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Dell computers business strategy
Dell computers business strategy
Dell's business model
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Basic Overview of Dell Headquartered in Austin, Texas, Dell is the number 1 PC Company in the world in terms of total sales. In addition to offering a full line of desktops and notebooks designed for consumers, Dell offers network servers, workstations and storage systems. The company also sells handheld computers and it markets third-party software and peripherals. Dell’s growing services unit provides systems integration, support and training. Direct Sales Business Model Back in 1984, Michael Dell started a computer company with $1000 and a cool new idea: to sell PCs directly to consumers, bypassing retail stores and system integrators and offering limited customer support but dramatically lower prices. This approach, called the direct business model, allowed Dell to customize each system to the unique needs of each customer while providing them with a competitive price, high quality, leading edge technology and personalized customer support. This model provides direct contact to its customers, which allows it to tailor support offering to fit the demands of each customer in a quick, and timely manner. The direct business model has radically changed the way in which companies in the computer industry view the ways in which they do business. This model is the key concept behind Dell’s success. The world’s largest PC manufacturer, Dell has grown from $6 million annual revenue to over $40 billion in only sixteen years. It’s the largest online computer retailer, selling an average of $30 million a day. I have attached a tab with financial data to demonstrate how Dell’s high return to shareholders has been the result of a focused effort over the time to balance growth with profitability and liquidity. Annual Financial Highlights (in millions, except per-share data) FY05 FY04 FY03 FY02 FY01 Net revenue $49,205 $41,444 $35,404 $31,168 $31,888 Operating income $4,254 $3,544 $2,844 $2,271 $2,768 Net income $3,323 $2,645 $2,122 $1,780 $2,310 Earnings per share $1.29 $1.01 $0.80 $0.65 $0.84 Closing stock price $41.06 $33.44 $23.86 $26.80 $25.19 In addition to focus on its shareholders, Dell thinks about its employees. The distinct company’s values, The Soul of Dell, acknowledge the company’s responsibilities to its employees, communities, global suppliers and their employees. -Dell employees make a difference everyday for Dell customers and in Dell’s communities. By giving generously in the communities in which they live and work through commitments of time, expertise and money, Dell’s employees are connected directly to the community. -Dell values the diversity of its workforce. Its approach to diversity is defined by a recognition of both similarities and differences, inclusiveness, respect and a company culture that allows each individual to contribute to his or her fullest potential.
Besides marketing its customer service, the company markets different programs according to its three major types of customers. Some of them being,
Michael Dell founded Dell Computer in 1984 and grew it into one of the largest computer manufacturers in the world. Dell Computer’s success resulted in Michael Dell being the highlighted as “youngest CEO of a Fortune 500 company” (Krames, 2003, p.58). Michael Dell’s guiding principle is to focus on the customer. This principle routinely guided his leadership decisions including computer design and development decisions, the organizational structure of the company and in how Dell Computer used the Internet.
Why has Dell been so successful despite the low average profitability in the PC industry?
Bill Miller and his co-workers had made some massive successful investments in computer makers, such as Dell and Apple (Insider monkey, 2012), in the services sector, such
Ten years back, where the majority of business transactions were conducted offline. Today, the trend of most of companies is to deal with its consumers through internet and not just using PCs, the customers are using different types of platforms such as mobile phones, tablets and other small mobile devices. Just imagine that all computer manufacturers are in along marathon has no end point, guess who is running alone in the front? Answers would be different but sure Dell is one of them. Its success came from a strategy which is missing with most of its competitors. Dell has effectively relied on its online selling strategy more than offline selling strategy. Actually, the core of Dell’s strengths is on its website which is the platform of most deals and services and also selling computers directly from company to customers. These deals and services are shown in the following:
To meet and respond to its customers needs, IBM creates, develops and manufactures many of the worlds most advanced technologies, ranging from computer systems and software to networking systems, storage devices and microelectronics. Indeed, IBM has various product lines and services a few of which are: the Personal Computer that was first created in 1981, AS/400 business system, RS/6000 family of workstations and server systems, S/390 enterprise server, groundbreaking ThinkPad notebook computer; the award-winning IBM Netfinity and finally, PC Servers. It is an important supplier of hard disks, random access memories, and liquid crystal monitors.
