The History Of Dell Computers Business Essay

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One of the famous manufactures company is Dell. The leader of PCs . Its an American company. Dell is a sixth largest company according to Fortune Magazine. In 1984, Michael Dell starts the business of PCs while he was a student of the University of Texas, Austin. His aim is build better computers than IBM, offer great value and better services to the consumers by selling direct sales became number 1 in the industry and he has achieved also. Michael Dell would buy surplus computers from retailers, add extra features that customers wanted and sell them by fax, phone, and mail and door to door also. When he was 18 years, he dropped school and focus on his business expansion after getting $300000 capital from his family. In 1985, the company produced the first "Turbo PC" on its own design. In this competitive world, Dell has no middle men they directly sells their computers to individual consumers, organizations, small firms and corporations. They are very good in services too. They dispatched the order within eight days. Orders are taken by fax, phone and internet. At that time advertisements are also limited. They advertise their computer in national computer magazines. In the first year, they earned $73 million. In 1988, they began expanded globally. Capital is also increased by $30 million to $80 million. They initially offer 3.5 million shares to public at $8.5 each share. In 1992 Fortune Magazine declared that Dell is in the list of world's 500 largest companies and making Michael Dell youngest CEO of a Fortune 500 company ever. When he became CEO of the Dell he was chosen because he keeps Dell Company on the Top of the world. Initially Dell sold their computers directly to consumers but in 1993, Dell began selling PCs at retail store like Wal-Mart which would increase their profits by $125 million. In 1996, Dell had plans to sells their PCs through online. In 1998, he became second in worldwide shipments of workstations with window NT. Dell computer is growing more than twice than its competitors. In 1998, other computer companies had faced lots of economic problem in Asia. In 1999, Dell had sales increases in Japan, Asia Pacific, Europe, Middle East Asia and Africa. Employees were also doubled now they had 20, 800 employees during the year. Dell enjoyed growth and his market share were also increased from the competitors. Dell maintained the number 1 rank in PC reliability and customer service and also provides technical support to consumers. In 1998, Michael Dell was just 33 years old and he became the 4th richest person in USA. His dream was to beat Bill Gates at the same age. In 2002, Dell introduced several new items like TV, Mobiles, Audio players, printers and accessories. But it has not been success all times because life is not easy, there were ups and downs. In 2002, when Compaq merged with HP which were better known, regarded and cheaper also took place. Now, dell became down due to poor production of portable PCs, they also made another error in venturing into retailing. It also found its direct sales to consumers also caused problem to retailers also which needed to sell PCs to higher prices to cover margin. In 2004, Michael Dell resigned the position of CEO and retaining the position of chairman. In 2007, Michael Dell became CEO again. Dell open first retail store in India. In 2012, Michael Dell ranked 41st richest person in the world in Forbes Billionaires List.

The Industry-

Dell competes globally. Initially a direct supplier to consumers now competes directly against the world's leading PCs manufacturer. In this competitive world, organization and employees rapidly changing and increasing globalization environment still Dell maintain its position at top. In 1999, Dell market was up by 23 % where as Compaq market share go down by 27 %. IBM share go down by 17% having fallen 10% from the last 3 years. HP is 16%, Toshiba is 10% and Apple is 9% go down. Four years ago, Dell computer ranked fifth worldwide behind Compaq, IBM, Apple and NEC. The competitors of Dell are Apple Mac, Toshiba, Compaq, IBM and Hewlett Packard. Hardware manufactures like Dell, IBM, HP, Apple they make computers that facilitate the use of software's - Microsoft and Macintosh according to consumers need. In this competitive world, Dell maintains strong relationship between employees and consumers also as this provides the market benefit for them. PC market is evolving market. Pricing of PCs are decreasing every week because of the new technologies. The cost of material is also decreasing, this reduction is because of the Ram and Hard Disk prices are also decline. The PC business can be highly profitable but it's difficult also in this competitive world and one to survive in as many Korean, Japanese and USA companies have discovered. To survive in this competitive world, PC Company should obsolete the old PCs and launch new computers with innovation technology; upgrade their product as quickly as possible. The positions of PC assembler are more secure as they don't need to make any investment in the business but their job is more stressful as pressure is from suppliers like Intel and Microsoft. Assemblers are quick to introduce the new technology computers as consumers want the extra high features. To reduce the price of the product just because to achieve maximum profits, this is the company strategy this assists them in achieving higher profits. In this competitive world, company reliability, customer support and customer service, advertising of the product, brand reputation and brand recognition can help differentiate the product. High speed logistics, particularly on the distribution side also help assemblers to improve their competitive position.

