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Michael Dell, in 1984 founded Dell in order to directly serve their customers with computers that meet their needs. The company was called PC's limited and he was still a student at University of Texas at the time. The following year, Dell came out with their very first computer called the Turbo, which had an eight-megahertz processor. The major goal was to produce personal computer systems that were IBM compatible and were produced or entirely stock parts. What set the company apart was not just its consumer-oriented focus but also its allowance for people to customize their computers during the ordering process. Because each computer was individually assembled, this was possible.
The company grossed 73 million dollars in the first year. The company went public in 1988 offering shares for $8.50 a piece. The first Dell laptop made its debut in 1991 and by 1993; it became one of the top five computer companies in the world. By 1995, those$8.50 shares were worth $100. The progress of the business was rapid and in1997; Dell had shipped its ten millionth system.
In 1996, Dell began selling their products through their website and three years later they took over Compaq Jumping forward a bit, in 2003, Dell introduced their first printers for the public, including those intended for the average consumer and businesses. Dell printers are known for being versatile and easy to use, however a recent development has brought scepticism to the company when Lexmark began working with them whom modified their cartridges so that they don't work with Dell printers. However, Dell has a long track record with customer satisfaction, at the very least in regards to their computer products.
Michael Dell's performance in his roles as CEO and Chairman Dell's
Michael Dell started his company with a purpose. His purpose was to sell directly to the end user by eliminating the intermediaries. Dell's company, PCs Ltd., was able to sell IBM clones for 40% less than the competition. This strategy resulted in instant growth for his company. The fast growth of his company gave Dell his share of early development problems. He needed to increase his production capacity, add additional staff, and create a business model to follow. Dell needed to do this and keep his growing costs low. He renamed the company Dell, added a sales force, and offered common stock. The sales team was able to sign contracts with large customers. His sales rose to $388 million in 1990. Dell wanted his direct sales to increase even faster than they had been so he decided to distribute his products at warehouse stores. He realized he had made a huge mistake after they saw how small the sales margins were. He withdrew from the retailers after only three years. Dell realized that direct sales were the only market he wanted to be in.
In his role as CEO, his performance was through his innovative way for marketing computers, he guided Dell from a small, Start-up Company into a global leader in PCs and IT Products and Services. He was very accessible CEO and a role model for young executives because he knew how to delegate the authorities to subordinates. He believed that the best results come from the talented people who can be relied upon to do what they are supposed to do. Michael Dell was also the chief architect of the company's direct sales approach and build-to-order approach.
Michael Dell justified his excellent performance by performing well in all the five areas of Crafting & Executing Strategy. He formed a strategic vision for Dell, which had five tenets. Five tenets were describing the vision of having a strong and direct relationship to customer, allowing customer to purchase custom built product, creating non-proprietary and efficient technology and supply chain and company should endeavour to deliver added value to customers. These five tenets were the key to delivering a superior customer values. He made sure that all company executive believe strongly in those five tenets. Under his leadership he developed the business model, which uses the company's strong capabilities in supply chain management, low cost manufacturing and direct sales capabilities to expand into product categories where Dell could provide added values to its customer in the form of lower prices. Under his leadership, Dell has become the low-cost leader using his business model and strategy.
Elements of Dell's Strategy
There are four main elements to Dell's strategy of delivering superior customer value. The fist key element is that Dell focused on selling directly to the consumer, which has proved to be very efficient way to market the company's products, while eliminating wholesale and retail dealers. The second was allowing customers to purchase built products and services in a custom tailored way, which allows them to meet customer's specific needs. The third is a highly effective supply chain and manufacturing organization, which has strong roots in standardized technologies, and selling direct. This allows Dell to sell it products at lower prices than most of the competitors. The last is Dell delivers added value to customers. They implement this through extensive research in all technology options, by trying to determine which ones would be optimal, and lastly to be accountable to customers for helping them receive the highest return on their investment. In the business model, Dells' Strategy was clear. It constantly strived for was to reduce cost. In the most recent year, 2008, they set a goal of trying to reduce cost by $3 billion. With dell obtaining the seven major factors in its strategy it was able to dominate the market. First it made its computers "build to order." Second, it partner with its suppliers to "squeeze cost savings" out of the supply chain. Third, it used direct sales techniques to gain customers. Fourth, it grew into a larger a larger market share with expanding its additional products and services to capture a larger share of consumers IT spending. Fifth, it focused on providing outstanding customer service and technical support. Sixth, it kept R&D and engineering activities solely on better meeting the needs of consumers. Lastly, it focuses on using standardized technologies in all of its product offerings. Dell's strategy is together well, which the major factors relying on one another in order for the company to succeed as a whole. I believe Dell's strategy is constantly evolving. They are always looking of new ways to expand their products and services without trying to overload the system. In recent years, Dell has expanded into data storage hardware, switches, handheld PC's, printers, and printer cartridges, and several new software products.
