Case Analysis of Dell: Selling Directly, Globally Essay

Words: 1122
Pages: 5

Business Model:

Dell Inc. founded by Michael Dell in the 1984 is the world's largest PC Manufacturer with annual sales of over $54 billion from around 170 countries. The Company was founded on a simple concept; that by selling personal computers directly to customers, Dell could best understand their needs and provides the most effective computing solutions to meet those needs. Dell provides computer systems under its enviable "low-cost direct sales model" under which the company maintains full ownership and control over manufacturing, distribution, and customer relationships. Dell has cut out middlemen, disguised as distributors, and the retail outlets from its supply chain, preferring to ship its products directly to customers.
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But Legend the leading PC manufacturer in china adopted the direct model of Dell & was able to cut down the cost and reduce inventory holdings in the process. Hence it was only a matter of time before the competition beats them at their own game.

Alternatives and Risk/Reward:

Alternatives Risk Reward
 Joint Venture with Local Companies Loss of identity Greater market share
 Tie up with Distributors and Vendors & aggressive Marketing & Promotion Higher operating cost leads to increase in price of product Closer to customers, help understand there needs and wants
 Flexible Payment options like "Cash on delivery"& Loans with low rate of interest If customers don't like product they might return it as they have not made any payment Due to flexible options, it will result in a pull strategy and result in higher sales
 Training people for direct sales Wastage of resources if direct sales does not work in Asian market Higher sales through direct model will result in low operating cost


As Retail buyers accounted only for 10 percent of sales and the average individual could not afford to buy the PC. Dell should diverge all of there resources for time been on other segments like Corporate Accounts & Small Businesses which will result in low cost operations because once trust and confidence were established with corporations, it