Michael Dell - The Man Behind DELL

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Case Details:

Case Code : LDEN004
Case Length : 10 Pages
Period : 1984-2001
Pub Date : 2002
Teaching Note : Available
Organization : Dell Computers
Industry : Computers
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"I'm all about learning from my mistakes."

- Michael Dell, in March 2001.

"Michael Dell is clearly a genius in the computer world, but his revolutionary insights into business processes provide invaluable lessons for many other industries as well."

- Frederick W. Smith, Chairman and CEO, FedEx Corporation,
in 1999.

Background Note – Dell

The story of the world's No 1 retailer of PCs over the Internet, Dell Computer Corporation (DELL) goes back to 1984, when Michael S. Dell (Michael) established the company with a start-up capital of $1,000, in a 1000 square foot office space, in a small business center in North Austin, Texas.

Michael, then a freshman pre-medicine student at the University of Texas, began his business by selling computer chips and disk drives for IBM PCs at meetings of computer users in Austin. In its first year of operations itself, DELL achieved sales of approximately $ 6 million, which grew to $ 257 million in the next four years. By 1987, DELL opened a sales subsidiary in the United Kingdom to tap the growing European market. 

European countries had a lower PC saturation rate than the US and there were no large PC manufacturers in Europe. In the same year, DELL went public.

During 1988-1991, DELL expanded its operations worldwide and set up wholly-owned sales subsidiaries in Canada, France, Italy, Sweden, Germany, Finland, and the Netherlands (Refer Table I).

In 1990, DELL recorded sales of $ 546 million in PCs and peripherals; in the same year it entered the retail business. Soft Warehouse Superstores, now CompUSA agreed to sell its PCs.

The company struck a similar deal in 1991 with Staples, an office supply chain. DELL reported a 109% growth in international sales but recorded a 64% dip in profits in 1990-91...

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