...Marketing | Dell | New Horizons Case Study | | | 7/1/2012 | | Executive Summary In 1984, at the age of 19, Michael Dell founded Dell Computer with a simple vision and business concept; that personal computers could be built to order and sold directly to customers. Michael Dell believed his approach to PC manufacturing had two advantages: (1) bypassing distributors and retail dealers eliminated the markups of resellers, and (2) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components, and finished goods. Now, that concept picked up and arrived at Dell being the multi-billion dollar leading computer manufacturer in the world with 2001 revenues reaching $32 Billion and return on investment of 335%. However, things started to plummet by 2001 and Dell experienced, for the first time, a -10% decline in sales and unprecedented cutthroat competition from HP and IBM. Dell Corp. had to make difficult decisions on how to sustain its profitability in light of its broad product portfolio - PCs, workstations, servers and storage products for a broad cross-section of customers in the United States and worldwide. Fueled with ambition and determination, Michael Dell is set to maintain his company's leading position in these tough times. Dell, facing a predicament of whether they should maintain their strategic course or fundamentally change it in order to achieve the targeted growth rates, managed to acquire three important...
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...Case Study of Dell : Inspiring the leadership In 1984, at the age of 19, Michael Dell founded Dell Computer with a simple vision and business concept—that personal computers could be built to order and sold directly to customers. Michael Dell believed his approach to the PC business had two advantages: (1) bypassing distributors and retail dealers eliminated the markups of resellers and (2) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components, and finished goods. While the company sometimes struggled during the 1986-1993 period trying to refine its strategy, build an adequate infrastructure, and establish market credibility against better-known rivals, Dell’s strategy started to click into full gear in the late 1990s. Going into 2003, Dell’s sell-direct and build-to-order business model and strategy had provided the company with the most efficient procurement, manufacturing, and distribution capabilities in the global PC industry and given Dell a substantial cost and profit margin advantage over rival PC vendors. Dell’s operating costs ran about 10 percent of revenues in 2002, compared to 21 percent of revenues at Hewlett Packard, 25 percent at Gateway, and 46 percent at Cisco Systems (considered the world’s most efficient producer of networking equipment). Dell’s low-cost provider status was powering its drive for market leadership in a growing number of product categories. Dell Computer was solidly entrenched...
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...Background of the company In 1983, 18-year-old Michael Dell left college to work full-time for the company he founded as a freshman, providing hard-drive upgrades to corporate customers. In a year’s time, Dell’s venture had $6 million in annual sales. In 1985, Dell changed his strategy to begin offering built-to-order computers. That year, the company generated $70 million in sales. Five years later, revenues had climbed to $500 million, and by the end of 2000, Dell’s revenues had topped an astounding $25 billion. The meteoric rise of Dell Computers was largely due to innovations in supply chain and manufacturing, but also due to the implementation of a novel distribution strategy. By carefully analyzing and making strategic changes in the personal computer value chain, and by seizing on emerging market trends, Dell Inc. grew to dominate the PC market in less time than it takes many companies to launch their first product I. Statement of the Problem Dell has been following its unique ‘direct build-to-order’ sales model for more than 20 years. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site. Over the years, Dell’s supply chain efficiencies and direct sales gave it a competitive advantage. II. Statement of Objectives * Examine and analyze Dell’s Direct model, its basic working, success and future challenges * Typical Working of Dell’s Supply Chain and future supply chain challenges * Highlights...
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...Prelude case Dell Corporation FT What if a manufacturing company didn’t need to have any inventory? Imagine the reduction to cost structure that could be achieved by simply getting rid of the need to carry huge amounts of finished goods on its books – and eliminating the nail-biting stress of waiting until those goods are sold. For Michael Dell, founder and CEO of Austin, Texas-based Dell Corporation, very little imagination is required. He has built a company with annual revenues in excess of $40bn entirely around a vision whereby manufacturing of an individual item does not begin until it has been ordered by a customer. Every single Dell product has an end user’s name on it before it even leaves the factory. Visiting a Dell factory gives you an idea of just how effective Michael Dell has been in executing this supply chain management philosophy. At the company’s Irish factory near Limerick, for example, there are 40 doors at one end of the factory that deliver the parts needed to build a variety of products – including desktop computers and servers – and 40 doors at the other end of the factory where the finished goods are dispatched to be delivered to customers. The company never holds more than four hours’ worth of parts inventory at any time – and Dell is not even considered to have acquired the parts until the moment they are offloaded from a truck and brought into the factory. The same process is used in Dell operations throughout the world, including the company’s showcase...
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...and Extending the Business Model With Information Technology: Dell Computer Corporation Kenneth L. Kraemer, Jason Dedrick, and Sandra Yamashiro Center for Research on Information Technology and Organizations (CRITO), Graduate School of Management, and Department of Information and Computer Science, University of California, Irvine, Irvine, California, USA Keywords The exceptional performance of Dell Computer in recent years illustratesan innovative response to a fundamental competitive factor in the personal computer industry—the value of time. This article shows how Dell’s strategies of direct sales and build-to-order production have proven successful in minimizing inventory and bringing new products to market quickly, enabling it to increase market share and achieve high returns on investment. The Dell case illustrates how one business model may have inherent advantages under particular market conditions, but it also shows the importance of execution in exploiting those advantages. In particular, Dell’s use of information technology (IT) has been vital to executing both elements of its business model—direct sales and build-to-order—and provides valuable insights into how IT can be applied to achieve speed and exibility in an industry in which time is critical. Many of the insights gained from this case can be applied more generally to other time-dependent industries, suggesting that the ndings from the Dell case will have implications for a growing number of companies and...
