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Dell Computer Organization of a Global Production Network AUTHORS.pdf
CENTER FOR RESEARCH Dell Computer: Organization
ON INFORMATION of a Global Production Network
TECHNOLOGY AND
ORGANIZATIONS
AUTHORS:
University of
Kenneth L. Kraemer and Jason Dedrick
California, Irvine
Center for Research on Information
3200 Berkeley Place Technology and Organizations
Irvine, CA, 92697-4650 University of California, Irvine
This research is supported by a grant from the Alfred P. Sloan Foundation.
INTRODUCTION
In 2001, Dell Computer became the world’s largest personal computer vendor, continuing to
gain market share and post profits in an industry struggling with slumping sales and billions of
dollars in losses. Dell sells 90% of its PCs directly to the final customer, largely bypassing the
reseller channel that accounts for most of the world’s PC sales. This direct customer relationship
is the key to Dell’s business model, and provides distinct advantages over the indirect sales
model. Dell’s direct relationship with the customer allows it to tailor its offerings to customer
needs, offer add-on products and services, and use the Internet to offer a variety of customer
services. In addition, Dell’s PCs are built to customers’ specifications upon receipt of an order,
giving Dell additional advantages over indirect PC vendors who must try to forecast demand and
ship products based on those forecasts. Dell’s direct sales and build-to-order model has achieved
superior performance in the PC industry in terms of inventory turnover, reduced overhead, cash
conversion, and return on investment (Kraemer, et al., 2000).
Dell’s business model is simple in concept, but
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