Dell Case Study

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Introduction Michael Dell left college to work full-time for the company he founded as a freshman. Dell’s venture had $6 million in annual sales. Changed his strategy to begin offering built-to-order computers. That year, the company generated $70 million in sales. End of 2000, Dell’s revenues had topped an astounding $25 billion. Innovations in supply chain and manufacturing, but also due to the implementation of a novel distribution strategy. Grew to dominate the PC market in less time than it takes many companies to launch their first product. No more middleman Dell started out as a direct seller. Well before use of the internet went mainstream, Dell had begun integrating online order status updates and technical support into their customer-facing operations. By 1997, Dell’s internet sales had reached an average of $4 million per day. Offered superior customer choice in system configuration at a deeply discounted price Important side-benefit of the internet-based direct sales model was that it generated a wealth of market data. Forecast demand trends. Segmentation strategies. This data drove the company’s product-development efforts. Virtual integration Company pursued an aggressive strategy of “virtual integration.” Ought to develop long-term relationships with select, name-brand PC component manufacturers. supplier inventory hubs in real time for the delivery of a precise number of required components on short notice. Significant cost advantages over the traditional stored-inventory method. Dell openly shared its production schedules, sales forecasts and plans for new products with its suppliers. Supplier partners. Dell to reap the benefits of vertical integration, without requiring the company to invest billions setting up its own manufacturing operations in-house. Innovation on the assembly floor In 1997, Dell reorganized

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