Dell Case
Dell case
Based on Ali Farhoomand’s “Dell: Selling Directly, Globally (2007)
Introduction
Dell’s business model has been the key element of Dell’s growth in revenue and reputation. It was innovative, cost reducing and effective with customers. Since the foundation Dell grew rapidly and did not appear to look back until 2007 when they lost their spot as the number one computer vendor in the world. This report will identify the key elements of Dell’s strategy and explain why it was a success in the past. Present challenges, including attempts to expand into China, as well as a look into the future of Dell, will also be discussed.
The strategy that made Dell a top 25 company in the world
As the title implies the strategy of Dell has been the foundation of one of the largest companies in the world.
Dell was founded by Michael Dell in 1984. Eight years later, in 1992, it was on Fortunes top 500 companies worldwide. By launching their website, www.dell.com, e-commerce became a significant part of Dell. Selling computers built to order directly to customers through a website was one of Michael Dell’s visions. Dell gained early-mover advantage as one of the first companies to offer PCs for sale online in 1996 [1].
Why the three golden rules fit the Internet
The Internet provided a technology with great potential for computer vendors such as Dell. By using a website Dell had their own platform to serve B2B and B2C clients. The golden rules, on which founder Michael Dell based Dell’s strategy are as follows:
1. Eschewing inventory
2. Always listen to the customer
3. Never sell indirectly
Computers can be customised through Dell’s website or by phone which ensures the customers to get the exact computer they want. When Dell receives the order they know exactly which parts for the computer they need from their suppliers. So instead of having a warehouse filled with computers, Dell only make computers they know they are going to sell.
On their website Dell can
Based on Ali Farhoomand’s “Dell: Selling Directly, Globally (2007)
Introduction
Dell’s business model has been the key element of Dell’s growth in revenue and reputation. It was innovative, cost reducing and effective with customers. Since the foundation Dell grew rapidly and did not appear to look back until 2007 when they lost their spot as the number one computer vendor in the world. This report will identify the key elements of Dell’s strategy and explain why it was a success in the past. Present challenges, including attempts to expand into China, as well as a look into the future of Dell, will also be discussed.
The strategy that made Dell a top 25 company in the world
As the title implies the strategy of Dell has been the foundation of one of the largest companies in the world.
Dell was founded by Michael Dell in 1984. Eight years later, in 1992, it was on Fortunes top 500 companies worldwide. By launching their website, www.dell.com, e-commerce became a significant part of Dell. Selling computers built to order directly to customers through a website was one of Michael Dell’s visions. Dell gained early-mover advantage as one of the first companies to offer PCs for sale online in 1996 [1].
Why the three golden rules fit the Internet
The Internet provided a technology with great potential for computer vendors such as Dell. By using a website Dell had their own platform to serve B2B and B2C clients. The golden rules, on which founder Michael Dell based Dell’s strategy are as follows:
1. Eschewing inventory
2. Always listen to the customer
3. Never sell indirectly
Computers can be customised through Dell’s website or by phone which ensures the customers to get the exact computer they want. When Dell receives the order they know exactly which parts for the computer they need from their suppliers. So instead of having a warehouse filled with computers, Dell only make computers they know they are going to sell.
On their website Dell can
References: 19:Digital nation on the Rise: Profiting from China’s Internet Revolution, McKinsey, 2010 20:http://www.chinadaily.com.cn/business/2011-07/30/content_13015824.htm 37http://ctwatchdog.com/finance/2012-computer-reliability-report-lenovo-most-reliable-acer-least-reliable-apple-declined 38:Inside Steve’s Brain by Kahney, L (2011)