21092739-Dell-Computer-Corporation-dian - Dell Computer...

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Dell Computer Corporation Case summary As of august 2002, Dell Computer Corporation was the world largest direct selling computer company. Headquartered in Austin, Texas, Dell had gained a reputation as one of the world’s most preferred computer system company and a premier provider of products and services that costumers worldwide needed to build their information technology and internet infrastructures. Dell was founded in 1984 by Michael Dell, who, in 2002, was the computer industry longest-tenured CEO. The company was based on a simple concept: that Dell could best understand consumer needs and` efficiently provide the most effective computing solution to meet those needs by selling computer system directly to costumers. The traditional value chain in the personal computer industry was characterized as build to stock. PC manufacturers design and build their product with preconfigured option based on market forecast. Products were first stored in company warehouses and latter dispatches to resellers, retailers and other intermediaries who typically added a 20- 30% mark up before selling to their customers. PC manufacturers controlled the upstream part of the value chain, giving the downstream to the middlemen. Retailers justified their margins by providing several benefits to customers: easily accessed locations, selection across multiple brands, opportunity to see and test products before purchasing, and knowledgeable salespeople who could educate customers about their choices. Turning Michael Dell concept to reality meant rallying a large and dynamic organization around a common purpose and measuring its performance by relevant and concrete measurement (or metrics).
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Dell’s scorecard included both financial measures: ROIC, average selling price, component purchasing costs, selling and administration costs, and margins) and non- financial measures (component inventory, finished goods inventory, account receivable days, account payable days, cash conversion cycle, stock outs, and accuracy of forecast demand). The scorecard was generated on real time basis, and relevant performance measures were broken down by customers segment, product category, and country.
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21092739-Dell-Computer-Corporation-dian - Dell Computer...

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