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...University of Texas at Austin Graduate School of Business 3/3/99 Dell Computer Corporation: A Zero-Time Organization Deep in the heart of Texas lies a Fortune 500 company who exemplifies many of the principles of a Zero Time organization. Dell Computer Corporation has seen extraordinarily growth: a 58% revenue increase and an 82% profit increase in 1997, an equally extraordinary short period of time. Sales rose to $12.3 billion in 1997, profits to $944 million in 1997, and the stock split for the sixth time in 1998. Much of this success is due to management principles and a vision that we describe here. First we provide some background information on the company, and we describe the management principals and philosophies we think make Dell a success. Finally, we describe Dell using the lens of a Zero Time organization. Company Background Many know the story of Michael Dell, his college-based business of building personal computers with available parts, and his build to order strategy. Founded in 1984 as PC’s Limited, the name was officially changed worldwide to Dell Computer Corporation when the first stock offering took place, in June 1988. Other key turning points, according to Michael Dell, were in 1986, when Dell first went outside the US to Europe and hit $50 million in sales; 1989, when the company when from last to first place in their industry on the management of their inventory; and 1993 when the concept of segmenting took shape and allowed the ...
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...analyze the possible alternatives of Dell Computer Corporation in funding its future growth and expansion from the point of view of its top management. Given the company’s financial statements, projected growth in sales, and its working capital financial ratios, this paper forecasted Dell’s balance sheet and income statement for 1997 to trace the external fund needed, if any, and which type of funding is most optimal to fund its future operations and growth. The forecast used a set of assumptions based on the company’s historical data and company policies. After experiencing its first loss late 1993, the company dedicated itself to bringing back its efficient operations to keep up with the fast growing computer industry, minimizing middlemen retailers and shifting the company’s focus to the growth of their liquidity, profitability, and overall growth. The company eventually recovered through its new and improved internal systems of inventory control and vendor certification, ensuring that its products are always of the highest quality. Ensuring its foothold in the market, Dell was the pioneer in manufacturing Pentium-based products and transforming its major product line to Pentium technology. In 1995, Dell was able to ship its new system that was equipped with Microsoft’s Windows 95 on the same day that Microsoft released their operations system. Now, Dell is again atop the industry outpacing revenue growth and increasing its net income. Dell in the recent years has always financed...
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...Dell Direct Introduction Michael Dell is the CEO and founder of Dell. He started this company in 1984 when he was a student. The idea of Michael Dell when starting the company was that consumers of computers would like customized products that serve their own purpose. By so doing, Dell Computer Company developed a marketing strategy focusing on consumer direct purchase of their products from the source. This strategy has allowed the company survives in the market irrespective of many competitors who have similar products, (Musil, 2011).Dell is in the process of understanding consumer behaviours on personal computers and other equipment that relates to computer. With the increase in the number of companies with similar computer services, Dell need to focus on its marketing strategy in order to establish the best market segment. This essay will focus on how Dell should use the exploratory research design understand consumer behaviours on purchase of personal computers. The essay will also evaluate on the current company’s marketing strategy and determine its applicability towards survival and growth in the market. Discussion The most vital aspect in the current personal computer market is to develop products that serve needs of consumers. Dell Computer Company must develop a research study and determine how household consumers purchase personal computers. This will help the company come up with a marketing strategy for marketing its products. Reaching the target population...
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...In 2001 Dell became the number one provider of consumer personal computers in the world. The company became a global leader through a combination of inventory management and customer service. While competitors used a build-to-stock design, Dell utilized an assemble-to-order design. This meant that Dell only began building the PC until the order is received, using the order money to purchase the components. Dell kept no in-house stock of finished goods inventories. Dell’s supply chain design allowed for mass customization. While other companies in the industry had to guess at consumer preferences, Dell knew exactly what its customers wanted before manufacturing the product. This lean system would not have been possible without Dell’s supplier integration. The company outsourced all components of personal computers, only performing the assembly. To buffer against demand variability and minimize long lead times, Dell required its supplier to keep inventory in supplier logistics centers, which were small warehouses located within a few miles of Dell’s assembly plants. Each center was shared by several suppliers that paid rent to Dell. Dell owned none of the inventory in the logistics centers, keeping overhead low. Dell withdrew inventory from the logistics centers as needed, which averaged once every two hours. The just-in-time philosophy resulted in inventory turns of 122 per year. In order to maintain such lean manufacturing, Dell had vendor-managed-inventory arrangement with...
