dell understood completely what the needs of the customers were and this ony led to a network of satisfied customers with the potential to do business again and again in the future. However, the direct-sales business model was merely a tool for Dell to do business. If the success of Dell was based solely on this model, Dell would have not been able to rise to the top of the competition in two decades despite being a late entrant. Many competitors of Dell duplicated the model and tried to do...
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...Dell Computer is at the forefront of the computer industry, with the company serving multiple sectors of the market, including households, businesses, educational facilities, and even governmental agencies. The company started small under Michael Dell, who was 19 years old in 1984 when the company began. Dell initially had $1,000 to use on computers parts that he assembled into PCs and sold over the phone. However, the demand for PCs continued to rise, and Dell had to begin to expand the company. It moved to a five-employee staff working around a table assembling computers while taking orders, and eventually, by 1993, Dell had 4,500 workers and had to hire additional employees each week to keep up with the continually rising demand for PCs. Dell quickly realized that he could not manage the company by himself, so he recruited strategic managers who could assist him in the company’s various areas such as manufacturing, finance, and marketing. This move to a functional structure involved grouping employees by their skills in order to better organize the value chain. The company’s structure also became taller with a more structured hierarchy that would allow Dell and his managers to keep necessary control over the business. As Dell Computer grew in size and revenue, it developed a lean organizational culture, with the employees working together to cut costs as much as possible while continuing to serve its customers with the best customer service possible. Dell Computer became...
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...Dell Computer Corporation Performance Measures Dell Computer Corporation Performance Metrics Every component of a corporate sustainability model should be associated with performance indicators such as inputs, processes, outputs, and outcomes. By determining the appropriate performance measures needed for each component of the sustainability model, companies can evaluate the performance and financial benefits of the sustainability initiatives. Dell Computer Corporation knew that balance is especially important in performance measurement and wanted to make a change to improve their reputation and also their consumer sales. The performance metrics that are most valuable to Dell from the inputs are mostly from the business context performance measures which include number and size of competition, diversity from competition, market size, and their competitive position within the industry should be the most important to them since they have so much competition in the industry (Epstein, 2008, p. 169). One way that I found through research that Dell has come up with to stay unique and making them competitive with their competition was by creating “the Dell Precision T5500 and T7500 which deliver up to 90 percent better multi-threaded digital content creation application performance versus previous generation systems” (Bolen, 2009). “The new systems are purpose-engineered for professionals in engineering, media, entertainment, biosciences, exploration, economic modeling and risk...
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...SWOT analysis of Dell Computers Corporation Student Name Institutional Affiliation Professor’s Name SWOT analysis of Dell Computers Corporation Dell is a privately owned American multinational computer technology which develops, sells and repairs computers and related products plus services. It was named after its great founder, Michael Dell. The company is best known for the innovations it made on the management of supply chain and electronic commerce, mostly the model for direct sales and configure to order approach which they used in management to deliver customer’s specifications of configured PCs. Dell is one of the leading computer manufacturers in the whole world and it has tremendously grown since its incorporation by Michael Dell. Dell currently dwells in an ever changing market with competitors who are challenging the company with unique and new products in the market place. Therefore SWOT analysis will provide a basis for crafting strategy that will take advantage of the company’s resources and at the same time benefiting from the opportunities and defending the company the threats to its successful operations (Michael Dell 2009). Strengths Majorly, the strength of Dell comes because of the Direct Model which is considered as one the greatest assets of the company. The Direct Model gives consumers a chance to customize their laptops since the market is becoming more educated and every individual needs a laptop that will meet their needs especially in terms of performance...
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...| Managerial Marketing | | Case Study: DELL New Horizons | Case Study: DELL New Horizons Questions 1- What has made Dell Succeed to date? Up to 2002 The key to Dell’s success to date was its innovative direct business model, which focused on selling Dell products directly to customers rather than through intermediaries. Dell believed so called “middlemen” added little to no value to the end product and that their associated fees were essentially unnecessary mark-ups for customers. By completely cutting out intermediaries, Dell not only reduced its customers’ costs, but also enabled the company to customize computers and focus on meeting customers’ needs and providing superior customer service. So doing ultimately helped Dell establish itself as one of the most customer-centric information technology companies in operation. When it came to product development technology, Dell did not aspire to be the industry pioneer. Instead, Dell left product innovation to its competitors and relied on its unique marketing distribution formula to generate sales. The intuition of Dell’s top management, especially Dell’s namesake and CEO, Michael Dell, contributed significantly to the effectiveness of this formula. As noted in the case, Dell had the “uncanny ability to reach out into the market and identify the next high-margin technology product that could be driven to scale with lower priced products driven by its direct model.” This foresight basically eliminated Dell’s need...
