Dell Computers: Strategic Management

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Executive Summary

Dell’s position in the market suggests an industry reputation as one of the top-notch firms. Dell has enjoyed great success in delivering quality products and solutions to its clients while its current sales levels are high and business growth is imminent. Dell continues to make a presence in the growing international market and is in the right position to pursue its plans and exceed expectations. Dell proves to remain at the top of the chain because of people and processes.

The analysis also pointed to some important findings. Dell has a superb production scheme that values quality of products and ensures that clients receive their orders on time. Its organizational structure gives importance on all the segments of the company. It has provided an independent component address the strategies in the future while it also showed that Dell has a meticulous system that adds value to each production stage.

In the U.S. Dell is a major player and is one of the biggest computer manufacturers. Although the market is saturated, Dell can either acquire other companies or continue growth of its product range. As a global firm, Dell needs to be aggressive in its product development and need to establish small niche in other markets. The industry is booming, so there is no need for Dell to rush and proceed with the well-planned action course to ensure consistent success.

Dell’s strength is anchored by the processes that it follows emphasizing on quality and delivery. However, it needs to establish its own development procedures and must not be dependent on suppliers. But Dell is poised at an advantage due to growing market overseas. It has only to monitor external barriers that affect its growth and push for its mission and vision through effective strategies.


The discovery of computers is one of the most important events that paved the way to information technology. After the first computer was developed, millions of prototypes were sold like pancakes in the market. Computers have slowly replaced machines as the primary tool sought by businesses and individuals. In addition, the presence of computers has allowed the world to get connected. As computers continue to increase in demand, manufacturers have increased in number. At present, firms involved in the production of computers keep on growing. This positive trend is expected to continue given the lack of alternative for computers.

The company analysis on Dell focuses on three important aspects. It highlights the inner process of Dell and the contributions of these schemes to the firm’s success. The analysis will also focus on Dell’s external environment. In addition, the discussion will provide certain strategies that the company manifests. These important keys are relevant in fully understanding Dell’s current status. Moreover, it will serve as preview to the company’s position in the future market. In addition, the analysis will provide a background of the industry and its effect to the operations of Dell. It will emphasize on the issues that have changed the metrics of computer production.

Given the nature of the analysis, there are some important aspects that need to be established. The study will center on the internal processes of deal without giving much emphasis on the technical procedures. The study will also deviate from using numbers as basis for arguments and findings. Hence there are no computations or any form of fundamental analysis that will be manifested. The conclusions that will be made are taken from Dell’s current position and the trends in the industry.

Company Background

Dell is a technology firm based in Austin, Texas founded by its current CEO Michael Dell. In 2006, the company has recorded revenue of nearly $56 billion. Out of these earnings, Dell gained $3.6 billion as net profit. The firm employs some 78,700 personnel for its global operations (Dell, Inc., 2007). Fortune Magazine (2007) listed Dell as the 34th largest company in the world and 8th in the Top 20 most admired corporations. The firm is listed in the 38 high performing companies provided by S&P 500. In addition, Dell has bee observe to outperform the market for the past 15 years. These figures show the pedigree of Dell when it comes to performance.

The mission of Dell, Inc. is to become the global leader in providing quality computers. The company believes that it is an agent that will provide best solutions for the clients. It mission is to ensure that transactions made clients are easily done. The slogan emphasizes on the customers as the priority of the company (Dell, Inc., 2007). The idea that Dell postulates emphasizes on combining top-notch technologies to create a single product. The partners of Dell include chip makers, software developers, and peripheral producers. The product line of the company is comprised of desktop computers, laptops, servers, and storage area networks.

Organizational Structure

Dell, Inc. is led by Michael Dell, who has been the top executive of the company since it was founded. There are other 8 members of the board who man the five committees created by the company. These committees include audit, finance, compensation, governance and nominating, and antitrust compliance. The auditing committee handles accounting and related issues. The finance committee determines possible mergers and acquisitions. The compensation committee determines the salaries of all Dell personnel. The governance and nominating committee manages corporate issues. The antitrust committee determines antitrust laws that have to be implemented by Dell. In addition, there are executives appointed in each region where Dell operates. These regions include the Americas, Asia-Pacific and Japan, and Europe plus the other locations. The Dell Global Executive Management Committee serves as the framer of strategies and the future direction of the company.

