Dell Analysis

In: Business and Management

Submitted By edwinnguri
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SITUATION ANALYSIS

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. Dell, facing a predicament of whether they should maintain their strategic course or fundamentally change it in order to achieve the targeted growth rates, managed to acquire three important strategic options: 1) Focus only on the four major core products (Desktops, Laptops, Workstations, Servers), 2) Focus on both the four major products (Desktops, Laptops, Workstations, Servers) and on International expansion, or 3) Focus on both the four major products (Desktops, Laptops, Workstations, Servers) and on expansion into the service industry. After analysis and evaluation, it was apparent that alternative #2 or #3 is the most feasible to implement,…...

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