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Corporate strategies at Dell corporation
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Dell Inc., with fiscal 2005 net revenue of $49.2 billion, is a premier provider of products and services worldwide that enable customers to build their information-technology and Internet infrastructures. Dell offers a broad range of enterprise systems (servers, storage, workstations, and networking products), client systems (notebook and desktop computer systems), printing and imaging systems, software and peripherals, and global services. During calendar 2004, Dell was the number one supplier of personal computer systems worldwide as well as in the United States. Dell's global market leadership is the result of a persistent focus on delivering the best possible customer experience by selling products and services directly to customers.
Dell, a Delaware corporation, was founded in 1984 by Michael Dell on a simple concept: by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. Dell is based in Round Rock, Texas, and conducts operations worldwide through its subsidiaries. Unless otherwise specified, references to Dell include its consolidated subsidiaries. Dell operates principally in one industry and is managed in three geographic segments: the Americas, Europe, and Asia Pacific-Japan regions.
Dell recorded these numbers selected numbers on 2006 10-k.
Sales- $55,908 million for fiscal year ended 2/03/2006
Net income $3,572 million for fiscal year ended 2/03/2006
Cash flow from operating activities- $4,839 million for fiscal year ended 2/03/2006
Total assets $23,109 million for fiscal year ended 2/03/2006
Number of employees- As of 02/03/2006 Dell had approximately 65,200 regular employees
1. How and why did the personal computer industry come to have such low average profitability?
Microsoft is currently the largest company in the computer industry. With a market capitalization of $291 billion, Microsoft has built an empire by dominating software sales for personal computers. Stock growth over the past 25 years has increased by more than 30,000%. However, Microsoft’s growth has substantially decreased since the market collapse of 2001(Niemond 25 April 2007).
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.
How and why did the personal computer industry come to have such a low profitability?
For many years, IBM succeeded in holding a very good market position. In fact, the company achieved a very high market share and huge profits. However, this situation did not last forever. In 1990, IBM experienced its first quarterly loss of $2billion due to some unexpected accounting charges. However, revenues increased from $62.7 billion in the previous year to $96 billion. In 1991, the c...
A business is feasible when it is able to generate profits, standstill despite of risks and achieve the founders’ goals (Hofstrand, 2009). In order to meet all of these achievements, the researcher need to investigate investment, technical market and commercial feasibility (How to conduct a feasibility study, 2015). In terms of Business model Canvas, the ‘customer segments’ component presents the market feasibility. Dell has targeted four main segments which allow the company to design, produce, promote and deliver different products with different features. In comparisons, the ‘value propositions’ contribute to the technical feasibility when the product is formed and advertised, ready to deliver. Dell has used different strategies to maintain and developed the brand including remain the same brand name for different products. This strategy is promised to stimulate customers’ awareness of the company, thus, attract numerous number of clients and increase annual profits. Finally, ‘channels’ characteristic focuses on accessing technical feasibility. Dell disposes different channels in order to reduce the transportation and warehouse costs as well as guarantee customers with aggressive on-time delivery. Consequently, as the cost has been lowered and the reputation has been improved, Dell is expected to maximize their revenues
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.
Speaking about the business model of Dell, it has ability to remain on the higher end of the scale for a particular time period. Dell has business model, which primarily focuses on direct selling line of attack. It in a straight line supplies the PCs to the regulars. It does not believe in intermediary, retailers for the business practices. Undeniably, this gives them an edge to serve customer well. Nevertheless, it understood the importance of retailers and start offering products on the premises of retailers, such as Wal-Mart, Sam’s Club and so on. Next, Dell administration is certain of the exclusive business of PCs. As time goes on, however, observing the
With a changing economy external factors have placed an undeniable importance for businesses to implement an Enterprise Risk Management (ERM) program within their organization. The need for ERM is present in almost any business sector, including higher education. An effective ERM program successfully identifies risk that are present internally and externally in regards to the organization. Identification of key risk, prioritizing the risk and implementing strategies will aid in avoiding and mitigating the risk that could have catastrophic implications. Ultimately, a strong ERM program will allow the organization to manage risk successfully by instilling an ongoing process.
Dell Computers Strategy Global companies play an important role in the business environment, because they connect their businesses together around the world. A good example of a global company is Dell Inc., an American computer-hardware company, headquartered in Austin Texas, which develops, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. They design, build and customize products and services to satisfy a range of customer requirements: from the server, storage and Premier Services needs of the largest global corporations, to those of consumers at home. According to the Fortune 500 2006 list, Dell ranks as the 25th-largest company in the United States by revenue.
Michael Dell founded the company Dell to offer network servers, workstations, storage systems, Ethernet switches, desktops, and notebook PCs after successfully selling his computers to customers directly in Texas. Over the course of three years his sales volume warranted the opening of an international sales office in 1987. In 1988 he began selling to large customers including several government agencies and Dell became a publicly traded company.
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.
Dell Inc had very effectively used the direct marketing channel for the sales of computers to the end consumer. When all the other pc makers were selling through retailers and distributors, Dell had started efficient use of the direct channels.
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)....
“The Dell Theory of Conflict Prevention argues that no two countries that are both part of the same global supply chain will ever fight a war as long as they are each part of that supply chain.” (Friedman 170) The supply chain, being the complex system in which we transfer parts and other things throughout the world in order to build a finished product. Thomas Friedman gives an example of the supply chain with his experience of getting a computer built by Dell in Emerging: Contemporary Reading for Writers. This sets the groundwork for Friedman’s theory and also the McDonald’s Theory of Conflict Prevention. The McDonald’s Theory and the Dell Theory are of the same skeleton, both have the same premise and try to both play on your emotions. The