Dell Essay Research Paper Dell Computers was

Dell Essay, Research Paper

Dell Computers was founded by Michael Dell, who started selling personal computers out of his dorm room as a freshman at the University of Texas. Michael Dell would buy parts wholesale, assembled them into clones (exact replicas) of IBM computers, and sold them by mail order to customers who did not want to pay the higher prices charged by retailers. Michael Dell was soon making 80,000 dollars a month profit and in 1984 Michael dropped out of university to found Dell Computers. Michael formed in his dorm room the underlying principles, which he would follow throughout the 80 s and 90 s as CEO of Dell Computers.

Since their inception in 1982, dell has had a consistent rise in sales. Dells built to order strategy has enabled them to become a very efficient producer of computers and profitable company. The WebPages for dell computers has enabled dell to be able to reduce expenditures and become more efficient in their overall production and distribution of their products. Dell has been the only company to become an efficient maker of computers using the built-to-order system. Dells stock has become increasingly more valuable to investors over the past five years. Dell s built-to-order strategy has made them successful in growth, development and stock valuation.

The book Direct from Dell gave a lot of background information on, Dell s strategy, and mail order system as well as statistics on company sales and growth. The book goes into depth when analyzing Dell s built-to-order system, and mail order system. The book was written before the WebPages became popular so it talks only about what the company expects from it and not about how the web page has performed. The Charles Shwabb investment web page gave a lot of information, which would suit potential investors on Dell. The web page allowed me to view Dell s financial statements and analyze just how profitable Dell Computers has been and in which areas they showed the most or least profit. The book The Market Share Reporter gave me information on how much of the market Dell controls for each product they sell and how they compare to other companies. The book has many graphs, and charts to make it easier to see how much control a particular company has in that area in relation to other competing companies.

Selling computers over the Internet enables Dell to become a more efficient distributor of computers. When Michael Dell first started Dell computers the majority of the selling of the custom built computers were made over the phone with considerably less coming in through the mail. This was a very costly method for selling computers because there is a need for 700 customer service agents who service many calls a day and it costs the corporation on average 8 dollars a call. In 1994 Dell set up a group of people to set up a web page for Dell products, which would be customer friendly and reduce the costs being paid for customer service. Michael Dell was once asked why he initiated the move for the majority of their mail order sales to come through the Internet and answered like this. He said the role of a sales person is changing from the role of an actual sales person to a web page. The Internet lets people choose between many pitches and buy the best product offered. The move onto the Internet made the whole process for receiving orders and reducing expenditures a lot cheaper and more efficient. Now the orders go directly to the warehouse floor where they are quickly assembled and instead of needing 700 people to answer phone calls you need only 30 to run the web page. The web page has also helped Dell increase sales because consumers only need to log onto the Internet and order a computer with the exact specifications which they require. As of December 31st 1999 Dell was selling 14 million dollars worth of software and equipment a day over their various web pages. Dell has become a more cost efficient seller of computers because with the reduced cost of paying customer service they are able to lower the costs of the computer and still make the same profit. The web page also makes money for Dell, which in turn lets them subsidize their expenditures because they also sell products for competitive companies and are able to take a premium of the sale. The online internet sales allows Dell to follow the order patterns of their customers and use that information to know where they can mass produce a certain computer prototype and be able to sell the computer and since that computer has been mass produced Dell will make a bigger profit. By selling computers over the Internet Dell has been able to become a more efficient seller of computers and been able to utilize the Internet to make a large profit.

The build to order strategy allows Dell to be more cost efficient by helping them cut expenditures and delivering better products. Dells strategy for manufacturing computers is called the built-to-order system where you only build the computer once the computer has been ordered. Using the built to order strategy allows Dell computers to be very cost efficient. They only build computers once they have been ordered so that Dell is never left with any unused inventory, which in the computer hardware industry depreciates at 1% a week. Dell buys their inventor based on estimates of consumer needs. They buy less than the estimates predict but more frequently so that they never run into