Operational Processes

The manufacturing scheme of Dell revolves around the concept of order first before producing the computer. The emphasis on quality is being outlined by the method used in producing computers (Gamble, et al., 2005). For Dell the procedure is simple: reduce the cost of productions, treat suppliers as partners, load the computer with software, and ship the computer 6 days before order. Critics often claim that the efficiency hampers the quality of computers; Dell believes otherwise. It has been observed that the computers produced by Dell have received several distinctions for quality. The company has no place for defective and sub-standard personal computers.

One way to determine the quality of personal computers produced by Dell is through the examination of the processes being implemented in production (Mintzberg, 1989). The procedure is simply and it starts with the order slip being provided to customers. With the order slip, clients are asked to give the specifications of their desired computers. Since the customers decide for their computer, clients are assured that the finished product is top notch in terms of quality. Another reason why the computers are of utmost quality is the strategy of Dell to form partnership with suppliers.

As partners, other companies indirectly become part of the production. To further boost their stock, partner firms are obliged to provide the best supplies that they have. For partner companies, the success of Dell is an accomplishment on their part. In addition, the supplemental software and tools make personal computers flexible. Aside from the normal functions, Dell made computers is capable of performing applications that are helpful to users. Also, it is important to take note the days between the delivery and the order date. As soon as the computers are assured, delivery will likely follow.

One of the issues the Dell faces is the handling of defects. Since the main concern of Dell is the consumers, quick implementation of strategies regarding defects are maintained. Part of the strategies is the provision of new products with improved quality. Dell provides warranty periods to allow customers to replace any of Dell products found to be defective. Dell segregates the usable components and disposes the parts that are classified as substandard (Juran, 1974).

Industry Analysis

The computer production industry is considered as dynamic and fast paced. There are several catalysts to growth and barriers to development. The process starts with the identification of consumer preference. Dell, for instance, conducts rigorous studies to determine the exact needs of its target consumers. Aside from market strategies, Dell also manifests continuous product research and development.

Technological shifts are common and Dell has to make a quick adaptation. Another important change that Dell has to take into account is the competition in the industry. The Five Forces Model of Michael Porter (1983) provides the technical approach in attaining sound strategic management. The facets include the capacity of the consumer, the capability of buyers, the entry of competitors, and the threat provided by the substitutes. These four aspects contribute to the overall state of competition in the market.

Another strategy that can be used to assess the industry is the PEST Analysis. It describes the framework in which the company operates. This strategic tool is often used to determine the potentials of the business in all aspects (Armstrong, 2006). As expected politics in one of the major influences in the business of the company. In 2006, Dell was involved in a controversy as the U.S. Securities and Exchange Commission (SEC) questioned its accounting principles (Damon, 2006). The government had become strict in the implementation of accounting rules (Iliev, 2007). On the economic side, Dell has been experiencing robust growth because of the emergence of markets such as China (Time Magazine, 2007).

In the social realm, computers have become part of usual everyday activities. Most important, the integration of the computer with other activities makes it a pillar of societies. Jonscher (1995) pointed out that most of the function of firms is being completed through computers. Drucker (1993) predicted that the impact of IT in the global economy will be as widespread as that during the Industrial revolution.

Industry Cycle

The product cycle in the computer industry follows the model drafted by Anderson and Zeithml (1984). The first phase is introduction and this is the stage when the product in launched in the market. This process is being observed by industry players are still in their start-up phase. The second phase of the cycle is growth and is characterized by robust sales.

The third phase is the apex of products being introduced in the industry. The sales level is sustained and strong customer loyalty is established. This stage, however, also shows declining pace in revenue increases and gradual saturation of the market. The final stage relates to the decline of the company or a product. It is expected that sales will go down and competition will continue to intensify. In addition, changes in trends and economic conditions affect the firm’s stability.

