Dell Case Analysis
Running head: Dell Computer Corporation
Dell Computer Corporation
Case Analysis
Executive Summary
It is 1994, ten years since Michael Dell first purchased an Austin business license to operate what later became known as Dell Computer Corporation. Sales totaled $6 million in 1985 at the close of the company’s first fiscal year. In 1986, Dell boasted $70 million and up it climbed to today’s whopping $3.5 billion. Although annual net sales have risen exponentially over the past decade, several setbacks and miscalculations in the market have cost the company dearly. 1993 was a pivotal year and by the end of the fourth quarter, Dell reported a negative operating income for the first time in its history. With only $20 million in cash to fund a $2.5 billion business, Dell was facing threats not yet experienced in the young life of the bullish, upstart enterprise. True to form for the ambitious, technological wizard, Michael Dell promised immediate recovery by the following year.
The promise was delivered through the help of the lead partner at Bain and Company, Kevin Rollins, who with Michael Dell dissected the company into its component parts in order to make an informed decision what to cut, what to close, and what areas to accelerate (Dell 1999). A closer look at the 1993 debacle is necessary to predict the survival of Dell in its second decade within the highly competitive and turbulent computer industry. This analysis intends to get to the heart of the problems faced by Dell during their worst period and determine if the manner in which Dell weathered the storm can forecast their ability to face the tempestuous times ahead in the volatile world of IT.
The Industry Backdrop pre-Dell
From 1976 the microcomputer industry was young, technology was cumbersome, entry barriers were weak, and computers were sold almost exclusively by mail-order. By 1977, with advances in technology, the market changed rapidly as did distribution channels. Personal...
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