Dell case


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Dell case

  1. 1. “No one has pulled the levers of cost, quality, and service better than Dell.” Started by Michael Dell, the Computer Corporation is one of the world’s leading direct marketers of personal computer systems. Dell Computer Corporation designs, manufactures, markets, services, and supports a wide range of computer systems, including desktop personal computers, notebook computers, and network servers. It also markets peripheral computer hardware and software, as well as service and support programs. The success of Dell Computer Corporation can be traced to Michael Dell’s strategic vision and distinctive competency. Dell Computer Corporation has grown tremendously since its incorporation in 1984. Dells direct model, which is largely responsible for the success of the company. Now in a market that is ever changing, competitors are challenging dell. The market of laptop computers has distinguished itself as one of the fastest growing segment of computer industry. If the idea of maturity is unsettling to Dell, it could be because he himself just hit the big. But there has to be consolation in what he has accomplished in his time. His company has run through the competition like some kind of sports team. The PC industry: IBM, the company that practically invented the desktop computer, has exited the business by selling out to the Chinese firm Lenovo. Gateway has seen its business crash--its stock, which traded above $80 five years ago, now fetches $4 and change. Compaq wisely sold out to Hewlett-Packard, which unwisely doubled down in this market. Dell has thrived as downward-spiraling prices and co modification washed over the PC industry, benefiting the company's customers and bashing its competitors. Instead of battling the tide by attempting to erect proprietary systems, as HP and IBM often did, Dell used its low-cost, direct-sales model to ride the wave. Situation Analysis 1. They have moved into servers and storage, mobility products, services, software peripheral categories, and printers, and become a diversified IT company. 2. If a customer wanted a PC with an Intel chip and Microsoft software, Dell was the optimal machine to purchase. 3. As for PC market share, Dell wasn't on the radar screen, while Commodore, with about $1.1 billion in PC sales, was the industry leader with a 27% U.S. market share. IBM was No. 2, and Apple and Tandy came in at No. 3 and No. 4. Dell's market share gains would be impressive enough, but the company also has the growth and profitability throttles open all the way. 4. Its worldwide revenues are growing 19% now--that's seven percentage points higher than the rest of the industry while profits are growing even faster. 5. Dell's margins are revealing, in that its gross margin of 18% is actually lower than IBM's and HP's. That's because Dell is generally selling lower-margin machines. Dell's operating expenses--e.g., selling, general and administrative are so low, a direct result of the cost- effectiveness of selling directly to customers rather than through a middleman.
  2. 2. 6. Dell also spends less on research and development than HP, IBM, and the others, a point that makes the folks at Dell a little prickly and defensive. Dell's competitors say it is evidence that Dell doesn't innovate. 7. They have started this fine policy after Rollins joint Dell an it was: Employees rated their bosses Every six months in “ TELL DELL “ survey If the manager is not addressing the employee issues, they don’t get promoted They don’t get compensation If this remains consistently ( Bottom score) The person is asked to leave the job. Problem identification The main and the most important problem of Dell is “Diversification” it is not difficult to manage things when you are into too many things. Alternative solutions 1. The market for laptop computers has distinguished itself as one of the fastest growing segments of the computer industry. 2. Increase portability and durability of each product from destops to laptop computers. 3. Greater performance capabilities. 4. Best technology in each piece of product 5. Best technology with best quality 6. Price of the product should be chipper 7. Should have a large variety of products in chain. Conclusion / evaluations Dell is archiving its goals but not reaching to the aspersion of their ultimate clients. If they pay a little more attentions on R&D department than the profits may rise more. Getting its sellers, distributors, manufacturers, Intel etc. close to its assembling place will not make any improvement for its business. Even if they are shifting their business in different IT fields like printers, cartridges etc.what’s happening is that they are leaving other departments as they are and not getting any improvement in it. Due to which the quality of their products are facing a lot of problem. Hence they should look more on the quality of product.