Luis David Zavala Garca

03/02/16
Key learning
Dell is a company that focuses on consumers and their direct contact with them, the
customer as a tool for product development benefits, since it is the customer better known,
its business model but has struggled was good for era and exemplary production model for
other companies.
Dell case
Dell was founded in 1984 by Michael Dell, which at the time did business as PC's Limited,
while a student of the University of Texas at Austin. He sold IBM PC-compatible
computers built from stock components. Dell dropped out of school to focus on his
business, after getting $1,000 from his family. In 1985, the company produced the first
computer of its own design, the Turbo PC, which sold for 795 dolars. The company
grossed more than $73 million in its first year of operation.
With a simple concept: that by selling computer systems directly to customers, Dell could
best understand their needs and efficiently provide the most effective computing solutions
to meet those needs.
The traditional distribution system of the PC industry is an indirect model often referred to
as the channel
Dell adopted a customer sales model over phone or internet, avoiding intermediaries and
distributors. This models was the basis of their success, but this advantage today has
been to change, thanks by other companies, that have been improving their direct contact
with the client, for this cause, the Company has made efforts through acquisitions of
companies storage systems to reduce their dependency on agreements with third parties
to cover the portfolio. It has also acquired IT service companies to strengthen their
professional services.
Dell use the Just in time manufacturing approach, which minimizes inventory costs. Low
inventory is another signature of the Dell business model, a critical consideration in an
industry where components depreciate very rapidly. This Company maintains a negative
cash conversion cycle, that means the payment receive for the product before it has to pay
for the material.
The relationship with the customer is the key to Dells business model, and provides
distinct advantages over the indirect sales model.
Dell has continued to provide new products, pioneering critical developments and
innovations in home, small business and enterprise computing. The focus point of Dells
innovation approach remains an unwavering commitment to delivering new and better
solutions that directly address customer needs.