Essay about Case 3

Submitted By redsox2434
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Case #3 is about Dell Computer Corporation and its development of computers. Corp. made its name with its popular desktop computer model. After huge growth and profits, Dell corp hit a wall. The company attempted to bring life back to the corporation by entering the portable computer market (laptops). The attempt at laptops resulted in failure and a damaged reputation. In the case, Dell is struggling with the development of new laptops that will hopefully resuscitate the company. Dell is faced with a decision that comes with huge risk but high reward. Michael Dell founded the company in 1983. Michael Dell, a student at the University of Texas, started upgrading IBM compatible personal computers. Within two years, the company had over 70 million dollars in sales. Dell’s success was due to many factors, but the biggest being its business’ direct model. The company focused on selling custom computers directly via mail. This eliminated the middleman. Dell also had excellent customer service, which consisted of both home and phone representatives. In 1991, the company made a decision that would have a massive impact. The company decided to enter the retail market in order to compete with its competitors. While the initial launch boosted Dell’s sales by more than $1 billion, it came at a cost. In 1993, Dell reported a profit of $10 million. By entering retail, Dell strayed away from its original direct model that allowed the company to turn over inventory 12 times a year. Also the company lacked senior management and structure in its product development. To make things worse, Dell had a recall of 17,000 laptops. This called for a new development process. The new development process consisted of core teams. Core teams were involved in the process form beginning to start, allowing for more structure. The new process also introduced the six phases. These phases allowed for work to be reviewed every three months and eliminated variability in the outcome of product. With the new development process in place, Dell was ready for a second attempt at laptops. The portable computer industry was growing. Dell’s initial entrance to the market resulted in failure, $20 million in write off expenses and a recall 17,000 laptops. Michael was quoted saying that the development of their laptops suffered from significant under investment and a shrunken desktop mentality. The laptops had many problems with it batteries, screens, and power. It didn’t help that the computer had a 386 microprocessor, which ran a lot slower than the competitor’s laptops that had a 486 microprocessor. Dell created a new portable division, lead by Mark Holliday, to create new laptops that would spark life back into the struggling company. The challenge of developing the new laptops was deciding what features to emphasize. Dell decided battery life was more important than all the other features. The company was faced with a decision to either continue using the traditional nickel metal hydride (NiHi) battery or to go with a new Sony developed lithium ion (LiOn) battery. The NiHi batteries only lasted up to three hours and didn’t charge to full capacity. The LiOn batteries didn’t suffer from any of these issues and had a power for up to six hours. Even though the LiOn battery had more
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