1)Based on a thorough analysis, identify and discuss the factors that have made Dell a success to date.
2)What is Dell's competitive position in the industry as of 2002?
3)An August 12 2002 Business Week article indicated that Michael Dell's goal is to double Dell Computers' current revenue to $60 billion by 2007. Is this achievable? How should Dell go about increasing its annual sales by $6 billion each year for the next five years?
4)What are the pros and cons of the various growth options? What do you recommend? What are the implications of your recommendations? How will it affect Dell as a company particularly in terms of its positioning strategy that has successfully fueled the growth to date?
5)If you disagree with Michael Dell's growth target from question 3 above, what would your alternative recommendations be? Why?
Identification of Alternatives
Recommendation & Implementation
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 coupled with the goal of reaching the $60 Billion mark by year 2007.
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 2 important strategic options: 1) Focus only on the four major core products (Desktops, Laptops, Workstations, Servers), or 2) Focus on both the four major products (Desktops, Laptops, Workstations, Servers) and on International and Service Portfolio Investments. After extensive analysis and evaluation, it was apparent that alternative #2 is the most feasible one for it maintains Dell's strategic structure and could, possibly, help Dell achieve its $6 billion/year for 5 years goal. This strategy resulted in the highest combination of growth and profit to insure and secure Dell's leading position in the computer industry.
Founded in 1984, Dell was brought up, by Michael Dell, through upgrading IBM compatibles for local business in Texas, and on a simple concept: that by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. This direct business model eliminates retailers that add...