Dell Case Study

When Dell started in 1984 by Michael Dell it quickly turned into a thriving business which would build into one of the world’s largest company’s by 1992. That is tremendous growth for any company. With this rapid growth their came growing pains. Dell originally started with the business model of made-to-order PC’s delivered directly to the customer with no distributors or retail stores (even though they attempted retail outlets in the 90’s but failed). In 2007 they revisited retail outlets and began shipping product to major retailers such as Wal-Mart, Best-Buy, and Staples. In 2008 however, cost pressures made Dell rethink their manufacturing process and ended up closing plants within the US. Manufacturing for the North American market now took place in other countries.

With the recession from 2008-09 Dell found itself struggling. Even as the U.S. started to crawl out of the recession Dell’s competitors were able to find ways to cut costs. During this period HP was able to surpass Dell with the largest global market share in personal computers. By 2010, computers/laptops were becoming a commodity and people didn’t care to spend more than $300-$400.

Dell not only made PC’s but also laptops, servers, storage systems, printers, software, peripherals, and services. With the changing times and competitors the industry shifted its focus from desktop PC’s to mobile computing, software, and technology services which were weaknesses to Dell. With these changes Dell lost its high quality perceived products due to its emphasis on cost reduction and competitive pricing. Dell needed to improve so Dell’s management came up with a three prong strategy which included improving the core business, higher margins, and balancing liquidity, profitability, and growth.

Resources

Dell brand name

Low overhead expenses

Customer service

Broad product line

Moved manufacturing facilities overseas

Capabilities

Made to Order computers

Ship directly to customer (no distributor/middle man)

Process Engineering

Supply Chain Management

Less money spent on R&D (waited for technology to become standardized)

4 different business models (Large Enterprise, Public, Small & Medium Business, and Consumer)

Core Competencies

Customer Service

Made to Order

Supply Chain Management

FOF#1. Dell had

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