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Since Dell was founded in 1984 they have grown and expanded while integrating different ways of business to fit into the changing economy. The actions of Dell have changed the face of business today as they nearly single handily perfected the 'Just in time" inventory system. The market has changed countless times since the start of the internet age and Dell used their product placement to help build the multi billion dollar company they are today. Dell has become excellent at adapting to its surroundings and this has been a major part of their success. From advancing into retail outlets to using millions of pounds of recycled product, Dell has never been shy when it came to change. This research project will show in-depth their company history, how they distribute, strive to help the environment, and how they are continuing to adapt and grow in today's economy.
Dell first began with only $1000 as "PC's Limited" in 1984 as an unconventional project by Michael Dell in his dorm room at the University of Texas. He left the University after his freshman year to focus on the business. They created their first computer system, the "Turbo PC". The now renamed Dell Computer Corporation gained $85 million of capital in 1988, after just four years of operation. With its leading customer service and support, Dell's focus remains the sale of custom built computers directly to the end-user, but the sales expand into retail stores such as Walmart and Staples as the company's success began to slowly decline. One of the Pioneers of e-commerce, after seven months of its startup Dell.com sold $1 million per day. In 2007, it had the fourth largest online sales of $4.2 billion in the U.S.
Dell has expanded its product and solution portfolio and has seen increasing revenue in the last years. It now owns a number of subsidiaries and a global presence.
When Dell was started in the dormitory room of Michael Dell at the University of Texas his distribution strategy was rather simple. He sold to the other students of the university directly which allowed him to fully customize and personalize their computer. This strategy of selling directly to a customer and eliminating intermediaries allowed for 'the Dell effect' to occur, in which customer's value to a company was raised and the products were provided at the lowest prices on the market because of the direct method of delivery. The type of delivery is known as "just in time" as it makes the products being sold available "just in time" for the customer. Dell was the first company to make this delivery system famous, from 2001-2006 they were the number one personal computer provider in the world. Dell only sold directly to their customers without a retail outlet until 2007 because of this, their products were valued very high from a consumer point of view, because you could customize nearly everything about the computer to your specific specifications. The low costs and high reliability associated with Dell is what made them famous; amazingly Dell eliminated almost all intermediaries involved with retail sale. Dell itself was the retail store, producer, and shipper, this allowed for a drastically lowered cost of product, because each aspect did not have to be transported until it was needed. For example, their relationships with other producers allowed them to set up systems in which the Monitor and Tower would be shipped from separate locations to arrive at the customer on the same day.
Dell has advanced their method of purchasing a computer many times, in the early years before the internet was widely used a "Dell" could be ordered by Fax, Mail, Telephone, or in person. As the internet grew into the massive network that it now is, the majority of Dell's orders came from the online site on which you could select all the features you desired much similar to how online shopping is done today. Dell's computers today in most cases are assembled ahead of time and are available in stock versions at any popular retail outlet. Although their online ordering is still available, convenience seems to have taken off the market today, and Dell adjusted by offering their product in a retail format.
When Dell was most successful between 2001-2006 their major generator of sales was their online website, they were the first company to perfect the just-in-time fully customizable options that their website offered. Dell ensures that a computer ordered online will be delivered in full anywhere in North America within five business days, this offer is what in Dell's early years set them apart from the competition, unfortunately other companies have adopted this style and have drawn large amounts of Dell's sales away from them.â€¨
When the company ran into problems in 2007 they altered their sales tactics, although they still offered the "just in time" method which made them famous they had partnered with countless retail stores. Starting in 2007 Dell partnered with Walmart and their product were available in over 3,500 stores in America, Canada and Puetro Rico. When this shift was made Dell announced that "although their direct model was a revolution it is not a religion". With this shift to making their computers so widely available they lost some of the prestige that was associated with having a "Dell". By the end of fiscal 2008 the Wall Street Journal reported that Dell computers and products were now being offered in over 12,000 retail outlets. The struggle to keep the prices of their products classically low was the problem Dell faced as they now were offering their products in such large retail markets. To deal with this Dell outsourced a lot of their production to China and other lower cost related producers. In the recent years of financial hardship many companies have done things similarly and sacrificed quality for quantity. Dell is currently the second largest PC distributor in the North America.
How Dell affects the Environment
Dell has targeted its design to meet environmental concerns which reduce impact on different levels of its operation. For example, many of Dell's products include power management features which save energy during idle time, and over the past ten years they have improved per watt performance by a claimed 101 times. Certain eco-label certifications such as Energy Star and EPEAT are also acquired to help consumers make better choices. Dell also warrants some of its servers and storage products to operate at a higher temperature using fresh air cooling systems. According to Dell's 2012 Corporate Sustainability Report, they have been able to reduce the carbon footprint of its facilities by 16 percent, avoiding 25 million tons of greenhouse gas emissions. The organization has focused on data center energy efficiency. Dell M-series Power Edge blade servers consume up to 20 percent less power while competing with per watt performance. In other attempts, Virtualization technology has been an interesting solution for schools and institutions alike, which moves computing to the servers, and thus saves energy.
