Dell Spells Success in China|Business Strategy|Case Study|Case Studies

Dell Spells Success in China

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Case Details:

Case Code : BSTR066
Case Length : 15 Pages
Period : 2003
Organization : Dell
Pub Date : 2003
Teaching Note :Not Available
Countries : USA, China
Industry : PC

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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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Winning Praises in China Contd...

Commenting on the company's performance in China, Michael Dell, Dell's Founder & Chairman, said, "Market share is the return of customer votes on our performance concerning product and service. In order to maintain the highest standard of customer satisfaction, we continue to focus on delivering an excellent and unsurpassed customer experience."3

Background Note

Dell was founded by Michael Dell in 1984 in Texas, US. The company changed the dynamics of the Personal Computer (PC) industry with the launch of its innovative 'Direct Model' of selling. By choosing to sell directly to the customers, Dell eliminated intermediaries like retailers and distributors. This helped Dell to develop low cost, customer oriented products within a short span of time. This way, it could avoid the unnecessary time and cost factors the intermediaries added - a factor that hampered the profits and growth of other players in the market (companies with long distribution channels had to maintain large inventory stocks in order to meet their sales targets. Also, this did not give them a real understanding of the customer requirements).

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The direct selling model was based on the concept that "By selling directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs."4

Using this model, the company took orders from customers over the telephone, sometimes even helping them select the system. This not only helped buyers determine exactly what they wanted, but also helped them control costs. The orders were then passed on to the manufacturers. After the system was assembled, it was delivered to the customer. Apart from this Dell offered free technical support services and an immediate (next day) onsite product service to its customers. By following this model, Dell could introduce latest technology products in the market much earlier than its rivals, since the latter operated through slow moving, indirect distribution channels. By eliminating intermediaries, Dell could, on an average, turn over its inventory every three days or less...

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3] 'Entering the 'Top Three' in Market Share,', March 18, 2003.



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