Economic Analysis of Desktop Computers
Table of Contents
1. Introduction 6
2. The Industry Demand 7
3. Costs and Production 15
4. Market Structure 20
5. Strategy 25
6. Recommendations 31
Michael Dell started the company in 1984 with the revolutionary idea to sell custom built computers directly to the customer. As one of the world's premier providers of computer products and services, Dell now designs and manufactures a comprehensive family of desktop solutions for virtually every computing need. Within the last five years, Dell has grown from $7 billion in revenues to more than $35,4 billion, and the company continues to expand in its current products and regions, and also into new markets. This makes Dell to the second largest seller of Computers and Computer products after Best Buy. As result of Dell's direct business model, Dell became leading seller of computer systems worldwide and the market leader in all customer segments of the United States.
The success of Dell's direct selling strategy is reflected by an increase of almost 100% in net revenues over the past five years
The key principles of Dell's business strategy are: (1) a direct relationship to its customers that provides a constant flow of information about customersÃÂ´ plans and requirements and enable Dell to continually improve its product offerings; (2) Customers can purchase custom-build products and custom-tailored services, which contributes to the efficiency in meeting the customersÃÂ´ needs and reduces inventory levels by a faster inventory turnover; (3) Dell is the low-cost leader, enabled by a highly sufficient supply chain management and manufacturing organization; (4) Dell provides a single-point of accountability for its customers by offering an array of services designed to provide customers the ability to maximize return on investment, system performance and efficiency ; (5) Dell believes...