Dell Inc. in 2009
Executive summary
Dell Inc., one of the most successful information technology companies in the world, experienced record high share price above industry average in 2002 due to its renowned direct sale model and customized computers. However, at the beginning of 2006, Dell lost leading position to Hewlett-Packard, triggered several subsequent reactions to more adapt to fiercer marketplace as well, to win market share back. One of the key changes Dell implemented was introducing retailers into the supply chain. Dell also outsourced manufacture to contractors. Also launched new model series embedded with user-friendly features to capture potential market from rivals. It is certain there are two sides of each practice. This will be analyzed in this report, followed by critical reasoning as to possible causes that raised problems in Dell. Introduction
In 1984, a freshman named Michael Dell, with the concept of direct marketing and a thousand dollars, founded the Dell Computer Corporation. From then, Dell has proven to be the global computer industry's fastest-growing company over the past decade. Dell’s success was primarily attributed to three key factors, the direct sale model, the built-to-order system and the just in time system. However, in 2006, Dell confronted severe underperformance and dropped sales, a sequence of reactions took place then. Key success
Dell’s Direct-to-consumer model allowed customers to order products through phone call or internet. Dell was able to meet customers’ specification, based on the product customization strategy. This enabled Dell to have an agile supply chain that could cope with volatile demand and avoid bull-whip effect effectively, as well as save the logistical costs.
The built-to order system allowed Dell to achieve lean production. Eliminating unnecessary waste (efficiency) and in fact, enabling Dell to achieve effective demand management (responsiveness) saving inventory carrying costs. For instance, Dell
Dell Inc., one of the most successful information technology companies in the world, experienced record high share price above industry average in 2002 due to its renowned direct sale model and customized computers. However, at the beginning of 2006, Dell lost leading position to Hewlett-Packard, triggered several subsequent reactions to more adapt to fiercer marketplace as well, to win market share back. One of the key changes Dell implemented was introducing retailers into the supply chain. Dell also outsourced manufacture to contractors. Also launched new model series embedded with user-friendly features to capture potential market from rivals. It is certain there are two sides of each practice. This will be analyzed in this report, followed by critical reasoning as to possible causes that raised problems in Dell. Introduction
In 1984, a freshman named Michael Dell, with the concept of direct marketing and a thousand dollars, founded the Dell Computer Corporation. From then, Dell has proven to be the global computer industry's fastest-growing company over the past decade. Dell’s success was primarily attributed to three key factors, the direct sale model, the built-to-order system and the just in time system. However, in 2006, Dell confronted severe underperformance and dropped sales, a sequence of reactions took place then. Key success
Dell’s Direct-to-consumer model allowed customers to order products through phone call or internet. Dell was able to meet customers’ specification, based on the product customization strategy. This enabled Dell to have an agile supply chain that could cope with volatile demand and avoid bull-whip effect effectively, as well as save the logistical costs.
The built-to order system allowed Dell to achieve lean production. Eliminating unnecessary waste (efficiency) and in fact, enabling Dell to achieve effective demand management (responsiveness) saving inventory carrying costs. For instance, Dell