Case Study

Dell Inc.

I.

Time Context
1984 to 2006

II. Viewpoint
Dells founder, Michael Dell

III. Central Problem

The central problem of Dell started when their early
rapid growth that resulted in disorganization in its
management occurred. The managements decision to
abandon distribution in retail stores and instead,
refocusing to the direct distribution has been the root
cause for the sub-problems they faced in the later years
such as decline in their U.S. PC market share as well as
to their global market share. Therefore, their
disorganized management and their inability to adapt to
the changes in the technological environment has been
the central problem of Dell.

IV. Statement of objectives

A. Must objectives (short-range)
To increase the U.S. market share to 30% and the
global market share to 17% for the next 2 years.
To increase the customer service rating to at least 80%
at the end of 2007.
To increase the 2007 sales growth to 18%
To widen distribution process by bringing the products
within the reach of consumers through retail stores for
the next two years.
To diversify products to serve the demand of
consumers in a fast-paced technological era such as
smartphones for the next three years.
B. Want objectives (long-range)
To double the companys market shares in Europe.

V. Areas of Consideration
A. Strengths

Perfected manufacturing process

Customer service focused
Strong market position support
Low costs
Product customization
Directing selling to consumers

B. Weaknesses

Lack of retail stores presence

Solely dependent on suppliers
Low market share in the international market
Limitation of their direct selling approach
Weak internal control

C. Opportunity

Target the consumer market

Additional products such as smartphones
Investment in marketing
Increasing internet users
Expanding to European market
Growing economy globally.

D. Threats
Competitors offer more innovated and differentiated
products
Fast-paced changes in customers needs.
Quick product life cycle
High switching costs (suppliers)
Low entry barriers

VI. Alternative Course of action

1. Investing in a more intensive Research and
Development
When all else fails, it will be wise to invest on the
fundamentals. A company should, sometimes, make a
pioneering move to new technologies appealing to the
masses that carry an earning potential.
Advantages:
.
Next moves can be close to accurate.
.
Risks of making bad choices are minimized.
Disadvantages:
.
Information acquired can be leaked.
.
Result of Research and Development is
feasible or already in the market to begin with.

not

2. Stock up on parts
There might be a delay in the supply cycle that will cause
more harm than good for the company.
Advantages:

Parts can be used for contingency.

Disadvantages:

Increase in carrying costs.

3. Change in management style

The company may take actions such as reshuffling their
employees to know who will effectively do a certain job.
Advantages:

Employees may share new and more effective

ideas.

Employees have the opportunity to try new things

and to gain
new skills.
Disadvantages:

New management teams are prone to errors or

mistakes due
to the unfamiliarity in the technical aspects of the
job.

Changes in management style are too risky for a

company.

VIII. Detailed Action Plan

What
1. Increasin
g the
company
s
customer
service
rating
1. Widening
distributi
on
channels

Who
Customer
service
managers and
customer
service
representative.
Top
management

How
When
Adding more capable
service people that will
handle the calls from
the customers, avoiding End of 2007
transfer calls.

Slowly shift the

companys focus to the
consumer market and
bring the products to
retail stores.
1. Diversific Top
Producing additional
ation of
management
products such as
the
and Production smartphones to cope up
products team
with the technological
advances.
1. Advertisi Marketing

ng the
team
products

Next two
years

Next three
years