Premium Essay

Dell Case Study

In: Business and Management

Submitted By latoyapeaches
Words 473
Pages 2
sDell Case Study

1. Taking the case of computer products, identify the supply chain for the distribution of these products and explain the channel service needs of customers. To what extent are store- and non-store-based distribution channels alike or different in terms of the channel functions they perform?

Many computers are brought through three different supply chain methods:

Although Dell is different as they sell straight to the direct customer. Store and non store based distribution are different because of the better personal service received in store. Distribution is all to do with the placement of the product, being online to product is available to a mass market therefore no matter where in the world the customer is they can order a pc. Whereas when the product is in store it is only available to those near the store, and they may have a much limited stock than what an online distributor is.

2. What are the advantages and disadvantages of the ‘Dell model’ of sales, manufacturing and distribution?

Dell distinguish themselves to other computer manufacturers, as Dell sell direct to the final customer. Dell decided to do this as they believed they were providing a better service to the customer and they will grow rapport with that customer who will come directly back to them. This is an advantage as the are getting great service and Dell can rely on repeat service. Another advantage of the Dell model is that they allow customers to build to order their PCs, the disadvantage is that Dell then has to contact supplier who have the parts if customers requested special parts, and this being an external company to Dell they may not have it in stock. Therefore the customer would have to wait until receiving their pc. The dell model is also put in place so they stay up to date with their competitors, branding is important in this so they...

Similar Documents

Premium Essay

Dell Case Study

...Background of the company In 1983, 18-year-old Michael Dell left college to work full-time for the company he founded as a freshman, providing hard-drive upgrades to corporate customers. In a year’s time, Dell’s venture had $6 million in annual sales. In 1985, Dell changed his strategy to begin offering built-to-order computers. That year, the company generated $70 million in sales. Five years later, revenues had climbed to $500 million, and by the end of 2000, Dell’s revenues had topped an astounding $25 billion. The meteoric rise of Dell Computers was largely due to innovations in supply chain and manufacturing, but also due to the implementation of a novel distribution strategy. By carefully analyzing and making strategic changes in the personal computer value chain, and by seizing on emerging market trends, Dell Inc. grew to dominate the PC market in less time than it takes many companies to launch their first product I. Statement of the Problem Dell has been following its unique ‘direct build-to-order’ sales model for more than 20 years. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site. Over the years, Dell’s supply chain efficiencies and direct sales gave it a competitive advantage. II....

Words: 2983 - Pages: 12

Premium Essay

Dell Case Study

...Marketing | Dell | New Horizons Case Study | | | 7/1/2012 | | Executive Summary In 1984, at the age of 19, Michael Dell founded Dell Computer with a simple vision and business concept; that personal computers could be built to order and sold directly to customers. Michael Dell believed his approach to PC manufacturing had two advantages: (1) bypassing distributors and retail dealers eliminated the markups of resellers, and (2) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components, and finished goods. Now, that concept picked up and arrived at Dell being the multi-billion dollar leading computer manufacturer in the world with 2001 revenues reaching $32 Billion and return on investment of 335%. However, things started to plummet by 2001 and Dell experienced, for the first time, a -10% decline in sales and unprecedented cutthroat competition from HP and IBM. Dell Corp. had to make difficult decisions on how to sustain its profitability in light of its broad product portfolio - PCs, workstations, servers and storage products for a broad cross-section of customers in the United States and worldwide. Fueled with ambition and determination, Michael Dell is set to maintain his company's leading position in these tough times....

Words: 3208 - Pages: 13

Premium Essay

Dell Case Study

...Many of the insights gained from this case can be applied more generally to other time-dependent industries, suggesting that the ndings from the Dell case will have implications for a growing number of companies and industries in the future. build-to-order, business model, clockspeed, customer relationships, Dell Computer, direct sales, distribution channel, information technology, time-basedcompetition, virtual integration “It isn’t so much that we have a new economy, as we have a new...

Words: 12929 - Pages: 52

Premium Essay

Dell Case Study

...Now, Dell is again atop the industry outpacing revenue growth and increasing its net income. Dell in the recent years has always financed its operations internally; and using the analysis and the results of the forecasted financial statements, the company will internally generate excess funds which can be attributed it to its efficient management of working capital. These excess funds can be allocated in investments in research and development to keep up with today’s...

