Dell's cash conversion cycle has been negative. The negative numbers reflect that there is a disconnect between the direct labor manufacturing overhead in creating the final product. But some people think that it is okay and that Dell has an excellent future planned.
Dell is a leading computer technology organization. Dell constantly keeps up with changes in their market to stay competitive. Dell is focusing on cost from issues of storage to transportation of products.
1. Most publicly traded corporations are required to submit 10Q (quarterly) and 10K (annual) reports to the SEC detailing their financial operations over the previous quarter or year, respectively. These corporate fillings are available on the SEC Web site at www.sec.gov. Go to the SEC Web site, follow the “Search for Company Filings” link, the “Companies & Other Filers” link, enter “Dell Computer,” and search for SEC filings made by Dell. Find the most recent 10Q and 10K and download the forms. Look on the balance sheet to find the book value of debt and
And in Michael Dell’s own words about the future: “The epicenter of the company has really shifted to these other areas and away from the PC,” Dell said. “If fiscal year ‘11 was about getting operationally fit, then fiscal year ‘12 will be about leveraging this strength.” (Ricadela, 2011).
as a percentage of revenues. Dell is well managed and knows how to control their costs. The company is on top of every detail and there are no surprise costs to harm the company. (Part 2, Item 7, Form 10-K, Dell Inc. 2011) The net income performance of the company has been excellent for fiscal 2011 with an 84% increase from the previous year. This big increase in net income resulted in a 1.6% growth in profit margin and a 2.5% growth in ROA (return on asset). Higher revenues and good cost control are responsible for these growths. Another reason for the growth in net income is the change in the business operation of the company. Its service operations are expanding and have a lower cost than manufacturing the products. Fiscal 2010 had a decrease in net income of 42.2% mainly due to the drop in revenue and the acquisition of Perot Systems. Dell is planning to
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.
In 2008, Dell Inc. had grown from a $1,000 startup called PC’s Limited to a company that had $ 61 million in revenues. ("Dell 's net revenue 1996-2013 | Statistic") Dell Inc., formally known as Dell Computer Corporation, was started and headed by Michael Dell until 2004 when he stepped down as CEO. Michael Dell went from being a college drop out to becoming the youngest ever CEO of a Fortune 500 company, not to mention becoming a multibillionaire in the process. ("Dell Inc. History") However, the successes of his company would not last after he left in 2004. ("Dell 's net revenue 1996-2013 | Statistic") This faltering of company performance prompted Mr. Dell’s return to the helm of the company in 2007. ("Dell Inc. History") This case analysis will examine the initial strategies Mr. Dell used to grow his company and the impacts that these decisions would have on Dell Inc. as it faced uncertain conditions in 2008.
The bigger question for the company is whether going private would solve any of the issues it has faced for years. Its traditional business of making and selling personal computers has become less and less profitable, and Dell has already been trying to move into the more lucrative and stable market of providing hardware and software services for corporations. That's not something that requires Dell to be private, however.
The advantages support one another. The economies that Dell has built with these advantages are difficult to imitate. The supply chain relationships and the high switching cost to customers due to high customization offered increases the difficultness to imitate. Even the competitors want to imitate it will take time because of the path dependency that Dell has built. And moreover, Dell has been constantly upgrading itself. Hence the model of Dell is inimitable and hence can continue delivering sustainable
PC industry is characterized by fast declining ASP year over year. Together with the increasing component costs from 2009, both Dell and HP are facing squeezing profit margins (HP 2010; Dell 2010). In the first quarter of 2011, HP’s gross margin for its Personal System Group (PSG) is as low as 6.4% (Epstein 2011). Similarly, Dell’s gross margin of PCs is often 3 to 5% (Wang 2010). This indicates that if both
DELL’s PC and laptops business have strong market share in the United States and is fast gaining market share worldwide with a double-digit growth rate in countries such as India and China. DELL is ranked the world's number two PC maker with a market share of 13.7 percent for the 2nd quarter of the year 2009, according to the industry tracker IDC. Due to the recent global economic downturn, DELL posted a 22% decline in PC revenue, which made up to about 60% of DELL’s overall revenue (Source: Reuters 7/10/2009 - Appendix 1.1). PC and laptops are DELL's core businesses. DELL’s PC business continues to grow in Asia and the focus will be in China and India for the next few years.