Dell was founded in 1984 by Michael Dell out of his dorm room. It utilizes a direct sales model which cuts out middlemen, allowing it to offer competitive prices. Dell builds computers to order in an efficient process with suppliers located nearby to minimize inventory and transportation costs. This has allowed Dell to rapidly gain market share, becoming the #2 PC seller in the US by 1998 and seeing revenues grow from $3 billion in 1994 to over $18 billion in 1999.

1. Matching
Dell
GROUP-9

2. About the company
• An entrepreneurial company started by Michael Dell, who found it in 1984 out of a
dorm room.
• Direct Model- Build relationship directly with consumers, cut down the
middleman
• Production process to cut inventory, suppliers co-located, close collaboration with
suppliers for efficient logistics
• Eliminates the need for inventory and intermediaries leading to built-in price
advantage.
• Market worldwide, with a manufacturing facility in Ireland, Malaysia and Austin,
US.

3. INDUSTRY
• Products: Based on well-defined, Wintel-based standards first established by IBM. Wide range of
configurations, highly competitive global markets for components except for Wintel (processor and
operating system)
• Evolution:
1975-81 start-up
1981-86 - Early explosive growth, high margins, IBM entered in 1981
1990-95- Crest because of the economy, but prices keep falling
1995-99-Growth recovery but the industry is at a late-growth maturity stage
• Customers: Large/medium companies/government, small businesses, consumers, education
• Channels: Retail, distributors, small resellers, integrated resellers, direct Manufacturing: Assembly-
line, low entry barrier, Asian manufacturer’s capacity

4. Question: -1 Dell Advantage
• Direct-to-customer business model Approach: DELL DIRECT
• Workstations and servers made to order, leading to no inventory
• Flexible Manufacturing:- Build-to-order manufacturing and Mass
customisation
• Cell Manufacturing reduces assembly time by 75% and doubles
productivity
• Role of Internet
• Faster shipment of product within 5 to 6 days

5. • Partnerships with Suppliers
• To part with a few outside vendors and stay with them as long as they
maintained their lead.
• Some vendors had plants or distribution centres within a few miles of Dell's
assembly plants and could deliver daily or even hourly if needed.
• JIT allows suppliers to operate with only a few days of inventory for some
component
• Sony monitors delivery, delivering both the product to the consume
simultaneously

6. Measure?
• Financial indicators since 1995, Dell has been gaining market share quickly,
growing about three times the 16% average annual rate of global PC sales
• Dell overtook Compaq as the U.S. sales leader in the third quarter of 1999 &
IBM during 1998
• In 1998, Dell Computer was the 2nd PC market leader in the United States,
with a nearly 13.2% share, Compaq with 16.7%, Gateway with 8.4%,
Hewlett-Packard with 7.8% and IBM with 8.2%.
• By 1999, Dell Computer posted revenues of over $18 billion, up from $3
billion in 1994 and stock price rose by 5600%.