Michael Dell - The Man Behind DELL

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. The company's costs had increased as a result of its attempts to design a PC using proprietary components. This approach increased inventory levels in the warehouses. To deal with this dip in profits, DELL implemented drastic inventory control measures and accelerated product development. In 1992, the company's sales grossed $2 billion (Refer Exhibit I).

In late 1993, DELL faced a serious cash crunch and was not able to cope with increased complexity as it expanded its product range and moved into various product areas. In 1993-94, the company recorded a loss of $ 36 million. DELL's management realized that lack of senior managers was one of the main reasons for the company's poor performance. Soon, the company recruited many senior managers from the industry. It also abandoned its retail business in order to refocus on its mail-order business.