In relation to cycles, Dell is at present in the stage between growth and maturity. The firm is still recording sales increases and it products continue to develop. Moreover, the industry has several potentials that expand possibilities for Dell. But there are signs that maturity starting to be observed. Competition has become intense and the number of competitors has declined because of acquisitions. Markets are saturated Dell is struggling in expanding its base to other segments. Further, majority of the revenues gained by the company comes from its solid and loyal consumers. There is a need for Dell to diversify and the company has responded to this call by venturing into other products associated with computers.

Target Market

The graph (see diagram 4) states that most of the income that Dell has accounted came from the operations in the Americas. This includes sales from the United States, Canada, Latin America, and South America. Europe also made notable figures in terms of providing Dell with suitable market position (Trout and Rivkin, 1996). In addition, the market in Asia keeps on expanding as Dell has established market shares in China and Japan. The income from operations in the Americas is bigger because the main operations are based in the United States. Other markets in the Americas have revealed increasing recognition to the presence of Dell computers.

The main targets of Dell are households. According to recent financial statements, household computer sales account for majority of the total computer sales. Compared to other entities, households comprise most of the demands for computers. Several households have been using computers to facilitate their activities and help in their endeavors (Culliton, 1948). To date, Dell maintains its priority on making households satisfied with the products being sold. After years of operations, Dell has successfully marched into the top of the computer market in America. More households have shifted to the use of Dell computers as reflected in the sales of the company.

It is hard to discount the effects of bureaucracies and government offices getting computerized. Because of the low cost high quality computer that Dell offers, the company has attracted government institutions (Drummond and Ensor, 2001). The influx of computers in government offices expanded the business perspective of Dell. Unlike before, the concentration was focused on households and then to businesses. The addition of government institutions as prospected customers pushes Dell to consistently produce quality computers.

Product Value

In the industry of computers, Dell is famous for the production of no nonsense and cheap personal computers. Over the years, this distinction has been preserved even with the threats of competition and economic uncertainties. Several reasons are seen to the driving force for Dell’s success (Willis, 1998). As always, one of the aspects involves the money of customers. The value that Dell is exchanging for the money of clients is more than what customers think.

In determining the value of money, it is imperative to examine the supplemental products that Dell adds to the computers. First, Dell technology is already established and has been performing with tremendous advantages. Second, Dell through its suppliers uses other well known technology (Gamble, et al., 2005). As mentioned in the early discussions, Dell computers employ Intel chips and Microsoft software. Perhaps this two amazing technology is sufficient to transform Dell co imputers into amazing gadgets. The value that Dell puts in its products never ends with technology.

Dell ensures that customers will have easy time acquiring the products. Dell’s delivery scheme is designed to keep consumers on their seats while waiting for the products (Deming, 1986). Dell continues to link with the customers through the consumer service networks created by Dell. Customer service personnel are tasked to aid consumers with the setting-up of the computers (Gamble, et al., 2005). Also, problems concerning the computers are welcomed by employees in the technical support. Queries are answered and solutions are provided within a short timeframe (Barney, 1991). The value that Dell brings into the table is far better than the competition. This is one of the strategies that make Dell successful and competent.

In using this value chain model (see diagram 5), Dell aims to avoid the misconceptions that other computer producing firms reveal. The common method includes the retailers and the distributors (Karp, 1998). In eliminating the outlets for selling, Dell was making a gamble out of its designed value chain model. Dell saw the lapses that most distributors and retailers commit. Since companies have limited control with the operations of middle sellers, adjustments are hard to take into effect.

Manifesting this value chain aims to benefit Dell in many ways. First, Dell will eliminate spending on other activities in the value chain (Porter, 1980). Instead on acquiring cost for the distribution and promotional activities made by middle sellers, Dell sees to it that the actual selling is done by the company (Gamble, et al., 2005). Losing distributors and retailers provided Dell the flexibility in handling crucial activities. More importantly, expenses that are made in dealing with middle sellers are avoided.

The inventories are regulated and minimized. Even though computers are durable and imperishable, Dell observed that over stocking tend to diminish quality of computers. When computers are piled, an inventory system has to be made. Such is an added aspect to the business and waste of time (Gamble, et al., 2005). The value chain shows that computers are automatically delivered once produced and assured. Computers remain new and the system will function with the expected efficiency.

