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Michael Dell Winning on the Demand Side of the Information Revolution Case Solution
The inception of Dell created a significant thrift in the early breakthrough of technology in personal computers (PC). Dell started with optimising the performance of the PCs; however, exploring the market gaps, the company was established with a goal of making PCs accessible all over the world. The breakthrough deal of the company was its emergency contract with NASDAQ as Michael Dell proved to be the genius he claimed he was in understanding computers. The fulfilment of the deal got Dell on the market map with its competitor, including IBM, HP, Compaq and many others. However, the company exponentially expanded, being started from scratch with the help of innovations, connections and its goal to expand to the global market. Dell started its international expansion by setting it’s headquartering in the Netherlands, and by the 1990s; Dell supplied its computer to over 170 countries around the world, making it among the major players in the computer industry.
Following questions are answered in this case study solution
It is 1983, and you are a first-year MBA student at Harvard Business School. Your strategy professor asks you to analyze the PC industry. How do you reply? Be sure to include leading players, terms of competition, profitability trends, and potential sources of competitive advantage.
How did Michael Dell, age 18 in 1983, view the PC market? What made him believe that he could succeed in this young, fast changing industry?
In 1984, Dell took a yearlong leave from the University of Texas in order to expand his PC business. If you were an angel investor in Austin at the time, how would you evaluate Dell’s prospects? Would you invest in his venture? Why or why not?
Between 1984 and 1993, what were the most important milestones in the evolution of Dell’s strategy? What role did the entrepreneur’s original vision play in the company’s development?
How important a role did branding play in the development of Dell Computer? How did the company’s founder and his colleagues build the brand? With which other Information Revolution companies would you compare Dell’s demand-side initiatives?
Case Analysis for Michael Dell Winning on the Demand Side of the Information Revolution
1. It is 1983, and you are a first-year MBA student at Harvard Business School. Your strategy professor asks you to analyze the PC industry. How do you reply? Be sure to include leading players, terms of competition, profitability trends, and potential sources of competitive advantage.
Since the invention of computers, and the exponential growth of Altair Computers, it was analysed that the market has a significant gap to be filled which can translate its monopolistic nature to oligopolistic. The market rose from non-compatible PC units to compatible PC units manufactured by IBM from the outsourced manufacturer of parts, enabling IBM to exploit the market with disruptive innovation as previously software developers had to develop programs for each computer separately. However, with the inclusion of IBM, it was noticed that the company's innovative strategy to ensure uniformity in PC’s behaviour enabled it to get the competitive advantage over Altair. Furthermore, it is noticed that the IBM’s open architecture policy of its PC lowered the barrier to entry in this market for potential start-ups. Many companies, including the likes of Apple, Dell and Compaq, were driven by the exponential growth in the PCs market.
The breakthrough deal between Microsoft and IBM is still considered as the deal that redefined technology, accessibility and communication all around the world. It was noticed that collaboration with the competitors amidst low information of the market was inevitable in order to ensure sustainability. There were several companies that lost millions of dollars trying to pursue the PCs business as it was among the revolutionary product across America and over the world as it contributed significantly towards the country’s export. The local competition of Dell was uninvited as Michael Dell explored the gap, which was not observed as an exploitation point among the large-scale companies that was the overload of inventories among the distributor and their failure to provide after-sales services. Thus, Dell incorporated a strategy to ensure that distributors were not a part of the sales cycle of the company and that the customer services experts were solely trained by the company.
Dell’s strategy significantly differentiated from the competitors as they were primarily relying on selling the computer, whereas Dell was providing after-sale services. During the interaction with the consumers of technology, Dell dominated its strategy on satisfying the needs of the consumers, which led the company to cross the USD 30 Billion thresholds in under two decades, making the founder among the top 4 richest people in the world despite starting from scratch of USD 1000 investment. It is noticed that the industry already operated in the gray area due to the pressurised sales target of the distributors and the employees, it was a sign of suffocation rather than competition among the manufacturers due to rapid developments in technology. Thus, it is suggested that having large capital invested in PCs inventory during the 1980s was a call for short-term shutdown as new technology made obsolete PCs worth diminish significantly.
2. how did Michael Dell, age 18 in 1983, view the PC market? What made him believe that he could succeed in this young, fast changing industry?
Michael Dell firstly analysed that the computers were not operating on the optimal level and needed modifications in order to increase their efficiency. The interest of Dell started with electronic calculators; however, the room for improvement in computers definitely required Dell’s input as he started making over USD 80,000 per month from the upgrade of the existing machines. However, it was noticed by Michael Dell that the awareness of the technical expertise of operating a computer was still scarce while the exponential increase in sales of the manufacturers failed to address the rising concerns about the malfunctions. Since computers were only their early stage, glitches in the machine were common, yet the customer service was not addressed efficiently due to the presence of distributors between the manufacturers and consumers.
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