The Technology-

Dell has made use of technological, like initially Dell has started business from call center by taking orders on phone and providing customer service. Today, Dell computers has 12 factory in Austin, can turn out a configured, tested, finished and boxed OptiPlex computer in less than 5 hours in this process also maximum time taken by burning it and to testing it. Dell has more than 200 process related patents covering its production process. At the time of assembling workers used to touch the computers 130 times but now only 60 times. At one station near the beginning of the assembly line, worker attach the mother board and power supply unit to the computer chassis - a process once required 6 screws but now takes one screw. Further along the assembly line, a tool known as stacker moves PCs in group of 5 where as workers moves that stackers one by one. Near the end of the line, completed PCs sit on racks ready for the installation of software's. This take 45-90 minutes but it be take less when engineers have successfully introduced an automatic software installation system.

Dell has introduced web technology to increase his efficiencies and saves money also. In 1995, Dell started business online and when everyone is not aware of ecommerce business and Dell makes half of it sales online. Dell has very strong back end, employees are very efficient. A single order triggers automatic component reorders, production scheduling and shipping arrangements.

Dell has created individual websites in 36 countries and 18 languages. Website includes all the information about the product with a price tag so that customer can buy the product online and they mention the delivery schedule also. They also provide the support information to customers based on the specific products they are willing to buy or they are using. When a customer order from Dell he is not only get a response from Dell but also activates its own company system like budgeting, approvals and inventories for this reason product will be more costly.

Back end solutions and Front end interference keep changing time to time. Dell will need to keep up these changes for the company developments.

The Innovation-

Dell innovate new technologies time to time but also Dell innovate the new selling idea. Dell developed a new business model that has helped revolutionized thinking about inventory, supply chains, working capital, outsourcing business and mass customization. Customer is also happy with this latest technology because customer receives the order within 8 days. Dell next feature is like customer can assemble their own computers but just they have to tell the engineers what they want in their PCs. Dell has continuously decreasing their value of the products because they believe that this strategy will increase their profits and will also give the reliability in this competitive world.

Dell has ingenious arrangements with suppliers. Its suppliers of monitors, Sony doesn't send its monitors to Dell. Instead, when the computer is completed, UPS or Airborne Express collect the monitors from Sony Mexican factory and matches the monitor and remainder of the PC at its delivery centre before delivering them as an entire package to the customer. This enables Dell to suffer holding an inventory of monitors and to save $30 on shipping cost.

Dell receives its order by phone, internet or fax. Once an order is completed and payment is verified. PCs are assembled and configured only after the clearance of payment. A production invoice is electronically forwarded to its production facility and order required parts. Parts and required components are delivered on a time from vendor warehouses located Austin, Texas, Brazil, Malaysia, Limerick, China, Ireland and Penang.

Market Introduction- The following characteristics will provide the Dell to more stability and make the business to success in this competitive world.

Relative advantage- was clear and different. They offer latest technological features according to customer requirement and assemble it and deliver anywhere.

Complexity- Dell is very straightforward. Customers can easily order the product through online or phone and fax also.

Compatibility- It's a different concept for consumers by online products rather from directly by from retailer.

Communicability- In the advertisement also, Dell clearly explain the product in simple language so the customers easily understand the product or he can contact Dell customer service also on phone. Dell is one of the biggest advertisers in trade journals, catalogues, IT books, websites and metropolitan newspaper and computer publications.

Trialability- Dell also gives trial to the consumers so the customers easily go through the process.

The Market Strategy-

Dell has divided their market into two segments- employs different marketing strategies to meet their goals. These two segments-

Relationship market- Government, educational institutions, Corporation offices

Transactional market- consumer and small business. In the transactional market, it pays less attention to the first time customers and avoids the low profits.

Superior Customer value-

Dell offers a superior customer value by offering customized PCs. According to the requirement of the customer need and order by customer, assemble it for the customer.

Strategic Relationships-

Dell competition is not in retailers and suppliers or manufacturers. Dell competition is with the world largest companies like Apple, Hewlett Packard, IBM, Toshiba and Compaq. Dell achieved this too with the help partnering throughout the value chain. Dell has been able to deftly manage the risks of diminished control and dependence to provide state-of -the- art technology to customers at highly competitive prices. Dell has used relationship strategies with partners to leverage their competencies and maintain maximum flexibility. Dell suppliers, distribution and service partnerships support its different process capability with companies like Intel and Microsoft.