Dell has initiated many environmentally friendly techniques in their production. It has taken steps to reduce potentially harmful chemicals such as arsenic in LCD production, transitioning to LED backlights, thereby eliminating the need for mercury in screen production. The company also eliminated lead in production worldwide, offering lead-free server configurations, and took steps to eliminate three types of phthalates. Also, avoiding non eco-friendly flame retardants, following paint and coating restrictions, and reducing glue and adhesive use, has helped to decrease the company's chemical footprint. Lastly, the company has offered BFR/CFR-free memory products since 2011.
Dell has acted to minimize waste and inefficiency and encourage reuse and recycling. In 2009 Dell banned the export of non-working electronics to developing countries. The organization has incorporated recycled material in their products and packaging. In 2012, Dell used 7.4 million pounds of recycled plastic in their desktops and monitors. The company also consciously designs its products to be easier to recycle or be reused.
Dell also has a recycle program where people can take their old computers, laptops, or any other electronic products to one of Dell's recycling facility. After Dell receives these products, it recycles them and reuses them in their new products. This helps to reduce waste. If a product is in working condition, they will be refurbished and resold through Goodwill; this helps people to buy cheap products and creates new jobs for people. As part of Dell's packaging strategy,
package techniques are implemented to find alternatives to the foams, corrugate and molded paper pulp materials often used in device packaging. Using recycled material, bamboo, and mushrooms as well as design principles to reduce packaging size help minimize material and fuel consumption, and produce packaging that is 75 percent eco-friendly. They use bamboo because it is strong, renewable, promotes healthy soil when harvested correctly in a way that doesn't need replanting afterward, is local to manufacturing sites (helping to reduce Dell's packaging-related carbon footprint), and is biodegradable and compostable. Bamboo is the fastest growing woody plant in the world. It can grow up to 24" per day. It can be harvested in just three to seven years; this makes it highly renewable and a great alternative to foams, corrugate and molded paper pulp. Bamboo is very strong and durable, thus providing effective protection from the packaging. After receiving your product, you can easily recycle the packaging just by taking it to a recycling facility or just by tossing it in your compost pile.
When a customer orders multiple items, Dell packages them in a single, strong box specially designed to minimize packaging material waste. If they were to package each item individually, it would waste natural resources, energy, time and space. Identifying and adopting new transportation and delivery systems has been a main environmental concern for the company's image. Dell chooses to partner with companies which strive to use strategies that can reduce their carbon emissions. Here are some of the strategies that FedEx, one of Dell's partners, uses in order to go green:
They have 43 all-electric delivery cars
They have 330 hybrid-electric delivery cars
They have 58 trucks that uses compressed natural gas, liquefied petroleum gas, and liquefied natural gas as fuel
They use electric energy to run their package sorting system, and their copying and printing equipment.
They use natural gas to heat their facilities.
Most of their envelopes are made with 100 percent recycled content and they are recyclable.
The boxes that they use and sell contain 20 to 45 percent recycled content and they are recyclable.
Shifting international shipment from air to sea has resulted in a major reduction of emissions. When Dell wants to ship their products to their suppliers, they found the most efficient transportation modes and routes for each supply chain so they can minimize environmental impact as much as possible. For many routes from Asia to Europe and from China to South Asia, Dell uses rail rather than trucks to transfer shipments from ocean terminals to the supplier.
Climate change has been a strong force in Dell's decision making. In efforts to show global citizenship and environmental consciousness, Dell decided to partake in a number of causes. The company has partnered with Conservation International, supporting and funding work to protect Ambositra-Vondrozo Forest Corridor in Madagascar. Dell has supported and funded programs aimed at developing fish farming and bee keeping, repairing agricultural irrigation, training farmers in agricultural techniques for the off-seasons, and helping farmers find new sources of income and protect the forests.
Dell strives to be known as a top environmentally friendly brand. Implementing numerous strategies and techniques over the years has resulted in a significant reduction of its footprint, flattening and controlling its corporate CO2 emissions in 2012. Dell also tries to offset its emissions through a plant-a-tree program, and by purchasing carbon credits. Of course, there are disagreements in emission calculation methods and to what extent a company is responsible. Suffice to say that the carbon credit market is an unregulated system, and leaves many environmental issues unresolved.
Clearly, Dell has made significant efforts to limit the environmental impact of its operations, and uses that fact to help market its products.