The value chain allows Dell to adjust when the demand of clients changes (Porter, 1979). Since computers are made when orders are determined, manipulations in the specifications and features are readily done. For Dell, the requests of clients are foremost and imperative. Most of the competitors have distributors and retailers. In this method, the middle sellers determine production (Gamble, et al., 2005). In the system that Dell follows, the true buyers determine the demand for computers.


In the previous discussions, the aspects that made Dell successful have been established. This section will assess the attributes of the firm that turned it into one of the most admired organisations (McGahan, 2004). Indeed, Dell Corporation has lived and trusted its values and principles. Also, Dell Corporation is led by a dynamic leader in Michael Dell and a management team that is primed to improve its already lofty status in the information technology market (Ansley, 1993).

Among computer producers in the United States, Dell is considered as the most consumer related. One of the reasons for this distinction is the brand that Dell promotes. For years, Dell computer brands have been equated with superiority and quality. The brand that the company is putting in the products has been known to most of the customers in the market (Business 2000, 2000). The branding strategy of the company is rooted on the desire of Dell to imprint a lasting stain in the households of the customers with Dell products used as the ink.

The management has determined that the domestic market is critical. That perspective has led the company to overcome adversities and rise to the top of the competition (Hussey, 1999). Despite the early problems, Dell Corporation proceeded in its goals and established monumental growth in sales, profits, and market shares. Specifically, Dell pounced on the domestic market first and made the most out of the opportunity. Before going global, the local market has to be dominated.

Perhaps one of Dell’s lasting legacy goes with its no nonsense ability to satisfy customers in all aspects. From the quality of products to after purchase services, the firm has become the darling of consumers because of its provision of the best. Dell Corporation has created a huge technical support system and customer service network to attend to the needs of consumers. Dell has devoted its resources in making sure that customers will be given the chance to be satisfied even after the computer has been provided to them (Begin, 1991).

Dell’s one great advantage is its ability to be creative. Indeed, Dell played differently and too advantage of its capacity to deviate from conventional methods of products. Unlike the usually manufacturing and distributing schemes, Dell has learned that efficiency is the key to be successful. In altering the traditional production chain, Dell managed to eliminate unnecessary expenses and reduce stored products in minimal levels (Flinchbaugh, J. and Carlino, A, 2006). Instead of going all out production, the firm preferred clients deciding for their own computers.

For Dell, suppliers are vital components of production (Gamble, et al., 2005). More so, the quality supplies that suppliers provide will determine the quality of the product that is produced. Through the years, the firm was able to develop mutual ties with its suppliers. This relationship has translated to on-time supplies delivery, quality materials, and purchase discounts (see diagram7).


Amidst the success of Dell Corporation, several critics have found some loopholes in its overall operation. For the management, each flaw is crucial and detrimental once left unnoticed. Perhaps the company has to take bold steps in addressing some important issues regarding strategies and corporate decisions. In particular, Dell management has to look into the possibilities of limiting the effects of these weaknesses and to strategise for contingency purposes. The incapacities that the company have are a testament that organisations are never perfected. Still, some methods can be made to ensure that the impact of these limitations will minimally create negative results for the company (see diagram 7).

With the competition getting intense by the day, Dell has been obliged to be closely linked with its suppliers. It was mentioned in previous discussions that this decision is beneficial as evidenced by the improvements in the production schemes of the company. The move, however, has some disadvantages. Dell’s suppliers are also market leaders and the possibility of identity switching is possible. Instead of giving the credit to Dell, some customers think that the efficiency of their computers and hardware resulted from the technologies the suppliers have provided. Since Dell’s technology is overshadowed by the suppliers’, penetrating immature markets will be difficult to do.

Also, the management has to watch out for defects in Dell’s computers. Despite the efforts of the production team to limit product defects, several instances point that such is too much to ask (Gamble, et al., 2005). For the company, producing defective products is part of the realties in the manufacturing industry. Still, this notion is no excuse for the company to continue on producing sub par products. The company has to adopt a certain form of process that values quality and continuous enhancements (Barney, 1991). Less complains mean that the firm is close from satisfying the needs of all its customers in terms of quality and reliability.