Organizational Change-

Dell office environment is flat. Dell's main office is located in Texas. As of 2013 the company employs around 14,000 people in Texas. Dell motivates employees to innovate new product and software's also. Dell regularly gives incentives to their employees. Dell easily adapts changing needs of customers. To get or wrongly understand the customer, results company failure so, to overcome this situation Dell provide the right people for the right job.

Marketing

Dell gives advertisements in several types of media like television, Internet, catalogs, magazine, and newspapers. Dell marketing strategies include lowering prices, offering free products (e.g. buy laptop and get Dell printer free), and offering free shipping.

Competition

Dell's major competitors include Acer, Hewlett Packard, Apple, IBM, Sony, Lenovo, Toshiba, Gateway, Asus, Samsung, MSI, Sun Microsystems.

Partnership

Dell did partnership with EMC. In some cases, Dell and EMC jointly design such products. EMC Corporation is an American multinational corporation. EMC offers cloud computing, information security, virtualization, and data storage products and services which enable businesses to store, manage, protect, and analyze massive volumes of data. 

Results-

As we discussed above performance of Dell in terms of sales volume, market share, profits, growth this result that Dell innovation get huge success. Michael Dell in 1984 sells PCs in the dorm room, at that time sales revenue went from USD 80000 a month to USD 60000 million a year just two year later. In 1992 Fortune Magazine declared that Dell is in the list of world's 500 largest companies, this also gives the Michael Dell great motivation. Hewlett Packard, Compaq and IBM are now all using their distributors to do more assembly work and to build more units to order. Competitors also have been reducing their warehouses and distributor inventories but they have not yet been able to get them down to the level of Dell. Competitors also follow Dell and started sell their PCs on their own websites.

Innovation technology and follow market strategy and strategic planning should enable it to maintain reputation, market share and help to achieved goals. Strong growth in international market like in Asia and Europe provide Dell in business expansion opportunities.

Recommendation-

Dell is one of the world top performing companies. Innovation process gives the huge success to Dell because it's very hard to achieve goal at that time like to take the order from customer and assemble the computer according to customer order and when customer don't believe in online shopping. They provide better services to the consumers, deliver the product on time, and innovate new technologies time to time and achieve its goal. But this also has few drawbacks and that should be changed to make more profits. So, I recommend this as a Problem Case.

Problems -

When a customer order from Dell he is not only get a response from Dell but also activates its own company system like budgeting, approvals and inventories for this reason product will be more costly.

Dell company web pages strategy includes customized web pages for the two dozen or so companies that supply most of its component.

In the transactional market, it pays less attention to the first time customers and avoids the low profits. This has stopped Dell sales from being dragged down by first time users.

Dell Computer has been criticized by their customers for incomplete understanding and the potential offered by the convergence of technologies, despite a clever partnering move with phone and cable companies.

Dell continues to face public scrutiny with even the company's own website littered with complaints regarding the issue escalation process.[137]

Dell has very good reputation but it goes down since 2002, due to poor customer service Dell moved call centre offshore and as its growth outstripped its technical support infrastructure, came under increasing scrutiny on the Web. The original Dell model was known for high customer satisfaction when PCs sold for thousands but by the 2000s, the company could not justify that level of service when computers in the same lineup sold for hundreds.

There was also criticism that Dell used faulty components for its PCs.[26] A battery recall in August 2006, as a result of a Dell laptop catching fire caused much negative attention for the company though later, Sony was found responsible for the faulty batteries.[19]

Diagnosis-

I believe that due to heavy workloads to the employees it causes all the problems. Workload on the employees is to high that's why company is facing problem in customer attention and making bad quality product in rush.

Action Plan-

Short Term

Make the product reasonable- Dell products are more costly if we compared to any other product so Dell should decline their prices and make the product reasonable.

Update Website- Dell website show unnecessary information also when customer order the product so Dell should provide limited information which is beneficial to consumers.

Long Term

Increase manpower- Sometimes Dell did not give response to the first time buyer or low price buyer and focus more on the big company and this also gives the bad impression of the company so, Dell should focus on every customer whether his budget is low because every company believes this strategy also to satisfy customers.

Increase Call Centers- Sometimes Dell can't understand the customer properly and this also affects the company image. So, Dell should focus on the customers what he speaks and what he wants in his order. Dell should communicate the customers in their customer's native language so that they easily understand the thing.

Quality- Dell should improve product quality also. If the quality of the product is good it will give long life to the product, complaints will be less hence, the results company will earn more profits.

If Dell follows these marketing strategies, they can make more profits and market value of Dell is also increases. Dell should improve on this, and answer customer inquiries more quickly.

Risk

Initially, company will invest more capital to solve these problems but I believe result will be good at the end. Dell will recover soon all capital and enjoy profits.

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