Duckett observed an article on the Dell website that presented an annual prize to one small business in recognition of its innovative use of technology to improve its customers’ experience. Duckett had done just that. With the improvement of her business through information technology, she had become successful. Duckett used Dell PowerEdge servers and a variety of desktop PC systems by Dell that her employees use. Duckett’s passion for commitment to customer satisfaction and the use of information technology for business success gained her the reward she was destined for. With receiving the $30,000 worth of Dell products and services, Duckett planned to improve her business and continue her commitment to satisfying her customers. The lifetime membership to the National Federation of Independent Businesses and a day with the CO, Michael Dell, and his executives was just a bonus to the great achievement that she had accomplished.
Dell's strengths were oriented around listening to the customers, responding to the customers, and delivering what the customer wanted. The direct relationship was first through telephone calls, then through face-to-face interactions, and now through the internet. It has enabled them to benefit from real-time input from real customers regarding products and future products they would like to see developed. The company also doesn't use reseller or retail channels because every computer is built-to-order, which allows less inventory. The direct model allows them to take the pulse of whatever market and provide the right technology for the right customers.
As with many global corporations Dell finds themselves in a unique position to effect meaningful change around the world. They are of the belief that making impacts goes above just writing checks, they are resolute to instill a culture of volunteerism and to use their technologies to create new opportunism and better futures for generations to come. They plan to do the following to achieve this:
Launched as a static page in 1994, Dell.com took the plunge into e-commerce shortly thereafter, and by 1997 was the first company to record a million dollars in online sales, according to Dell spokesperson Deborah McNair.
Historically, personal computer companies produced most of the components for a computer which they assembled into their final products and distributed to resellers. The manufacturing of these components was vertically integrated into the organisation. Dell, as a small start-up, could not build this infrastructure. Instead, they developed a model where they developed relationships with organisations that could provide these components, allowing Dell to focus on selling and delivering computers. By selling directly to customers, initially through mail orders and later by using the internet, Dell avoided reseller mark-up. Dell also enabled customers to order customised computers, which Dell then assembled after receiving the order (Magretta, 1998, p.73-74). “Customers got exactly the computer they wanted and Dell saved money making the computers only when they were ordered” (Hill & Seggewiss, 2008)....
Diversity is all around us and how organizations deal with the notion of diversity can be complex and quite diverse. We know that being diverse in the workplace is important to the organization's success, should be recognized, accepted, and embraced. It’s how the organizations live up to what they believe in and must go above and beyond legal compliance and requirements to promoting diversity and inclusion. Otherwise, employees may view the organization's vision and policies as lip service and only be tolerant of diversity because the organization said so.
In 1984, the same year that Compaq introduced a PC that included Intel’s new and more powerful 80386 class of microprocessors, beating IBM to market and Michael Dell began building IBM compatible computers in his college dormitory, Lenovo was form as a shop in a small concrete bungalow in Beijing with a mandate to commercialize the Academy’s research and use the proceeds to further computer science research.
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.
“The Dell Theory of Conflict Prevention,” is a theory that is approved by multiple famous authors. The theories main points are valuable and the theory should be looked upon more seriously. In Thomas Friedman’s essay, “The Dell Theory of Conflict Prevention,” he gives examples of how global supply chains would be constructive to promoting world peace. Friedman feels that if everyone is an ally to each other in some shape or form, then no one will want to engage in war. Madeline Albright would agree with Friedman’s theory according to her writings in “Faith and Diplomacy.” Albright felt that religion should play a factor in the diplomatic system of America, in order for us to maintain some kind of peace with other nations. Friedman and Albright both were looking for a solution to world peace. Albright would agree with this theory from the religious perspective. Appiah argued that an ideal global citizen would be essential to America, in his essays “Making conversation” and “The Primacy of Practice.” Appiah felt that people must have an understanding of each other in order to get along with each other. Both Appiah and Albright would agree with “The Dell Theory of Conflict Prevention.” “The Dell Theory stipulates: No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain”(Friedman 125).