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Michael Dell: Innovating Direct Sales Model

Michael Dell started Dell Computer Corporation in 1984 with $1,000. The company pioneered selling computers directly to consumers, bypassing retailers. Dell established the industry's first 30-day money back guarantee and on-site service program. It also opened its first international subsidiary in the UK. Rapid growth presented problems for Dell. While listening to customers helped Dell deliver desired products, cell manufacturing led to computers being shipped 5-6 days after orders. Dell addressed weaknesses by opening operations in other countries like the UK. Dell's direct sales model helped access customers directly to understand their needs, fueling innovation. This summary covers the key points about Michael Dell starting and growing Dell Computer Corporation from 1984.

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229 views2 pages

Michael Dell: Innovating Direct Sales Model

Michael Dell started Dell Computer Corporation in 1984 with $1,000. The company pioneered selling computers directly to consumers, bypassing retailers. Dell established the industry's first 30-day money back guarantee and on-site service program. It also opened its first international subsidiary in the UK. Rapid growth presented problems for Dell. While listening to customers helped Dell deliver desired products, cell manufacturing led to computers being shipped 5-6 days after orders. Dell addressed weaknesses by opening operations in other countries like the UK. Dell's direct sales model helped access customers directly to understand their needs, fueling innovation. This summary covers the key points about Michael Dell starting and growing Dell Computer Corporation from 1984.

Uploaded by

PUSPENDRA RANA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Analysis of Michael Dell

Part I: Introduction/Background Summary

In 1984, Michael Dell invested $1,000 in start-up capital to register his business as
Dell Computer Corporation, which was known as PC's Limited. The company the
first in the industry to sell directly to end-users by passing the dominant system of
using computers resellers to sell mass-produced computers. Dell Computer also
pioneers the industry first thirty-day money back guarantee. It became the
cornerstone of Dell's commitment to expand its service offerings, superior
customer satisfaction, and the industries first on site service program. It also
established its first international subsidiary in the United Kingdom, and raised $30
million in its initial public offering.

Part II: Problem Identification

The problem with Dell Inc. was the rapid growth within the company in their
beginning stages.

Part III: Researching Internal and External Factors

Dell's strengths were oriented around listening to the customers, responding to


the customers, and delivering what the customer wanted. The direct relationship
was first through telephone calls, then through face-to-face interactions, and now
through the internet. It has enabled them to benefit from real-time input from
real customers regarding products and future products they would like to see
developed. The company also doesn't use reseller or retail channels because
every computer is built-to-order, which allows less inventory. The direct model
allows them to take the pulse of whatever market and provide the right
technology for the right customers.

Dell Inc. weakness was cell manufacturing because their assembled computers
were being shipped five to six days after the order was placed. It is an inconvenience
for the customers to always send their computer away to have it repaired. First,
they are left without internet access. Second, the time it reaches Austin, Texas,
have it repaired, and shipped back can take days. The company opportunities were
the Dell U.K. that open business in 1987 and in that country it was a lot of
companies selling cheap computers. Dell Inc. strides on loyalty among customers
and employees, and that could only be derived from having the highest level of
service and performing products. Segmentation within the company enables
them to measure the efficiency of the business in terms of assets use. Dell Inc.
evaluates their return on invested capital in each segment, compare it with other
segments, and target what the performance of each should be.

It became a great way to identify what needed to happen for them to reach their
full potential in each business.

Lesson we can learn :-

 Innovate when you see an opportunity.


 Fuel your passion.
 Failure is a part of life.
 You can learn as you go.
 Focus on your dreams.
 Find a target market, and don't try to please everyone.
 Define your success.
 Have courage in the face of danger.

Conclusion :-

The most remarkable feature of Dell's supply chain management is its direct sales
model, meaning that it accepts orders directly from the customers, without any
resellers involved. This model helped the company access its customers and study
their needs directly.

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