Essay about Dell Case Analysis

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Section I
Dell was started in a dorm room at the University of Texas by Michael Dell in 1984. It was originally called PC’s Limited. PC’s limited would purchase components wholesale and assemble computers. The computers they built were similar to what IBM and other industry leaders at the time were manufacturing. PC’s Limited was able to sell their computers at a steep discount compared to similar offerings on the market. The business was immediately successful. Michael Dell left University and the company continued to grow exponentially. The company was renamed Dell Computer Corporation and went public June 22, 1988. The IPO raised $35 million.

Throughout the 1990’s, Dell Computer Corporation experienced phenomenal growth. Dell expanded into several global markets, started selling to businesses and established itself as one of the leaders in the computer making industry. In 1996, Dell Computer Corporation began taking online orders for computers. Within the first month, they were receiving over $1 million in sales per day. Online sales were a driving force behind Dell becoming the largest PC seller in the world. This sales practice allowed Dell to meet customers’ specific needs through customization. This model also enabled Dell to have the best inventory turnaround in the industry. With their astonishing success in computers, Dell began to expand into other product markets such as: televisions, personal music players, and printers. In 2003, the company changed its name from Dell Computer Corporation to Dell Inc. to reflect their expanded product line.

Michael Dell stepped down as CEO in 2004, relinquishing the title to Kevin Rollins. In January 2007, Michael Dell returned to CEO after a period of slowed growth, and he remains the CEO to this day. Dell is headquartered in Round Rock, Texas. Dell (2012) reported that it employs 109, 400 people globally (p.10).

Dell is a socially responsible company. At every stage of production Dell has initiatives to be more environmentally friendly. Dell tries to limit their use of hazardous materials when designing and building their computers. Dell Inc. (2011) reports it has reduced total non-hazardous manufacturing waste from 100, 000 metric tons in 2009 to approximately 30,000 metric tons in 2011. Of that waste, 96.23% and 95.7% was recycled or reused in 2009 and 2011, respectively (Striving Toward Zero Waste, chart 1). Dell realizes shipping packaging can leave a substantial environmental footprint and has instituted several strategies to reduce this footprint. In 2009, Dell started shipping products in Bamboo packaging. Bamboo is sustainable, biodegradable and environmentally friendly. They have also created a free program to recycle old computers, Dell Reconnect. Dell Inc. (2012) reports they have kept over 200 million pounds of e-waste (electronic waste) out of landfills since 2004 (Dell Reconnect, para. 3).

A major competitive advantage at Dell Inc. has always been their direct sales model. By cutting out retail stores, Dell products sell for less than competitors. Having a direct relationship with the customer gives Dell valuable information about what products and features consumers like and a general idea of what direction to move in next. Since the order for a computer is received before it even starts to get built, inventory times are remarkably lower than competitors. Due to innovations like this, the operating costs at Dell Inc. are significantly lower than competitors. The low cost strategy Dell Inc. has pursued throughout its entirety has been a major driving force behind its success. However, competitors have recently been able to cut manufacturing and operating costs and are minimizing the price advantage Dell holds. Competition in the computer industry is incredibly high and fast developing. Dell’s ability to position itself in the marketplace and anticipate their rival’s movement has been a large factor in why they are still one of the leading computer
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