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...sDell Case Study 1. Taking the case of computer products, identify the supply chain for the distribution of these products and explain the channel service needs of customers. To what extent are store- and non-store-based distribution channels alike or different in terms of the channel functions they perform? Many computers are brought through three different supply chain methods: Although Dell is different as they sell straight to the direct customer. Store and non store based distribution are different because of the better personal service received in store. Distribution is all to do with the placement of the product, being online to product is available to a mass market therefore no matter where in the world the customer is they can order a pc. Whereas when the product is in store it is only available to those near the store, and they may have a much limited stock than what an online distributor is. 2. What are the advantages and disadvantages of the ‘Dell model’ of sales, manufacturing and distribution? Dell distinguish themselves to other computer manufacturers, as Dell sell direct to the final customer. Dell decided to do this as they believed they were providing a better service to the customer and they will grow rapport with that customer who will come directly back to them. This is an advantage as the are getting great service and Dell can rely on repeat service. Another advantage of the Dell model is that they allow customers to build to order...
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...Product Development at DELL Since its founding in 1984, Dell corporation had enjoyed tremendous success in the desktop computer industry. Their strategy was to eliminate the middleman by directly servicing the customers through mail orders . Dell grew from obscurity to a fortune 500 company in 1992, making its founder Michael Dell one of the youngest highly successful entrepreneurs of his time. At the core of Dell’s business model was Spartanism which inspired informality in processes and low R&D costs allocation. This worked with their desktop business and their imitators such as Gateway 2000 and CompuAdd were always playing the catching-up game. However moving ahead this philosophy, their foray in to the portable computer business was not as successful. This was an industry that revolved around several technological breakthroughs and required higher workmanship & quality control to manufacture products. Here, Dell fell short of delivering quality portable computers. Their brand suffered a major setback when their first line of portables were reported to have technical problems and about 17,000 units had to be recalled just one day before the launch. Soon after, Dell’s percentage sales in portable computers went to 2% from 17%, and their stock plunged by $7 in a single day. The portable computer industry was growing fast [Exhibit 1] and was deemed to spark a new wave of consumer demand. The major problems staring Dell in face were regarding quality and management...
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...Dell Strategic Management Assignment/Case Study Solution Dell Strategic Management Assignment/Case Study. It reviews the organizational structure, vision, mission, SWOT, PESTEL Analysis, Strategic Group Map Competition and Product Positioning Map of Dell. This is a sample paper. If you like to order your own paper, please Click Here Introduction This report undergoes a strategic management overview of Dell, one of the leading PC vendors of the world with a unique operations model focusing on built to order and direct to consumer frameworks. The report begins with a comprehensive overview of the company’s operations, its hierarchy, location and principle of logistics. An understanding of the vision, mission and objectives allows for the strategic analysis to be put into context and perspective. Our first strategic analysis tool is the SWOT analysis followed by an internal and external factor analysis. This is accompanied by a TWOS matrix allowing the report to pin point specific strategies which may help the organization cash on its strength and opportunities to offset threats. An overview of the life cycle of the industry is followed by a PEST analysis. Understanding the political factors is critical and along with the location principles explained in the first section – allows us to pin point some strategic direction for the company. Similarly the economic, social and technological factors are discussed for the industry and the implications for Dell on a strategic level. A competitive...
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...considerations and external considerations. Internal considerations are when we are producing the product, we need to know about what are the costs of developing, producing, distributing, and selling. Firstly, we must have a plan to avoid wasting money. External considerations are after produced the product, producer need to think what of the best product serves consumption patterns for the target segment. Is the packaging can attract consumers; how about the transportation, usage, and disposal of the product. The consumers will like to compare the products to make sure that they are worth to be bought. This essay is an example of a student's work Disclaimer This essay has been submitted to us by a student in order to help you with your studies. This is not an example of the work written by our professional essay writers. The product that we choose is Toy-Blocks because between 0 to 2 years old, children enjoy playing blocks. This is...
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...Consumer Buying Behavior Process Institute of Business and Information Technology University of Punjab Submitted by:- Maria Mohni Ali Farooq Submitted to:- Sir Basit Afzal Date:- 31/01/2014 Contents Executive summary 3 Methodology:- 3 Consumer profile 4 Yankolovich mind base segmentation:- 5 Trait sum up them:- 5 Stages of the Consumer Buying Process:- 5 Need Recognition:- 6 Pre-purchase Search or Information Search:- 7 Internal influence:-………………………………………………………………………………………………………………………8 External influence:-……………………………………………………………………………………………………………………..8 Evaluation of Alternatives……………………………………………………………………………………………………………………….9 Evoked set:-…………………………………………………………………………………………………………………………………9 Inept set:-…………………………………………………………………………………………………………………………………….9 Inert set:-……………………………………………………………………………………………………………………………………..9 Criteria used for evaluating brand:-……………………………………………………………………………………………10 Consumer decision rules:-………………………………………………………………………………………………………….11 Purchase decision:- 11 Post purchase evaluation:- 12 Comparison:- 13 Conclusion:- 13 Executive summary Consumer behavior is more related to consumer psychology as every consumer has to make a decision while purchasing something and decision making is the process which includes many external or internal factors. When we talk about the consumer psychology we are more concerned about the black box (human brain) where these processes run simultaneously like creation of need...
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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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