Dell Hbr Case Study

Assuming the profit margin stays at 5.1% and that operating assets (total assets minus short term investments) maintains at 1996 percentage level of approximately 30% of sales, Dell would require $2,336 million minus $1,555 million, which equals to $779 million.

Dell’s acquisition strategy is successful as the company strives to dominate the global market in technology resulting in higher margin offerings and short term profitability. The company’s most recent acquisition is EqualLogic, Compellent storage, and KACE systems management technology has led to Dell growing margin even as it increasingly sheds many of the third party products for which it receives lower margins (Kovar, Joseph F., 2011).

Dell is a computer corporation recognized for manufacturing computer systems through parts assemble. In 1983, Michael Dell saw an opportunity in using IBM compatible computers for a new assembly line that can be sold to local businesses. The idea as explained by Michael Dell, in one of his interview, is that in the early days of computers' manufacturing, companies had to be able to produce every part of the system. As the industry matured, companies started to focus on single parts and to become specialized in creating items that can be assembled with other parts to prepare a computer. As a result, Dell understood that to have a competitive edge in the market, they needed to

The actual requirement for Dell to sustain its growth target is $90+$108 = $198Mn. The remaining cash is incremental additional cash which is earned through operations, which can be invested as an asset (liquid investments). 4. How would your answers to Question 3 change if Dell also repurchased $500 Mn of common stock in 1997 and repaid its long term debt? The total amount of repurchase $500Mn and long term debt $113Mn is equal to $663Mn, which affects the net cash flow from financing activities. Total funding requirement is $663Mn + $90Mn (PPE) + $108Mn (WC) = $861Mn. Earnings from 1997, is $401Mn. We require an additional $460Mn ($861-$401) to fund

Dell used the customer to create products based on the user need. Each approached their core values of business and what works for them to create value and sustainability. Dell had the market share by using the internet to generate sales through machine to machine based sales and conserved his manpower to keep the cost of his product low. Intel spent many hours of research and product development to create new and innovative ground breaking products that led the industry standards.

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

Dell 's Competitive advantage lied in its very low or negligible inventory that it held. Also, because of its direct sales strategy it eliminated the intermediaries. Dell also had a first mover advantage in the direct selling model.

Despite this the company is profitable and can cover all its obligations, stock price of company is increase by 28.95%, Dividend per share by 15,62% compared to 2012. Decrease in profitability mainly caused by a negative balance

A noted misstep in their revised process was that they continued to build systems based on forecasts, rather than based on customer orders. As a result, inventory was still a significant cost factor, and IBM incurred big losses in their PC division from 1996-1998 from this and other initiatives. Meanwhile, Compaq effectively surpassed IBM in the mid 1990s, mainly through large acquisitions of firms like DEC, and followed with attempts to mimic Dell’s build-to-order and direct-to-consumer approach. Continued use of retailers and resellers likely prevented further cost savings, and in 1998 Compaq went from profitable to merely breaking even. Gateway seemed the most well positioned to closely follow in Dell’s footsteps since they were already largely a direct-to-customer business, but difficulties with inventory, IT systems, and a product recall restricted growth. Apparent focus on small business & home sales may have also been a limitation, as the majority of Dell’s sustainable revenue and growth came from sales & relationships with large corporations. While Dell’s competitors may have attempted to mimic their successful approaches, difficulties in fully executing and realizing the benefits have prevented any significant responses.

Answer: Not just the Total Asset Increase has to be financed. There is a possibility to invest/use the achieved profit to increase a total asset of the company.

Dell 's market and business strategies changed, requiring the company to move from a single supply chain to a customer

Dell has achieved low working capital by keeping its work-in-process and finished goods inventory very low. The competitive advantage Dell achieves from this is that its inventory is significantly lower than its competitors, it does not require large warehouses for stocking the inventories and Dell is also able to adapt the fastest to technology changes in the components. The competitors would find it difficult to adapt to technology changes in a short time because they have larger inventories than Dell does.

Dell is now entering its twenty fourth year of operation. While its products were once well received, sales have now slowed. Dell was once the leading PC seller, its stock price is now deflated. Dell’s stock prices haven’t been this low since before Michael Dell retook his position as CEO of the company, in February 2007. Dell’s sales are down and for once, Hewlett Packard shipped more PCs than Dell. Innovation and increased marketing are vital if Dell hopes to regain their, once held, top spot.

Even during those dark economic times, Dell’s situation looked worse than those of a lot of its rivals. The company did not seem to have any answers to the changing market conditions around it. And Michael Dell, the famed entrepreneur, did not appreciate me pointing that out. He grimaced and bristled and gave me the silent treatment during what was meant to be an hour-long interview that lasted closer to 30 minutes. Dell sucked the air out of the room with his discontent.

Dell is considered doing well in the market segmentation in order to avoid unnecessary loss. The management carry out analysis and report to find out which part or area can let them make the most profit. They position themselves as a strategic vendor, which is important in the business. From this, they have the competitive advantage in order to compete with other IT big business. Dell is also trying to sell affordable or more cheaper product to the customer. Apple is the top IT business in the world nowadays. As a result, Dell can not compete with them at the moment. Therefore, Dell’s product strategy is more focus on developing one specific product that can satisfy the customer. Dell also provides variety of services to