Dell Essay

879 words - 4 pages

You would have to go around the period of World War II to find the first digital computers designed by an army of engineers both computers the size of factories and only able to solve simple mathematical operations The portable computers have evolved since the creation the first one. As technology improved, and financial availability became friendlier for consumers the microcomputer revolution began. The market for microcomputers with a printed circuit grew to about 100,000 because of improved microprocessors, a standard operating system, and increased availability of software, disk drives, and cheaper memory. By the time Dell’s portable devices came to the market, portable devices advanced tremendously. Several computer manufacturers began to pop up around that time: IBM, Apple, and Compaq.

Dell was founded in 1984 by Michael Dell, who started upgrading IBM compatible personal computers in his college dorm, and then sold them door to door. The Dell business model is what, ultimately, led to the success of the Dell Company. Dell used the same principle that Michael Dell created in his college venture: eliminate the middle man. The company sold its products directly to its customers rather than sell it through distributors. Dell used home-based telephone representatives and field-based representatives to service its customers. Dell’s high growth rates and attractive margins allowed him to fund growth internally which led to him being able to receive orders from government organizations and oil companies. By 1985, Dell’s company grew to $6 million. Dell changed his strategy to begin offering built-to-order computers. By year-end, the company generated $70 million in sales. The competition in the computer industry was intense with major players like FP, Compaq and IBM dominating the market. While IBM and Compaq focused on large businesses, Dell focused on providing its products to medium and well as small businesses. Dell eventually captured a major portion of the computer market by offering small computers that were efficient and portable.

By 1993, the company’s profits declined due to imitators and retail selling. Due to their rapid growth, they were caught in a cash crunch. This helped his competitor Compaq to take advantage by slashing its prices by around 30%; companies such as Gateway 2000 also entered the market during this period. Dell started losing its share quickly. Even its inventory that used to turn over 12 times a year started to show negative growth.
Another issue was that lack of senior management capable of guiding the firm to maturity. In order to overcome these crises, in order to overcome this issue, Michael dell hired several senior executives from large companies like...

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