Globalisation has been a major breakthrough in the global economy (Mann, 2006). For Dell, it is an opportunity to introduce the products in foreign markets. Because of globalisation, taxes in foreign countries were considerably reduced and markets became flexible in welcoming foreign products (Kellner, 1998). Since globalisation is taking its ground, it is expected that the level of demand for computers worldwide will continue to grow. Also, globalisation brings the development of technologies. The emphasis on the use of modern gadgets and equipments provides the company an opportunity to expand its production and embrace other markets.

Since 1984, Dell has already expanded in South America, most parts of Europe, Asia Pacific, Japan, China, and other parts of the Americas. Aside from these regions, there are other parts of the world where Dell has yet to establish its presence. These areas include Africa, some parts of Asia, and the countries down under. Although this part is risky, risk is what defined Michael Dell’s career. The company’s ability to rise despite of adversities has paid well. In fact, Dell surpassing all the previous difficulties made the company stronger and moulded its character.

The industry of information technology has been witnessing a transformation. In the past few years, hundreds of companies catering information technology related services have significantly increased (Business 2000, 2000). The use of the internet and website promotions companies has increased their demands of computers and other information technology tools. This emergence is an opportunity that the company has to loo into. Dell is capable of securing deals with these companies and long-term computer supply is possible. The company can deal with companies and create agreements with Dell providing the equipments for the operations. For the company, taking advantage of the situation will translate more benefits (see diagram 7).

Outsourcing has become an important avenue for companies to minimise cost and improve operation efficiency (Erber and Sayed-Ahmed, 2005). Dell has already made this a possibility as evidenced by its technical support and customer service networks based in the Philippines. Instead of dealing personally with clients, Dell can outsource employees who are capable of doing the task online. The cost of having such network is cheaper than other schemes (Brudenall, 2005). Outsourcing has allowed Dell to communicate with its customer even after sales. The opportunities provided to the company are also presented to other competitors. This is an important aspect that the company needs to consider.


Dell Corporation has several obstacles to tackle before achieving ultimate success. Competition has improved because of the economics circumstances that have transpired these past few years (Gamble, et al., 2005). As always, competition serves as the biggest thing that will hinder success. Some firms are doing their best to be competitive in the same manner as Dell does. Dell has to ensure that its competitive edge is always enhanced to keep the competition behind. Competition is healthy, but too much of it becomes a problem for the company.

The dynamism of technology can either be an opportunity or a threat. For Dell, changes in technology are more of a threat because the products that it promotes relates well with technology (Karp, 1998). Because of the quick changes in technology, the company have to adjust so that the products will be able to compete with others. Taxes and interests deduct the total revenues that Dell expects to collect from the foreign investment. These impending expenses are hard to predict. Thus, forecasting the benefits of investing abroad is hard to determine considering that interest and taxes have to be excluded.

The market where Dell Corporation plans to thrive is an environment full of uncertainties. For Dell this situation is no first time. Still, the company has to watch out for events that can negatively affect the standing of the company. The market uncertainties sometimes masquerade as beneficial. Wrong decisions and bad strategies are detrimental to the cause of the firm. Although the control of these uncertainties are left to the market, management as it did has to learn how to neutralise the damaging effects of something happening without the knowledge of the firms. Anticipation will help so are the contingency strategies planned ahead.

International laws are sometimes hard on export products. Specifically, some countries do impose quotas referring to the quantity of products that are allowed to be distributed. This will hinder the quest of Dell spread its products. Also, this is discretionary and thyme governments are the only entity that can reverse such policy. This kind of trade barrier is made to promote local industries and limit the participation of foreign products in local competition. Regulation commissions in some ways are being obstacles to free production and distribution (see diagram 7).

Competitive Strategies

Given the vast scope of operations and different metrics of competitors, strategies have to be referenced to domestic and foreign operations. In the U.S. Dell is considered as one of the market leaders. The logical competitive strategy for the company is to sustain its pace. It has to be noted that the domestic market is starting to saturate. To resolve this impending predicament, Dell can resort to two measures. First, the company needs to acquire some of the firms in the industry. This will allow Dell to take additional market shares and lessen the number of producers in the market. Second, Dell has to diversify its products. The product lines need to stretch beyond computers and peripherals.

