Dell Case Study

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Dell was established in 1984 in the United States. During its first years of operations, its business strategy was focused in selling personal computers, including desktops and notebooks, directly to end users and avoiding relationships with retailers and other distribution channels. By selling directly to customers, through mail orders and then through the Internet, Dell ensured low prices while avoiding extra mark-ups. Additionally and as part of its strategy of keeping operating costs low, Dell developed relationships with third parties that would provide the computer components to be assembled later. In contrast, its main competitors like IBM were vertically integrated and produced most of the computers’ components. During the first two decades of operations Dell’s competitive advantages were to receive orders directly from consumers with a strong technological platform, assemble custom-made products that responded exactly to people’s wishes and deliver them in a record time. While doing so, it built a strong brand and gained an important market share among PC users in the US. Moreover, Dell was labeled as a supply-chain expert and its flexible and low-inventory operations allowed it to be considered an industry benchmark with a high return on equity. As revenues and profits continued to grow, Dell increased its product offering that now included routers, printers, scanners, monitors, digital cameras, modems, servers and some systems and specialized software. With this varied but interrelated range of products, Dell strengthened its customer satisfaction of getting inexpensive products all at the same place. After generating most of its revenues from the sale of PCs, in 2002 Dell generated more than half of its profits through the sale of other products. After consolidating its online and mail order distribution system and becoming the industry leader,

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