Dell New Horizons Case Analysis
Dell-New Horizons HBS case-9-502-022
Introduction
As a consecutively successful and fast-growing company, Dell’s management got the pressure of maintaining the rapid growth. On the other hand, the hyper-growth in the PC industry over-drafted some growth potential in the coming years and the bubble of the internet economy burst so the speed of the growth would slow down. Since March 2000, Dell’s performance in market capitalization and stock prices had got a slump. In addition, competitions were becoming ferocious so Dell frequently lowered its prices, lowering profit margins as well. Therefore, how to maintain a 30% growth in revenues and earnings year after year was a challenge to Dell. Dell faced the options such as product growth, service growth and international markets growth. In the product growth section, personal computers, workstations, servers and storage were the portfolio. Whether to enter new product categories such as high-end servers, external storage and enterprise services was on the table for the management. The financial constraint was $7.9 billion in cash on its balance sheet. (In 2000, net income + average growth on liabilities=$ 5,146 million).
In this analysis, we will scrutinize the growth options and Dell’s ability in certain fields to make sure which options are suitable for it. Finally, we will lay out a prospective plan to pursue growth.
Analysis
Dell’s success relies on the growing market of PC industry, its business model and its superior ability to execute to sustain the business model. Dell Direct model was about low cost, direct customer relationships and virtual integration. It was a high velocity, efficient distribution system characterized by build-to-order manufacturing, and products and services targeted at specific market segments. From mail orders and phone orders to internet orders processing, Dell has a long history and experience in direct selling, making it difficult for competitors to imitate.
Personal computers
Introduction
As a consecutively successful and fast-growing company, Dell’s management got the pressure of maintaining the rapid growth. On the other hand, the hyper-growth in the PC industry over-drafted some growth potential in the coming years and the bubble of the internet economy burst so the speed of the growth would slow down. Since March 2000, Dell’s performance in market capitalization and stock prices had got a slump. In addition, competitions were becoming ferocious so Dell frequently lowered its prices, lowering profit margins as well. Therefore, how to maintain a 30% growth in revenues and earnings year after year was a challenge to Dell. Dell faced the options such as product growth, service growth and international markets growth. In the product growth section, personal computers, workstations, servers and storage were the portfolio. Whether to enter new product categories such as high-end servers, external storage and enterprise services was on the table for the management. The financial constraint was $7.9 billion in cash on its balance sheet. (In 2000, net income + average growth on liabilities=$ 5,146 million).
In this analysis, we will scrutinize the growth options and Dell’s ability in certain fields to make sure which options are suitable for it. Finally, we will lay out a prospective plan to pursue growth.
Analysis
Dell’s success relies on the growing market of PC industry, its business model and its superior ability to execute to sustain the business model. Dell Direct model was about low cost, direct customer relationships and virtual integration. It was a high velocity, efficient distribution system characterized by build-to-order manufacturing, and products and services targeted at specific market segments. From mail orders and phone orders to internet orders processing, Dell has a long history and experience in direct selling, making it difficult for competitors to imitate.
Personal computers