Dell Incorporation Case Study

Q1: What’s your assessment of the job Mr. Dell has done as the company’s leader? What grade would you give him for his leadership of the company?

Michael DELL created his enterprise when he was only 19 years old. He surely didn’t have much experience back then. Nonetheless, Lee WALKER was brought in by Michael DELL to provide much-needed managerial and financial experience during the company’s organization-building years. Mr. WALKER became then Mr. DELL’s mentor, he built up his confidence, taught him how to overcome his shyness, how to control his ego and to become intimately familiar with all parts of business.

Michael DELL’s leadership was based on him delegating authority to subordinates, believing that the best results came from turning loose “talented people who can be relied upon to do what they’re supposed to do. He would also spend 30% of his time traveling to company operations and meeting with customers, which made him aware of their needs.

Q2: What are the elements of Dell’s strategy?

Q3: What does a SWOT analysis reveal about the attractiveness of Dell’s situation?

Strengths.

• Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a growth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World.

• Dell cuts out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer's own specification. Components are made by suppliers, never by Dell. PC's are assembled using relatively cheap labour. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain.

Weaknesses.

• The company has such a huge range of products and components from many suppliers from a plethora of countries, that there is the occasional product recall that can cause Dell some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they could overheat, causing electric shocks or fires.

• Dell is a computer maker, not a compute manufacturer. It buys from a group of concentrated hi-tech component manufacturers. Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply dues to the lack of large suppliers in the World).

Opportunities.

• Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell remained the company's Chairman. Despite founder Dell's massive success, new blood and a change in management thinking could lead the company into a new, even more profitable period. Dell was born in 1965, and founded Dell in 1984 with $1000 whilst studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992,