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Strategic Management Dell Case Study

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Dell Inc. was founded in 1984 by University of Texas freshman Michael Dell. First year sales reached $600,00 and within eleven years sales reached nearly $3.5 billion. Through direct mail and telephone sales, the company became one of the world's leading direct marketer of personal computers and one of the top five PC vendors in the world.

Part of Dell's early business model included made to order PCs that were delivered directly to the customer. The company focused on improvin­g process engineering and supply chain management, which helped to keep costs and inventory low. The result was Dell was able to make computers more quickly and cheaply than any other company. Instead of being a market leader in R&D of new technologies, Dell's business model included the strategy of waiting for new technology to be introduced into the market and standardized prior to introducing their product.

As the industry matures and the market landscape changes, PC sales growth has slowed considerably, and as a resu A number of industry analysts feel that Dell may not be well positioned


Multiple product offerings

Unique business model.


Just in time inventory.

Efficient Supply Chain Management.

Ability to manufacture low cost products.

Core Competencies:

Direct sales strategy.

Made to order products and direct delivery.

Quick order assembly and cheaper than competition.

Master of process engineering and supply chain management.

Finding of Fact:

Dell spent 1% of sales on R&D versus the 5% typically invested by other large computer firms.

Recommendation / Justification:

Part of Dell's business model was to spend less on R&D of new computer technology and to wait until a new technology became a standard. Instead of being an innovator in the industry Dell instead sought out new technologies arriving in the marketplace and then adapted to the design, features, options and solutions that are most relevant to the consumers.

Dell focused its efforts instead on ways to improve its manufacturing process. Dell became masters of process engineering and supply chain management. This allowed Dell to keeps its costs down by carrying less inventory which resulted in less overhead, and to use its buying power to obtain cheaper parts. When



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