Dell Computer in 2003 Driving for Industry Leadership Term Paper

Pages: 8 (2878 words)  ·  Bibliography Sources: ≈ 11  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

Dell Computers in 2003: Driving for Industry Leadership

Company background and History

It is an interesting fact that Michael Dell, when he was just about fifteen years old, bought his very own first personal computer, which was an Apple II, in the year 1980. He subsequently took the entire computer apart, so that he would be able to better learn exactly how it had been made, and what its various parts were. Soon afterwards, when IBM introduced its first personal computer, Michael Dell started to buy, and then to upgrade, and to sell IBM compatible computers in the market. This was the simple and modest beginning of the 'direct sales' technique that the company Dell employs, even today. It is another interesting fact that even when Dell was still attending the University of Texas, in the year 1984, he created a company, which he named 'PCs Limited' so that he could market his computers. (Allan, 15)

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The company's sales, at the outset, were at a rate of between $50,000 and $80,000 per month. Soon afterwards, Dell quit his University, and went on to incorporate the Company as 'Dell Computer Corporation' in the same year. However, products were being sold under the brand name of PCs Limited, and Michael Dell's primary intention and aim was to market more sophisticated and classy and also built to order Personal Computer compatible systems to end customers, using several recognized and accepted direct sales and marketing techniques. These techniques served to successfully get rid of the markup to dealers, and also to resellers, and offered a significant edge as far as costing was concerned, in the area of product pricing. Dell, however, was not at all completely satisfied, and therefore, he decided to attempt to improve profitability by producing his very own computer. (Allan, 15)

Term Paper on Dell Computer in 2003 Driving for Industry Leadership Assignment

For the purpose, Dell used a chip set for the Intel 286 microprocessor, which was being supplied by Chips and Technology Inc. Jay Bell was the design contractor, and by 1986, Dell was able to proudly display, at the Comdex Show, one of the fastest performing 286 based, 12 megahertz, computer system. It was priced at a low of $1,995, as compared to IBM's 6 megahertz machine which was priced at $3,995. By the time it was the end of that year, Dell Computers had managed a sale of $60 million, and soon the company opened up shop in UK, named Dell UK, in the year 1987, and by June 1988, the company was able to make its first public offering of shares. (Allan, 16)

Historic Financial Performance and Results

It must be remembered that historically, personal computers were always sold through a direct sales force to businesses such as IBM, for example, or through certain company owned stores, like for example, Gateway, or through independent retail outlets or other small businesses, like for example, Comp USA. As a result of this technique, most personal computer manufacturers had to inevitably bear the large scale overhead expenses that were generally associated with a direct sales force, and the complex and complicated business chain that this would entail. However, Michael Dell, using creative thinking, managed to take the cost out of the distribution of PCs, by ignoring and circumventing the numerous distributors, and selling directly to the end user. This business plan made sound sense, as is evident in the financial performance of the company. (Depamphilis, 180) While in 1994 Dell Computer's share of the global PC market was about 4.2%, it had increased to about 10% in the year 2000, and this fact alone made it the market leader in the personal computer market, globally. (Depamphilis, 181)

Today, Dell Computers sells about $22 million a day, in computers, using the Internet alone, and this figures to about 35% of its total annual revenue from personal computers. (Depamphilis, 181) A magazine article from 'Fast Company', issue 64, dated November 2002, talks about the financial performance of the company in that year. Dell Computers, even at that time of complete economic upheaval, was doing much better than most other companies, because it was in fact winning more shares in the PC market, and it was also moving into the enterprise arena, including servers, switches, and various types of storage products. (Tischler, 110)

On the whole, it can be said that Dell Computers has indeed been experiencing excellently positive sales figures, for four years, that is, from 1997 to 2000. Sales would however drop in the year 2001 by 5.9%, and be back by about 6.7% the subsequent year. Its net profits reached a peak in 2000, but it was estimated that it would drop by 28.5% in 2001, and in the year 2002, that it would grow by 14%. The company's working capital has been rising steadily, as is its long-term debt. Dell's profits and revenues have also been on a steady increase from the years 1997 to 2000, and the company is expected to keep growing over the next few years as well. (Customer service like you've never experienced, an analysis of the Dell Consumer Corporation)

Organizational Culture and Structure

Most analysts attribute Dell's success to its 'direct business model', but the true fact is that its success depends on several factors, based on its efficient organizational structure and culture, including its effective internal communications, its employee, customer and supplier relationships, and its deep awareness of the future trends in the market. Here it must be mentioned that it is a fact that it is the leadership of a company that is the key element to its success, and in Dell's case, it is Michael Dell who has been ensuring the success of his own Corporation. He keeps the company's goals in sight, and he translates them into effective strategic plans and strategies and makes sure that his employee's actions match these plans. An organization's work environment and its structure are also known as the 'Sphere of Control' because this is the area in which there is immense potential to control all the various events and resources that affect the entire organization. (Dell Computer Corporation: a model for Innovation)

The 'Sphere of Influence' on the other hand, intends for the corporate culture and the internal supply chain on which the Sphere of Control can exert its influence. In Dell Computers, its mission, its vision, and its values are made clear to all its employees, because it is posted on the company web site, and its focus therefore is on 'first to volume, not first to market', which means that it is the company's aim that it must be innovative in its mass production of computers, and not in innovative technologies. What can be termed as one of the keys to the company's success is the fact that there is 'massive communication' within the company, and every available form of communication is used. Even sensitive issues are broadcast, and all employees are aware at all times of exactly what they want to know.

Although recruitment is indeed a challenge in Dell, the company offers great numbers of benefits to its employees, so that they remain happy and satisfied, and given the type of 'fun' and friendly and open environment that the company tries to maintain, all the employees of Dell Computers would vouch for the organization. Dell, in addition, takes education as a direct investment into the future of the company, and therefore, Dell University is designed to be the center of 'innovation', and this type of organizational culture is effectively supported by its 'massive communications' plan. Accountability is supported by a well tested performance management system, which is closely tied up with the company's goals and visions and its competencies. A focus on the customer, a setting of priorities, an emphasis on problem solving, and a building up of efficient teams are all a part of the wonderfully effective organizational culture and structure in Dell computers. (Dell Computer Corporation: a model for Innovation)

Current Issues and Opportunities

Today, Dell Computers offers comprehensive solutions and opportunities that make it simpler and easier for several small companies and businesses to create, to develop, manage, and to deploy extremely powerful enterprise infrastructure and to use several different types of pertinent and relevant business solutions. As a matter of fact, today, Dell and Microsoft will work together to provide their numerous customers with important innovations in hardware, software, licensing, and services and in support, because of the fact that Dell has implemented Microsoft solutions internally within its own organization. (Microsoft Solutions)

What this means is that today Dell will be able to offer its customers the expertise and the best practice methods that it has already garnered from Microsoft, and some of these solutions are the Windows Infrastructure Design, the Microsoft Windows Deployment, the Microsoft Exchange Migration, and so on. The benefits of these are that Dell is today better and faster able to implement end to end solutions, it can help to assure the customer of reliability and performance, because of its conjunction with Microsoft… [END OF PREVIEW] . . . READ MORE

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