Words: 2721 - Pages: 11

Premium Essay

Dell Case Study

...That way, the parts did not take up inventory space for Dell and the suppliers could also reduce their own inventory levels. Dell was also very competitive about its pricing when they entered new markets. The company offered more powerful products at the same price as their competitors. Buyer Power: While the computer industry has been shrinking due to an increase in competition, the number of buyers of computers...

Words: 1214 - Pages: 5

Premium Essay

Dell Case Study

...In this case, the inventory is never kept at a high volume, so we can say that the increase in working capital is a good thing. Now, we need to look at the percentage change for each current asset and each current liability in comparison with the increase in the working capital trend. We may notice that each one plays a part in it. One asset that may stick out more than any of the others is the percentage change in inventory. If we take a look at Table 2, we will notice that, for the most part, the percentage change decreased from 1995 to 1996 compared to 1994 to 1995. For inventories, this percentage jumped from 33.18% to 46.42%. This big of a jump may send up some red flags since Dell does not want to hold too much inventory, but that is not want we want to take away from this. In this short time frame, Dell has grown significantly from the previous years. Since Dell is in the growth stage it is not something that should send up red flags. It should be looked at as a good thing because it means that the company is gaining...

Words: 527 - Pages: 3

Premium Essay

Dell Case Study

...Prelude case Dell Corporation FT What if a manufacturing company didn’t need to have any inventory? Imagine the reduction to cost structure that could be achieved by simply getting rid of the need to carry huge amounts of finished goods on its books – and eliminating the nail-biting stress of waiting until those goods are sold. For Michael Dell, founder and CEO of Austin, Texas-based Dell Corporation, very little imagination is required. He has built a company with annual revenues in excess of $40bn entirely around a vision whereby manufacturing of an individual item does not begin until it has been ordered by a customer. Every single Dell product has an end user’s name on it before it even leaves the factory. Visiting a Dell factory gives you an idea of just how effective Michael Dell has been in executing this supply chain management philosophy. At the company’s Irish factory near Limerick, for example, there are 40 doors at one end of the factory that deliver the parts needed to build a variety of products – including desktop computers and servers – and 40 doors at the other end of the factory where the finished goods are dispatched to be delivered to customers. The company never holds more than four hours’ worth of parts inventory at any time – and Dell is not even considered to have acquired the parts until the moment they are offloaded from a truck and brought into the factory....

Words: 978 - Pages: 4

Premium Essay

Dell Case Study

...I believe that the main reason that Dell was able to maintain such a low level of inventory compared to their competition has a direct result of their competitive strategy to maintain a minimum level of inventory. From Dells perspective, there is a competitive advantage to maintaining a low level of inventory in case of a technology change. Because they have less WIP and FG inventory, Dell is better positioned to take advantage of quickly changing technology (processors, for example). If technology were to reduce 30% of the inventory value, Dell would be better off with a...

Words: 423 - Pages: 2

Premium Essay

Dell Case Study

...In 1996, Dell supplemented its direct mail and telephone sales by offering PCs via the internet at Dell.com. By 2001, Dell ranked first in global market share and number 1 in the United States for shipments of standard Intel architecture servers. The company changed its name to Dell Inc. In 2003 as a way of reflecting the evolution of the company into a diverse...

Words: 5002 - Pages: 21

Premium Essay

Dell Case Study

...In PC industry, some local brands competed with Dell, such as the Lenovo, Amoi. And also have some internal brands affect its sells, Dell confrontation by its unique operation model, direct sells and...

Words: 298 - Pages: 2

Premium Essay

Dell Case Study

...1. Describe the “Direct Business Model.” The business model in which an organization sells their products by “cutting out the middle man” and selling their computers directly to the customers, away from a fixed retail location. Sales are typically made through one to one demonstrations and other personal contact arrangements. 2. How does it differ from traditional business models – e.g. Vertical Integration? In traditional business model like vertical integration, processes were vertically integrated with all the research, devel¬opment, manufacturing, and distribution capabilities in-house. This allowed for a high level of commu¬nication and ability to develop products based on the company's interaction with its clients. But in Direct business model organization treat suppliers and service providers as if they were inside the company. Their systems are linked in real time and their employees partici¬pate in design teams and product launches. Technol¬ogy enhances the economic incentives to collaborate because it makes it possible to share design databases and methodologies and speed the time to market. In this way it differs from traditional business model. 3. What are the advantages of direct business model from vertical integration? The advantages of......

