McCombs School of Business

FIN 370 Case Summary

You must attend class to receive credit for this assignment

Name: Matthew Le (mkt645) Case: Dell’s Working Capital Section: MW 3:30-5

Case Background (who, what, when, where?):

Who: Dell Computers and founder Michael Dell
What: Company that designs, manufactures, and sells high performance computers
 Selling directly to customers was Dell’s core strategy at the time
When: 1990-1996 and the future

Primary Problem and Precipitating Issue(s):

 Component shortage in 1996 because of no clear plan for financing future growth
 Build-to-manufacturing system appeared flawed
 Company’s growth rate was outpacing the industry’s growth rate
 In 1993, Dell had to sell-off excess inventory and took restructuring charges

Case Perspective (audience for the case analysis):

 Executives in Dell who want to look back at previously problems and solutions
 Competitors may also look at this case to compare with their own company
 Startups who are eager to join the computer industry may also look at this case

Decision Alternatives:
 Instead of manufacturing on call, I believe the company should forecast future production
 Can also handle inventory a lot better by purchasing orders when inventory is low
 Reduced the number of suppliers to ensure quality and improve delivery performance

Analyses and methodologies (how will you evaluate the problem?):

 First determined the problem of fast growth and insufficient inventory
 Next determine the boundary of the problem by looking at the market or competitors
 List solutions towards solving the problem
 Find the best solution and implement it to find results

Initial Recommendation and Rationale (based on your reading of the case):

Forecasting future production will be the key to having sufficient products for future growing
demands. Dell just needs to focus with company growth and continue to take feedback from
customers. At some point they will hit a plateau where future growth is easier to read, but right
now it is better to have enough products than not enough.