Case 6 Dell Inc

Topics: Profit margin, Gross profit margin, Personal computer Pages: 6 (1735 words) Published: April 15, 2015
Case 5:"Dell Inc. in 2008: Can it Overtake Hewlett Packard as the World Leader in Personal Computers?"  
Question 1:
a. 1992: Michael Dell becomes the youngest CEO of a Fortune 500 company at age 27b.  
b. Michael Dell has been the key factor for Dell, Inc. growing into the corporation it is today. In my opinion, his top 5 key strengths that helped Dell, Inc. grow include:  
1. Competitive nature
2. Foresight & Vision
3. Willingness to take risks
4. Aggressiveness
5. Ability to execute
c. 5 Tasks of Crafting and Executing Strategy:
i. Developing a Strategic Vision: Dell's vision was to be the low cost provider. This is arguably the most important key to Dell's success. He decided this was the direction the company was going to go and stuck with it, and his ability to reduce overhead allowed him to achieve it.  

ii. Setting Objectives: Dell's objective was focused on increasing margins,while keeping the end price low. He was able to achieve this by cutting out the middle-men and selling directly to the end user.  

iii. Crafting a Strategy: All of Dell's strategies were geared towards increasing the bottom line. If it didn't align with the overall goals, the idea was rejected.  
iv. Implementing and Executing: Dell's ability to stay ahead of the curve by offering completely customizable PCs build to the customers specification allowed the company to maintain the explosive growth it saw in the early years of the company. Strategic acquisitions allowed the company to augment and expand its offering to target additional markets.  

v. Evaluating Performance and Initiating Corrective Adjustments: Dell's early adoption of the newest technology has allowed the company to gain full visibility into the profitability of each piece of hardware it sells and helped predict future trends in consumer demand. Question 2:

a. Dell's strategy includes the following:
i. Sell customizable PCs directly to the customer
ii. Add customer value
iii. Streamline manufacturing and supply chained.
b. The core elements of this strategy include:
i. Decreased overhead by decreasing costs associated with built to order manufacturing  
1. Part of this required reduction of materials through partnership with suppliers  
ii. Targeting end users directly through sales efforts
iii. Expand offering to enter additional markets and niches through acquisitions  
iv. Standardize company processes

v. Predict the future needs of the consumer and be prepared to meet them with R&D

vi. Provide value add services to consumers
c. Dell is employing the low cost strategy
d. Everything Dell works on fits the company objective, to produce the best possible computer for the lowest price  
e. Dell's strategy is constantly evolving to meet customer demands. Dell has adopted Social Media channels for customer feedback, expanded their offering countless ways, and become established as the industry leader for best practices through the supply chain and manufacturing. Question 3:

Dell's expansion into different technology is typically very strategic and generally follows these guidelines’.  
i. The technology is something many customers have already asked for from Dell ii. The technology is gaining popular acceptance
iii. The technology has the potential to last many years without going obsolete Question 4:
There is no doubt that Dell's strategy is working, even though their profit margins are shrinking yearly. However, just because their margins are decreasing, it does not mean the company is doing poorly. The shrinking margins are instead an indication of the industry as a whole, where the market could hold higher margins a decade agoit will not anymore. See the numbers below.  

i. Gross Profit Margin:
1. 2008: 19.1%
2. 2007: 16.6%
3. 2006: 22.1%
4. 2005: 18.4%
5. 2004: 18.3%
6. 2002: 17.7%
7. 2000: 20.7%

It would be ideal if this number was continuing to rise, but the numbers shown are still...
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