Case Study: Matching Dell

In 1984, after generating $80.000 revenue per month from upgrading and selling computers out of his dorm room, 18-year-old Michael Dell dropped out of College and founded Dell Computer Corporation. The start-up company was faced to established industry giants like International Business Machines, Compaq and Hewlett Packard. To be competitive, Dell implemented an innovative business model which made the company grow and achieve the status of the one No. 1 PC provider in the U.S. (www.dell.com). Between 1994 and 1998, Dell Corporations revenue increased from $3.5 billion to $18.2 billion, its profit from $149 million to $1.5 billion and its stock price by 5.600%. This meant a twice as fast growth as Dell’s major competitors and a triplications of its market share (Rivkin/Porter 1999, exhibit 11).
This paper deals with the questions how Dell Corporation was able to enter the PC market, managed to get that successful and which actions should be undertaken to improve its position in the future.
After this brief introduction, the PC industry will be analyzed. The third part deals with Dell’s business model and the resulting competitive advantage. Followed by that the reactions of Dell’s competitors due to Dell’s business models will be discussed and finally some recommendations to ensure and improve Dell’s
position in the PC market will be given.