Words: 384 - Pages: 2

Premium Essay

Dell Case Study

...University of Texas at Austin Graduate School of Business 3/3/99 Dell Computer Corporation: A Zero-Time Organization Deep in the heart of Texas lies a Fortune 500 company who exemplifies many of the principles of a Zero Time organization. Dell Computer Corporation has seen extraordinarily growth: a 58% revenue increase and an 82% profit increase in 1997, an equally extraordinary short period of time. Sales rose to $12.3 billion in 1997, profits to $944 million in 1997, and the stock split for the sixth time in 1998. Much of this success is due to management principles and a vision that we describe here. First we provide some background information on the company, and we describe the management principals and philosophies we think make Dell a success. Finally, we describe Dell using the lens of a Zero Time organization. Company Background Many know the story of Michael Dell, his college-based business of building personal computers with available parts, and his build to order strategy. Founded in 1984 as PC’s Limited, the name was officially changed worldwide to Dell Computer Corporation when the first stock offering took place, in June 1988....

Words: 9948 - Pages: 40

Premium Essay

Dell Case Study

...Ststement of Problem Dell is anticipating growth of 50% in 1997 and expects to beat the industry growth forecast. With this in mind we need to analyse how best we can arrange funding to support this growth. 2. Statement of Facts and assumptions: A few facts - Dell has been successful in sustaining competitive advantage and maintaining profitability for the following reasons: 1.    It maintains the lowest inventory of FGI and WIP as it makes computers only on order. 2.    As a result of item 1) it has substantial cost savings in terms of low inventory stocking costs and the fact that it can adopt new technology a lot more rapidly with minimal wastage of redundant outdated stock. 3.    Another advantage of manufacturing just in time computers (other than configuration flexibility to match customer needs) Dell could keep its working capital in check. As can be seen from exhibit 2 in the dells working capital financial ratio. There is a steady decline of "Days sales of inventory". 4. Dell has witnessed a growth of 52.4% in 95-96 and has a gross margin of 20.5 percent. Assumptions: 1. The gross margin on sales would continue to remain 20.5 percent. 2. Dell will continue to operate with same efficiencies in operation. 3. Inventory levels of wip and FGI will continue at 10 to 20 percent of sales. 4. The average CCC will be at 41 days. 5. AR remains at 14% of sales and AP at 9 percent of sales. 6....

Words: 1838 - Pages: 8

Premium Essay

Dell Case Study

...As Dells most direct competitor IBM’s performance was compared to Dell to understand the reason for Dell’s outperformance. Ratios in Exhibit 1.1 shows significant growth in Dell sales as they increased in 2001 by almost 26% from the previous year compared to 1%, 10%, 15% and 7% for IBM, Compaq, HP and Gateway respectively. This trend is consistent with Net Income having increased by ~31% for Dell compared to 4.95% for IBM. Part of Dells superior performance was the use of its assets. Dell’s asset turnover is 2.37...

Words: 982 - Pages: 4

Premium Essay

Dell Case Study and Solution

...Case Study of Dell : Inspiring the leadership In 1984, at the age of 19, Michael Dell founded Dell Computer with a simple vision and business concept—that personal computers could be built to order and sold directly to customers. Michael Dell believed his approach to the PC business had two advantages: (1) bypassing distributors and retail dealers eliminated the markups of resellers and (2) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components, and finished goods. While the company sometimes struggled during the 1986-1993 period trying to refine its strategy, build an adequate infrastructure, and establish market credibility against better-known rivals, Dell’s strategy started to click into full gear in the late 1990s. Going into 2003, Dell’s sell-direct and build-to-order business model and strategy had provided the company with the most efficient procurement, manufacturing, and distribution capabilities in the global PC industry and given Dell a substantial cost and profit margin advantage over rival PC vendors. Dell’s operating costs ran about 10 percent of revenues in 2002, compared to 21 percent of revenues at Hewlett Packard, 25 percent at Gateway, and 46 percent at Cisco Systems (considered the world’s most efficient producer of networking equipment). Dell’s low-cost provider status was powering its drive for market leadership in a growing number of product categories....

Words: 1435 - Pages: 6