The strategies in the international market are the most challenging part for Dell. There are other global companies that the more established and recognized. At present, Dell is penetrating Asia and it has slowly carved its place in the European market. There is a necessity for Dell to continue its dynamism in terms of developing new products. The competition in the global market is more intense and provides more barriers. But Dell can make the most out of the growing demand for computers in emerging markets. The company can take a position between being aggressive and being conservative. It has to be aggressive in building its reputation by producing high quality of products and solutions. Dell, however, has to be conservative is penetrating the different markets because there are existing threats.


In most organisations, marketing audit is considered as a vital component of marketing processes. Brownlie (1993) stated that it is the initial stage in undertaking managerial initiatives in marketing. The focal point of the marketing audit is its design which ultimately determines the process in performing such method. The aim of this move is to take the share of Compaq in the domestic and world market. Among the competitors, HP has the capacity to compete with. In fact, its foreign market share is even higher than of Dell’s. HP has also focused on peripherals and other equipments aside from computers.

Corporate social responsibility (CSR) highlights the duty of the organisations to their stakeholders. Instead on solely focusing on corporate activities, Dell has to undertake endeavours with perceived social relevance. The views on the existence of firms have become diverse because of the improving consideration on social welfare. Although still inclined with profit maximization, several companies have started allocating funds for activities that goes beyond the corporate purpose. Some firms use CRS as strategy in building a strong market reputation and will eventually command high rate of market share (Van de Ven, 2006).

Strategic Human Resources Management (SHRM) is decisions and actions that pertain to the management of personnel in all business levels (Miller, 1987). It is important that the employees play significant roles in implementing business strategies geared towards sustained competitive advantage. Dell Corporation has to extensively develop their employees to become major contributors to its success. Amit and Schoemaker (1993) mentioned that the internal resources of the company are responsible for the formation of distinct competitive advantage. Human resources are one of the internal resources that companies have.

Benchmarking is emerging in leading-edge companies as an information tool to support continuous improvement and to gain competitive advantage. (Lloyed, 1997) Effective benchmarking needs a strong strategic focus and some flexibility in achieving management’s goals. The benchmarking process has many defining features. It has to be performed in accordance to the goals of the company and equated to the necessities of the consumers and trends in the industry (McNair and Leibfried, 1992).


Based on the discussions, Dell’s position in the market suggests its reputation as one of the top-notch firms in the industry. Since its foundation, Dell has enjoyed great success in delivering quality products and solutions to its clients. It current sales levels are high and business growth is still observed. In addition, Dell continues to make a presence in the growing international market. Dell is in the right position to pursue its plans and exceed expectations. It is inevitable that Dell will remain at the top of the chain because of people and processes.

The analysis of Dell, Inc. pointed to some important findings. Dell has a superb production scheme. It values quality of products and ensures that clients receive their orders on time. The organizational structure emphasizes on the important segments of the company. In addition, it has provided an independent component that will address the strategies in the future. The analysis also showed that Dell has a system that adds value to each production stage. This meticulous method is being considered as one of the best in the industry.

Dell is a major competitive presence. In the U.S. it is one of the biggest computer manufacturers. Although the market is saturated, there are still rooms for Dell to grow. It can either acquire other companies or improve the range of its products. As a global firm, Dell needs to be aggressive in its product development. At the same time, establishing small niche in other markets is an advisable strategy. Since the industry is in the booming stage, there is no need for Dell to rush. A well-planned action course is necessary to ensure consistent success.

Overall, Dell’s strength is anchored by the processes that it follows. The emphasis on quality and delivery are major pluses for Dell. The company, however, has to establish its own development procedures. Dell is criticized for its dependence on suppliers. As discussed, Dell is poised to improve because of the growing market overseas. But it has to monitor the external barriers that can affect its growth. Dell has to religiously push for its mission and vision through effective strategies.


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Organizational Structure
Diaram 1. Organizational Structure.
Dell Operating Income
Diagram 4: Dell Operating Income.
 Dell Operating Income
Diagram 5: Dell Operating Income.
SWOT Matrix
Diagram 6: SWOT Matrix.
Strategic Perspectives
Diagram 7: Strategic Perspectives.

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