Case Analysis of Dell: Selling Directly, Globally

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Business Model:

Dell Inc. founded by Michael Dell in the 1984 is the world's largest PC Manufacturer with annual sales of over $54 billion from around 170 countries. The Company was founded on a simple concept; that by selling personal computers directly to customers, Dell could best understand their needs and provides the most effective computing solutions to meet those needs. Dell provides computer systems under its enviable "low-cost direct sales model" under which the company maintains full ownership and control over manufacturing, distribution, and customer relationships. Dell has cut out middlemen, disguised as distributors, and the retail outlets from its supply chain, preferring to ship its products directly to customers.

Dell's biggest advantage as compare to its competitors is its manufacturing operations and just in time inventory control. Dell builds PC only after it receives order from customer via web or call centre. Once order is confirmed, it relays to its suppliers details of the components required, all the components are delivered at the factory and complete computer is shipped out, all within few hours. Dealing directly with suppliers helped dell in controlling inventory, which had a direct impact on customers. Inventory costs were kept to a minimum and obsolete and dated stock holdings were minimized. Hence Dell was able to pass along to its customers the savings from reductions in system component costs quickly because of it's just in time inventory control.

Dell discovered its core competency was in Direct Selling and Customer Service and major chunk of its revenue comes from online sales. They designed unique web pages for 44 countries in 21 languages and created customized "Premier Pages" for corporate clientele to make purchases from the company's own intranet. They also customized web-pages for small business and home-office consumers. Providing product information, pricing and technical support on-line helped Dell to lower...
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