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...Do you think Dell is well positioned with respect to its competitors? Not yet because Dell still left behind HP and IBM. People who want flexibility in their PCs tend to buy HP brand. For instance, HP Power Distribution Rack which controls three-phase power distribution across a row of server racks brings enhanced flexibility to IT personnel who are seeking to place power where it is needed, but without over provisioning or otherwise wasting the precious resource. In other hand people who want high performance, they tend to buy IBM brand. For instance, IBM System x server (formerly IBM eServer™ xSeries®) brought up database application, all of the performance number were beyond expectation. Actually, Compaq is well-positioned because its non price attribute position is balance both in performance and flexibility. Which competitor(s) should Dell be the most concerned about? Why? Competitor: IBM because as you can see in the positioning map it’s the nearest competitor that dell face. Dell has to compete on the nearest one because there just little difference in performance so it can be easily pursued by improving performance quality at least same as IBM. Compared with Hp, the difference is too far which means the capability is indeed totally different so it will be too difficult to be pursued and it sounds unbalanced competition. Source: IBM's personal computer business is taken over by Chinese electronics giant Lenovo, while IBM itself focuses more and more on...
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...Dell Inc. in 2008: Can it overtake Hewlett-Packard as the Worldwide Leader in Personal Computers? Dell is a global company that delivers products and services in more than 190 countries and over 40000 employees who live and work on six continents. The company deals in enterprise computing products, desktops, monitors, printers, notebooks, handhelds, software and peripherals with a focus on fully integrated improved environmental performance into business. The company had gone through many ups and down from its inception in 1984 and has to face many challenges and competitions to stay ahead in the market (Kolter and Lee, 2008). This paper strategically discusses the fall and rise of Dell Inc from 2007 to 2008 and to compare Dells strategy with that of Hewlett Packard with due reference from the case study “Dell Inc in 2008: Can it overtake Hewlett Packard as the worldwide leader in personal computers.” A) Dell’s Strategy to overcome HP in Personal Computers Michael Dell founded the company with simple vision and business concept that the personal computers could be built and sold directly to the consumers which would eliminate the additional costs of intermediaries between the company and consumer and thus reducing the overall cost of the PCs making it cheaper than other PCs in the market. The other advantage was that it reduces the costs and risks associated with carrying large stocks of parts, components and finished goods (Thompson and Gamble, 2006). The company later...
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...Abstract Company Overview Michael Dell, who was a student at the University of Texas, decided to establish a computer company with a capital of only $1000. He was following the "direct model" concept where all the products were customized based on the orders and requests of the customers. It is headquartered in Round Rock, Texas but receives nearly half of its revenues from outside the United States. Dell offers produces and markets a wide range of technology products for the consumer, education, enterprise, and government sectors. In addition to a full line of desktop and notebook PCs, Dell offers network servers, data storage systems, printers, Ethernet switches, and peripherals such as displays and projectors. In addition to third-party software and many services such as asset recovery, financing, support and so on. Strategic analysis summary This case study analyzes Dell Company from a strategic perspective, which shows that Dell follows a differentiation Strategy. In the analysis of Internal and External factors; Dell has scored medium on both external and internal factors analysis with scores of (2.78) and (2.56) respectively. Showing good financial position compared to its competitors, the financial analysis revealed that the company was able to enhance and increase its market share and power after the recession especially after 2009. This study led us to recommend using the QSPM matrix. Dell has to be aware of the price war started by rivals in which...
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...analysis Dell’s Direct Model and its basic working and success and future challenges. Dell’s Direct Model Dell has been following it’s unique direct build-to-order sales model for more than 20 years. Customers can plan their own configuration and place orders directly with company via the phone or a web site. Over the years Dell supply chain efficiencies and direct sales gave it a competitive advantage. Dell has also leveraged JIT principle to make its manufacturing process success. Dell’s approach to JIT is different in that they leverage their suppliers to achieve the JIT goal. They are also unique in that Dell is able to provide exceptionally short lead times to their customers by forcing their suppliers to carry inventory instead of carrying it themselves and then demanding (and receiving) short lead time on components so that products can be simply assembled by Dell quickly and then shipped to the customers. Characteristics of direct model * Eliminate costs and risks of carrying large finished goods inventories * High velocity * Low-cost distribution * Direct customer relationship * Build-to-order * Just-in-time manufacturing * Products and Services aimed at specific market segments * Reduced channel costs: from 13.5%-15.5% to 2% of product revenue * Latest Technology was introduced faster than indirect channels * Dell can use IT to directly control its value chain, set quality measures and monitor in real time how material...
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...Krames (2003) is very enlightening an intuitive. Michael Dell according to Krames (2003) believes in the power of the customer, be it their positive or negative feedback, but especially in what the customer wants from a product (p. 56). Michael Dell birth a business model based solely on a one-on-one relationship with customers is the foundation of his company the Dell Corporation. Andy Grove’s model mandates protection or maximization of sales opportunities so to be prepared for all possibilities of success or failure which he based on Time magazine’s 1997 person of the year Andras Grof paranoid perspective (Only the paranoid survive) (Krames 2003, pp. 66-67). Business partner Moore’s metaphorically likened their organization to that of a three legged stool, if one leg is off balance so is the entire organization (Krames 2003, pp. 137-139). Lastly, Grove named the fear of an organization being on the brink of total failure as a “strategic inflection point” (SIP) which he describes as an organizations face-to-face with massive must change events even to a point of complete organizational failure (Krames, 2003, p. 141). Resistance Comparison Michael Dell organization encountered near death when the brilliance of his technical engineering team and himself put together a massive computer (The Olympic) that customers had no real need for, which in-turn caused a huge financial loss to the Dell corporation. Michael Dell went back to basics which involved customers from the beginning...
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