Revitalizing Dell

Introduction
There are no standard approaches which would help a company to achieve global success and
brand recognition. Each business searches for unique strategies and methods which would suit its
marketing objectives.

Dell, an American-based technology company, has developed a set of unique strategies and
methods constantly used in marketing & management for obtaining & sustaining its brand image
and excellent service quality. Today it is one of the largest manufacturers & sellers of personal
computers and information technology systems worldwide.

Dell Inc. classified its products into different categories such as desktop computer systems,
mobility products, software & peripherals, servers, networking, etc.

Blue Ocean Strategy

The ‘Blue Ocean Strategy’ is a strategy whereby a company decides to enter in a market where it
can enjoy uncontested market share i.e. hypothetically referred to as ‘Blue Ocean’. In other
terms, a market for a product where there is no or very less competition. This strategy can be
applied across various sectors or businesses.

Dell Inc. followed the ‘Blue Ocean Strategy’ by adopting the ‘Direct-Sales Model’ strategy to
sell its products & services. This strategy basically involved ‘built or configure to order’
approach where they took orders directly from customers, built the computers according to their
specifications and then shipped the machines directly to them.

As a result of this strategy Dell achieved huge success in the market as its revenue rose from
USD 3.5 billion in 1993 to USD 55.9 billion in 2005 and its net income increased from USD 149
million to USD 3.6 billion. Till 2005 it had acquired 36% of the market share, the highest among
its competitors.
During this period, Dell earned more on Personal Computer systems than all of its main rivals
combined and was the only one to consistently report positive margins on PCs. This showed the
dominance of the company at that time.

This dominance and success was due to the strategy they had adopted and also because almost all
its competitors had not used this strategy. These competitors such as HP, IBM, Intel, Compaq,
etc. supplied their machines based on the orders from distributors, resellers and retailers which
were not customized.

Competitors started studying Dell’s model & way of working and started copying many of its
elements. During this period, Michael Dell had stepped down as CEO of Dell Inc. With the
advancements in technology and the advent of laptops & sleek designed desktops, Dell now
started facing pressures to improve its products & services.

As a result, Dell’s growth slowed and missed the earnings estimates of various analysts. Also the
confidence in the leadership was reducing inside the company. Due to this, Michael Dell
returned as the CEO to revitalize the company.

After his return, Dell started planning of a different strategy. Michael Dell planned to decrease
the annual cost by estimated USD 3 billion which is why the company started downsizing i.e.
closing some plants. They recruited senior talent from the industry to look at things in a new
way. Dell now increasingly relied on contractors for producing its PCs.

The company now began to enter into retail channel for sale of its products and also made efforts
to partner more actively with resellers to place its products in small & medium sized businesses.

Hence, it can be concluded that every company has to reinvent itself after certain period of time
otherwise they are thrown out of the competition.