Dell Computers in 2003 Driving Term Paper
- Length: 8 pages
- Subject: Business
- Type: Term Paper
- Paper: #47750923
Excerpt from Term Paper :
Constraints to Success Achievement
As mentioned earlier, Dell Computers was just another second-tire personal computer maker in the early months of the year 1994, and like all other PC makers, it had to order all the components in advance, and therefore had a large inventory of components. Then Michael Dell decide to implement his brand new business model, wherein the initial process by which he would use a build to order plan whereby he would provide direct sales to customers was changed, and Dell would now take a series of indigenous steps to make sure that he would be able to eliminate his inventories. The results that he managed to achieve were indeed spectacular, and over the next four years, Dell grew from a $2 billion company to a $16 billion company, at a growth rate of about 50%. Earnings per share of Dell increased by about 62% per year; and its stock price increased by 17,000% in just about eight short years. (Explaining Dell's transformation)
During these years of high profitability, Dell concentrated on profitability management, and this enabled him to create a tightly aligned business model which would allow him to get rid of his massive component inventories. This meant that not only was capital not needed, but the change in business plan managed to generate enormous amounts of cash, which Dell was able to use to support and to fuel his rapid growth over the next few years. However, all this was not achieved without failure, and in fact, the very seeds of Dell's success were rooted in his early failures. In the year 1994, Dell had created two important products, which however were deficient, probably due to a lack of quality. His sales figures started to plummet, and the company was faced with a serious cash shortfall. At the same time, the company started to realize the fact that it had to make sure to accelerate its growth process so that it would be able to move out from the growing list of second tier personal computer manufacturers to the set of prospering and rapidly growing group of top tier producers like IBM and Compaq for example, and this perforce required even more cash.
The executives of the company had to decide exactly how to go about generating the funds that would be able to keep the company alive and functioning. This was when it was decided to drastically reduce inventories, and the heads of the company had to figure out a way by which they would function effectively without the massive component inventories. The way that they conceived of was the new Dell Business Model, which they used to improve matters, and at the outset they made attempts to reduce the inventory by about fifty percent, and then to improve lead time by another fifty percent, and then to reduce assembly costs by thirty percent, and then to reduce and cut down on obsolete inventory by seventy five percent. These attempts managed to free enough cash that the company was later able to use in improving its growth. (Explaining Dell's transformation)
Strategic Analysis and Choice
Dell is today the leader in the market of high performance personal computers, and according to IDC statistics, Dell is now number three is 'close cluster' revenue, which in other words means that Dell is one of the top manufacturers of pre-configured high performance-based computing, and Dell is also one of the top in node volume, which means that the company has actually managed to figure out how to make volumes as the major criterion in the PC and the HPC business. This is the kind of business that Dell has become extremely proficient in running, and added to this are the advantages that Dell offers to its customers in terms of pricing, and in deployment packaging. This in turn has had the result of previously monolithic systems buyers making their initial forays into the cluster architecture and design of the Dell computer. (Product and Strategy, Dell's High Performance Computing Clusters)
It was at an industrial / financial analyst event which was held in New York City on April 2, 2003, that the CEO, Michael Dell, and the CEO of Oracle, Larry Ellison, stated their combined vision of the future of the design of information systems. Their description included an architecture that would be based on the usage of standards based and low costing two way and also four way clustered 'server building blocks' which would be able to deliver to the user a combination of unlimited scalability and also an excellent and strong database performance. They expressed their firm belief and hope that this type of small server/cluster design architecture would be able to finally rival the traditionally vertically scaled SMP systems, and give a better overall performance, and also at a cheaper rate than the traditional models. Dell has in fact used this type of building block approach to scalability, and has managed to achieve highly excellent and commendable performances from its computers. What this means is that this type of strategy is indeed succeeding and will do so in the future as well. (Product and Strategy, Dell's High Performance Computing Clusters)
Summary and Concluding Recommendations
To summarize, it can be stated that today, Dell Computers is one of the world's leading computer systems company, and the company designs, builds, and also customizes a wide range of computer related paraphernalia and products in order to satisfy a wide range of customers, some of whom may require servers, some who may require storage, and some more who may need professional services of any kind from the Dell Computer Corporation. As a matter of fact, this company believes that today, it can indeed conduct its business with all its consumers, one on one, and one at a time, much better than any other company anywhere in the entire world. Dell is today a globally recognized brand name, and most of its success can be attributed to its effective and efficient leadership in the form of its founder and CEO, Michael Dell, and also to its ever insistent and persistent focus and emphasis on the customer. The entire Dell team works hard to satisfy the customer, and this is done with carefully tailored standards-based computing solutions conceived of within the company.
As mentioned earlier, massive communication is also very important top the company, and every day, there is some form of communication with the numerous customers of Dell products, either in person, or through the Internet, or through the telephone. This would inadvertently mean that the customer's needs are placed first, and he is the most important person in the entire network. World class products and services are delivered to them, and this is perhaps the primary reason that they all keep coming back, and this can be deemed as being one of the most important reasons for the success of Dell Computers in today's extremely competitive world. One of the most important recommendations is that Dell must continue to undertake its global strategy to be the premier provider of products and services to its customers from North America, Europe, South America, and in Asia, and that they will remain as close to their customers as they are today.
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