Dell 2005 Form 10 K

Dell, Inc. operates on a strategy of "persistent focus on delivering the best possible customer experience by selling products and services directly to the customer" (Form 10-K, 2005). Dell relies on customer intimacy by eliminating wholesale and retail dealers and manufactures products based on the customer's needs. Customers order directly from Dell and can track the order from manufacturing through shipping.

Dell, Inc. faces business risks of general economic, business, or industry conditions and no assurance of maintaining a competitive advantage. A substantial portion of revenue is dependent on international sales, which are subject to risks and uncertainties. Product, customer, and geographic mix can be different than anticipated. Infracture failures and inaccurate product transition can have adverse effects. Supplier failure or disruptions in component availability slows delivery to the customer. Foreign exchange hedging or the ability to get licenses can have adverse effects. Failure to attract or retain qualified personnel and loss of government contracts have adverse effects on revenues. Environmental regulation, inability to provide customer financing, armed hostilities or natural disasters can also have adverse effects on revenue.

Control measures include supplier back up that can provide component products on demand when suppliers are unable to deliver the needed components. A continual analysis of business strategies is needed to maintain competitiveness. A continual analysis of product, customer, geographies, and customer preference can be done through surveys to customers. And, continual analysis of foreign hedging efforts is needed to minimize losses due to foreign exchange.

The Sarbanes-Oxley Act of 2002 effected Dell's disclosure efforts in respects to internal control and management assurance. Internal controls are tested by outside auditors in respects to effectiveness and have to be stated in the auditor's report. This includes policies for maintenance of records, transactions recorded correctly, timely detection of unauthorized use or disposition of assets. The internal controls are also required to be tested by management and the results of the test stated in the Management's Report on the effectiveness, any inefficiencies, and what is being done about them. The Management's report also is required to report on the fair presentation of the financial statements.

Dell is a manufacturer because they manufacture product on an order bases without holding large amounts of inventory. Direct inventory costs include production materials and machinery and other equipment. Indirect inventory costs include land and buildings as well as computer equipment. The gross margin for the year included higher infracture and assets. Net income was lower due to long-term liabilities coming due. The inventory balance was $459 million due to not keeping a lot of finished goods and materials being ordered on customer demand.