Does Dell's expansion into other IT product make good sense? Why or why not?
Dell's decision to expand into other IT products makes good sense. It is very obvious that dell has dominated the PC industry not only is it marketing and customisation, but is the quality if the product it sells to the consumer. It make good sense to me because many people who purchase Dell computers, and are very loyal to their brand would preferred to have matching components to their PC's. For instance, many consumers would probably buy the printer, so that it matched their computer. They would do this not only for the name brands to match, but because Dell has a quality reputation which consumers know and trust. They would be more apt to try a new product from a honest and worthy quality supplier, than they would from a company they do not trust.
SWOT analysis of Dell
Strengths: Dell is the World's largest PC maker. They cut out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management approaches to capture data on its loyal consumers. Weaknesses: The Company has such a huge range of products and components from many suppliers from various countries, that there is the occasional product recall that can cause Dell some embarrassment. Dell is a computer maker, not a computer manufacturer. It buys from a group of concentrated hi-tech component manufacturers. Opportunity: Dell is pursuing a immense diversification strategy by introducing many new products. Initially this has meant goods such printers and toners, but now also included LCD televisions and other non-computing goods. Dell is making and selling low-cost, low-price computers to PC retailers in the United States.
Threats: The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. Dell, being global in its marketing and operations, is exposed to fluctuations in the World currency markets.
Which company is competitively stronger - Dell or Hewlett-Packard?
Although Dell is not currently the leader in market share for the PC, is takes a close spot as second to Hewlett-Packard. Dell, as of the first quarter of 2008 had a market share of 15.7%. Lenovo had a total market share of 6.9 %, while Gateway fall into the other category, and it not a large threat to Dell as a competitor. The leader Hewlett-Packard had 19.1%. Both grew at a steal rate of 1% compared to the previous quarter. I believe Hewlett-Packard enjoys the strongest competitive position, with a fourth quarter in 2008 increasing 4%. HP forecasted the 2009 fiscal year revenues to be between $127.5 to $130 billion range. Dell forecasted for the same period a 3% decrease from that of the previous year, with their 2008 net profit already being down 3 percent. Gateway has the weakest overall competitive position, with HP having the highest.
In what respects, if any, is Hewlett-Packard's strategy in PCs more appealing or better than Dell's strategy?
There is no doubt that people still prefer Dell over any other brand of computers because of the ease of availability. I do not think so that HP has used any such strategies that are more appealing than Dell's strategies because Dell has always been number one in terms of marketing and advertising and using strategies to attract the customers. Yes, some people prefer HP because they believe that the costs of HP products are bit higher than Dell, so the quality could be better than HP, but nonetheless, Dell's strategies are more appealing than HP in every part of the world.
What issues and problems does Michael Dell need to address
Dell has a chance to become the global market share leader again, although it will have to implementing a new plan and strategy to evolve with the changing market. Right now the "two-two" system is not efficient and too costly. Dell will have to change many of its manufacturing procedures to reduce the cost in order to regain the market. Dell is very capable of building quality products; they are just falling behind in manufacturing them in a cost efficient way, where they are able to increase the revenue.
Recommendations for Dell to overtake HP in global sales of PCs
Dell is one of the top most leading companies of the world. There are several things that Dell's needs to do in order to overcome HP in the global sales of PC's
People prefer HP because they get all the accessories including scanner, printer, fax etc, so Dell need to get into this market and produce fax, scanners and printers so that they overcome HP.
Dell needs to have competitive lower prices then HP, because HP is known for expensive printer cartridges and hence Dell can overcome this strategy.
Dell needs launch newer products so that the market value of HP goes down because of limited products.
Dell needs to have promotional sales very frequently, which HP also doesn't have, so that the customers get attracted to Dell.
Dell should always concentrate on innovations and innovate newer products so that the customers get attracted.
To have more sophisticated online customer service where they can have more discussions about the technical problems related to their products so that the customer do not find difficult in maintaining their PC's.
To have a better after sales services to the customers.