Dell Case Study

Dell Case Study

Synopsis:

In 1984 Michael Dell attended the University of Texas as a freshman. He had a brilliant idea to buy retail computers and add extra memory and disk drivers and sell them out of the truck of his car.  Michael took a risk and hired some friends and placed ads offering computers 10-15% below retail stores. His risk generated $600,000 in sales his first year and continued to grow from there. In 1987 the company changed their name from PCs Limited to Dell Computer Corporation. By 1995 Dell had reached 3.5 billion in sales and had been recognized for many achievements including being named the world’s leading direct marketer of personal computers.

Over the next few years Dell lead the computer industry by mastering its manufacturing processes which gave them the buying power to acquire less expensive parts. Dell focused primarily on direct marketing and had not made a retail presence since the 1990s. While competitors were mimicking Dell’s in direct marketing they were also doing well in the retail setting. In 2007 Dell joined the retail market shipping worldwide to over 56,000 outlets.

As technology shifted competitors relied more on providing software, servers and consulting to clients rather than just PCs. These services provided them with larger margins and a competitive advantage. Dell went through numerus staffing changes and expanded by purchasing Perot Systems to provide computing services. However, Dell’s stock fell tremendously while the leading competitors stock flourished. As Dell faces the changes in the industry they now have to decide whether to stick it out with their current strategy or focus on services, or find a happy medium and do both.

Resources:

• Strong online/retail presence
• Financial Capital
• Global manufacturing
• Well-known brand name
• 33 years of experience

Capabilities:

• Direct marketing
• Competitive prices
• Custom products
• Numerous awards/recognition

Core Competencies:

• Provide custom products
• Provide competitive prices
• Continue to master the process engineering and supply chain management

Finding of Fact:

The Industry’s focus shifted from desktop PCs to mobile computing, software, and technology services-areas of relative weakness at Dell.

Recommendation/Justifications:

Dell has done an exceptional job providing clients with high quality products over the past 33 years. However, as technology advances Dell’s strategy to continue being competitive has to progress. Dell has to continue manufacturing top of the line products and find a niche to bring them back to the top.

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