Dell's Value Chain

History of Dell

Michael Dell, who is the founder of Dell Computers, began his venture towards revolutionizing the computer industry in 1980. In 1980, Dell purchased his first computer; an Apple II, and took it apart to understand how it was designed. In 1981, IBM introduced the Personal Computer (PC) and Dell saw this as a business opportunity. Dell switched from the Apple computer to the IBM PC and began to learn all of the possible components. Michael Dell’s hobby was to disassemble computers, rebuild them with improved components, and sell them directly to the user. Traditionally, in the computer industry, manufacturing companies built computers, which were distributed to resellers and dealers who sold them to businesses and individual consumer. Dell noticed that IBM also sold their computers to through the distribution method, and in 1984, Mr. Dell made his business venture official. The original name for Michael Dell’s company was registered in the state of Texas as “PC’s Limited.” The organization transformed and renamed the company to Dell Computer Corporation in 1988.

DELL’S VALUE CHAIN CASE

Discussion Questions:

1. How has Dell used its direct sales and build-to-order model to develop an exceptional supply chain?

Dell sells directly to customers which creates direct relationship with its customers and first hand and pure customer feedback. As Michael Dell has stated, direct customer relationship” creates valuable information” about the customer, thus Dell knows who the end users are, what they have purchased from Dell and what their preferences are, a fact that allows Dell to offer add-on products and services.

Direct sales and build-to-order model also creates close relationships with its suppliers. Dell fully adopts the approach of the extended enterprise by viewing its supplies as an integral part of doing business and a key factor for its success. As Michael Dell has...