Matching Dell

Dell Share holders bear the risk in the form of cost of potentially issuing the stock at below market values if the employees do convert the options into stock when the options are in-the-money. However, if the options expires out of the money, the shareholders realize equally better benefits. In this case, the firm obtains labor from employees without having paid for the labor by issuing shares. The employee stock options provides a cushioning from the full burnt

Inventory turnover – increase of 634.9% at Dell against 202% at Compaq shows the competitive advantage if Dell in managing and maintaining its stocks

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.

The Dell Computer Corporation was founded in 1984 by Michael Dell, who began the company by refurbishing IBM clones out of his dorm room for extra money. From the beginning and through the 1990’s, the company grew quickly and was very successful. Dell used a cost leadership strategy and focus on creating products that were already in the market place, but changed the timing of production and the method of distribution that was in place with the company’s competitors by assembling computers to order and selling directly to the customers. The company focused on creating value for customers and meeting their needs, but into the

The technology industry is one predicated on constant innovation. Products within the field must provide a compelling value proposition for consumers in order to properly maintain both margins and revenue. Technology companies, particularly those who manufacture products are realizing decreasing margins as the competitive environment matures (Bodie, 2004). Competition for foreign competitors has reduced margins and subsequently profit margins. Cost conscious consumers are now purchasing product based primarily on price rather than specifications. Combine this fact with the macroeconomic factors prevailing in the market and the industry has significant headwinds going forward one year from now. This is particularly true of Dell who has seen an erosion of market share due to the influx and demand of tablet computers. Less demand for traditional laptops has also decreased the profit and operating margins of the firm. Even within its own market, Dell has encountered significant competition for rivals such as HP, IBM, and Microsoft who recently announced its own tablet (Scheck, 2008). Below is a chart indicating markets share within the PC market over the last decade. Notice that market share gains after the housing market collapse have deteriorated. This reflects changing consumer sentiments regarding the overall purchase of PCs and heightened demand for alternative products such as tablets and notebooks.

However, IBM underestimated the potential of PC’s and its competitors capitalised on IBM’s technology. During 1980s and in early 1990s, because of increasing competition, bureaucracy and big bonuses for the salespople, IBM lost many high-performance employees and its CEO John Chambers. By 1993, the company 's annual net losses reached a record $8 billion. Cost management and rationalization became a core concern. And IBM considered splitting its divisions into separate independent businesses.

By 1993, the computer industry had changed rapidly with a large number of smaller companies dealing in fragmented solutions as opposed to IBM which was offering a complete solution. The company was on its way to losing $16 billion and it was on the watch list for extinction. Its lumbering size, the PC era and its insular corporate culture were the reasons it was heading to obsolescence.

By the late 1990s, HP’s business was facing major problems which are reflected in its financial results. Despite a 9.71% increase in total net revenue, HP faced declining net earnings of 6% from 1997 to 1998. The company had also experienced a slow and decreasing growth in revenue in comparison to its main competitors. From 1996 to 1998, HP’s annual revenue growth decreased from 21.89% to 9.71%, while one of its main rivals, Dell, was able to maintain an over-40% revenue growth in each year within the same period. Moreover, HP’s failure to satisfy customer needs and catch

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

Dell Computer Corporation did not however experience a smooth business all the way since they started having problems which is something normal for business enterprises. To start with, the company tended to be disorganized during the period of its rapid growth. This is attributed to the

Dell and Apple are American companies that participate in the industry of Electronic Computers, according to the SIC 3571. This industry is oriented to the manufacture of diverse kind of data processing systems. In 2001, the largest computer makers in the United States were Dell, Compaq, Hewlett-Packard and IBM. They produced about 40 percent of personal computers shipments in the world according to International Data Corporation (IDC). Dell is positioned as the bigger competitor, but in 2002, Hewlett-Packard acquired Compaq, challenging Dell’s leadership in this sector. (1)

Dell's value-chain strategy combines technologies from Intel, IBM, and Microsoft to serve customers efficiently and with state-of-the-art computer technology. Dell is able to introduce next generation products faster than its competitors can because its market-driven strategy is developed around a direct sales, built-to-order business design. This distinctive process capability is supported by effective supplier, distribution, and service partnerships with other companies. Dell's management understands its customers since company personnel are in close contact with buyers who make inquiries and place orders. Not only does Dell process some 500,000 telephone calls each week, but 65,000 corporate customers are linked to Dell through their own Dell Premier Pages on the Internet, and Dell's Internet based sales reached $50 million a day in 2000. Indeed, in 2001, Dell became leader in global market share. (market driven strategy ch 1, http://highered.mcgraw-hill.com/sites/dl/free/0072466650/46701/cra66650_ch01.pdf#search='dell%20external%20influences%20marketing%20strategy')

Dell, a direct-sales pioneer, grew exponentially in the 1990s and emerged as the worldwide market leader in 2001. During 2001-2002 it was the most profitable among the market leaders. Compaq came up with a full range of PCs ranging between $1,000 and $10,000. Whereas, IBM, which at once had a market share of 30%, was at this time going through a dramatic restructuring to stop its market share and profits from deteriorating further. Whereas, HP maintained a comparatively smaller share in PC sales. Besides

The rivalry in this industry is high with the four top Pc vendors- Hewlett- Packard, Dell, Lenovo, and Acer accounted for 53.6 percent of worldwide shipments. (Pg 5) Even though it was Apple who founded the first personal computer it was IBM that brought them into the conventional lives of society. Within this time period there were a lot of mergers and acquisitions making rivalry amongst firms even greater as every time this occurred these merged companies would have more market share and more capital to help their business.

Dell is among the fastest growing companies in the IT world. Dell started out as a company manufacturing PC’s and slowly developed as a big giant in IT industry. Today, Dell has an IT division which takes care of the cyber security called Dell Secure works. Dell designs, develops, manufactures, services and supports a range of computer systems including, desktops, laptops and enterprise products. Dell went public in 1988, capitalization for Dell increased to $85 Million Dollars from $1,000.00 in 1984. By 1996, Dell had become the 3rd largest hardware vendor in the world. In the late 1980’s Dell started gaining advantage with its PC business in the late 90’s. IBM was one of the big player in the industry