Dell's business model, product strategy, and global expansion

Dell Case Study Summary

Company Profile

Dell Computer Corporation (DELL:NASDAQ) was founded in 1984 by Michael Dell, who defined a unique business model at the time of purchasing IBM PC components, assembling them to his customers' unique requirements, and selling the complete system at a profit. Originally founded as PC Limited, Michael Dell and the founders changed the name to Dell Computer Corporation in 1987, went public with an Initial Public Offering (IPO) on the NASDAQ stock exchange, and generated $73M in Sales. Dell was the first to revolutionize the high tech industry supply chain (Kopczak, Johnson, 2003) which led to the company's successful launch of their online business in 1996. Since that decision to go online, Dell has expanded their product categories to sell MP3 players, printers, servers, data storage, networking equipment, software, computer peripherals, cameras, HDTV (High Definition Television) and entire storage networks.

In 2003, the company changed it name from Dell Computers Inc. To Dell Inc. And started selling through retail stores including BestBuy, Costco, OfficeMax, Wal-Mart and Tesco in Europe. The company also expanded globally throughout the Pacific Rim with major distribution agreements signed in Asia, Australia and throughout India. This global reach of the company ensured its position as a leading provider of personal computers and electronics, which eventually earned them the ranking of the 38th largest company in the world.

1.2 Product Profile

The product profile of Dell is best defined by its extensive build-to-order production capability and quickness in responding to customers' needs (Kopczak, Johnson, 2003). The Dell Inspiron is a case in point, which is sold in up to thirty different configuration with 15 different colors and eight major configurations. Dell can produce this model and ship it to custom specifications within 72 hours, delivering it anywhere in the world the customer is.

2. Internal Environment

2.1 Current Marketing Plan

Dell is a leader in electronic commerce and has also continues to generate the majority of its revenues through multichannel retailing and selling with partners as diverse as Wal-Mart to higher-end retailers including BestBuy. The decision to sell through Wal-Mart led the company to create a specific series of models that can meet the price and margin requirements of this global retailer. The Inspiron's low-end models were designed to meet the price and margin requirements of low-end retailers while Dell sells the high-end units through their distribution channels.

2.2 Organizational Resources

Dell is a global leader in technology sales and profitability with $19.6B in current assets and the ability to reliably produce up to 140,000 PCs any given day of their production runs. The company also has extensive investments in supply chains with printer provider Lexmark, which is the printer manufacturer the company resellers higher-end workgroup printers with. Dell also sells Lexmark personal productivity printers, and has extensive relationships with monitor, disk drive, accessory and network providers as the company continues to expand its base of product revenues.

2.4 Marketing Goals and Objectives

Dell's three most important marketing goals and objectives are to increase market share, maintain competitive advantage, and, maintain its current customer base. Each of these objectives is briefly discussed below.

Increase Market Share

Dell continues to pioneer the development of state-of-the-art supply chains that have the ability to deliver a customized PC anywhere in the world FedEx or UPS delivers within 72 hours of the initial customer order (Kopczak, Johnson, 2003). This strategy of build-to-order and allowing customers to tailor their systems to specific requirements is particularly popular with students, who appreciate the opportunity to have their laptops configured to their specific needs. From those who love music to the gamers, Dell has the ability to react quickly and provide an excellent product through the combining of their supply chains and customized strategies (Kopczak, Johnson, 2003).

Maintain Competitive Advantage

The spending levels of Dell on R&D are among the highest in the technology industry, which has continually fueled the level of innovation and value in products delivered to customers. Dell also invests heavily in process improvement throughout its supply chains, gaining a significant competitive advantage in the performance of these systems globally (Kopczak, Johnson, 2003).

Maintain its Current Consumers

Dell's approach to marketing to its installed base of customers is also among the most innovative the high technology industry. Using an integrated marketing communications strategy, the company strives to create long-term value for each of its customers through a unique series of product and service promotions. Dell is also one of the most active advertisers on national televisions throughout the U.S., Europe and Asia, which also contributes to their growth of sales and the ability to attract new customers.