The growth of Dell's distribution
Dell as a company has grown considerably throughout the years, especially in the ways that they distribute their product. In the year 1983, Dell originally distributed their product through Michael Dell's dorm room. His product at the time was computer upgrade kits. Considering he sold these kits and his service through his dorm room, he acquired one hundred percent of the profits. This allowed for him to perform upgrades at a much cheaper rate and sell them for a lower price than other competitors. After a while, Michael Dell quickly realized that if he was to create computers and sell them without the use of retail stores, his profits would be substantially greater. Thus, he became a direct seller.
Dell sold all their computers at this point by telephone. Customers would phone in, and Dell would build all the computers to the customers' needs and specifications. Considering Dell had roughly 50,000 phone calls daily, Dell was constantly given feedback through customers on the phone. This gave them a great competitive edge compared to other computer distributers at the time and allowed for Dell to make constant changes and keep up with their customers' demands. People now had the luxury of purchasing a computer at a much cheaper value, as-well as receiving the PC substantially quicker than other suppliers. Eventually in the year 1996, as the internet was becoming more and more common, Dell decided to branch out and make a website. This allowed them to go international and increase their sales dramatically due to having multiple languages available for customers of every ethnicity. This helped erased language barriers that Dell previously had. Now that Dell had a website, this was a drastic change for customers. It now allowed them to access any information about the product whenever they needed it and also offered a greater sense of customer service.
As years went on, Dell continued to search and try new strategies to make their company the leading computer supplier. One of the strategies they integrated was through the assembly line. Dell created a new method for assembling their computers. This method allowed for them to extract long, repetitive assembly lines where individual workers are assigned to one specific task, and integrate smaller more efficient ones. Dell achieved this through "manufacturing cells" which are essentially groups of workers assigned to a station where they can produce computers collectively. This one strategy Improved Dells production time immensely, allowing them to perform, and manufacture substantially quicker than other suppliers. Throughout Dell's constant improvement, one of the ways that they achieve customer satisfaction is through weekly meetings which involve any employee or customer who wants to partake. In these meetings, customer satisfaction is greatly discussed, and everyone helps give their opinions on how Dell can improve by making their distribution more efficient, or any other aspects of the company.
In 2009, Dell decided to branch out even more and made 2 deals with Ingram Micro and Tech Data which are two very well-known distributors. Making this deal gave Dell the ability to sell and distribute their products in a vast collection of countries which Dell did not previously manufacture for.
Today, Dell is still one of the world's top IT corporations. In recent years it has purchased several companies such as Alienware, SonicWall, and Quest Software, which is one of Dells more recent purchases. All of these Investments have helped Dell grow considerably, as they allowed Dell to branch out and acquire different customers from multiple areas of the technology market. Dell is still using the "Just-In Time" strategy for manufacturing and distributing their products. By using this method, Dell has saved a considerable amount of money on storage costs for unnecessary inventory. This strategy encourages Dell to constantly adjust their orders and change their schedules to meet the demand given. Since Dell is largely based online, once a product has been ordered, the manufacturing facility nearest to the client will assemble the product and ship it to the customer using mail services much like FedEx.
One of the largest producers of personal computers
Low use of intermediary's
Products made to customer's specifications
Very good Branding
Excellent customer service
The amount of partners they have can affect continuity
They only build computers not develop them
Their relations with computers retail outlets are weak
Their computers are not unique to the market
Their distribution technique is unique to the market
Expand their product breadth and depth
Build on their "one step" shopping experience
Start to develop new products not just assemble them
Expand retail overseas
There are many well established PC suppliers
The Competition retails very well
The Economy is always changing
New entries to the market
By the time Dell entered the market, computer technology experience rapid growth. Adopting strategies such as branding and customization opened the market for Dell and established its name. This all took place without any stores, portraying the brand as high quality specialty without the crazy price tag. Just-in time method of delivery was superior and set a standard. How much of an impact the internet has had for Dell's success is clear. Aside from expanding the market and increasing profits, the internet opened new paths to sell products. However, in the recent years what has come to threaten the company has been what helped it to be such a success in the first place. Increasing number of competitors offering similar or better solutions through the internet with similar delivery services and newer established brands have moved Dell to take action by reaching out to customers in retail stores, moving its focus towards non personal services such as servers and institutional products, and buy out its competition.
Dell has revolutionized the way personal computers are distributed, setting new standard for delivery and customization throughout the computing market. Dell offered the customization of any computer they provided, and delivered their product straight to the customer's door, which was the company's ultimate advantage. As a result, their product is defined by good quality, customization, and most importantly, the distribution method they used. Although they have had some drawbacks and misfortune within their company, Dell has remained one of the top computer manufacturers in the world. Currently focusing on the business aspects of production, they continue to succeed, branching out into servers, corporate, and institutional solutionsâ€¨