Friday, April 6, 2012


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Michael Dell founded the mail-order PC company in 184

at the age of 1. The company emerged from an 18-employee

basement operation to the leading supplier of computers in

the world.

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Dell Computer Corp. thrived by using flexible

manufacturing and inventory management techniques to shave

costs while providing custom PCs with the speediest

delivery in the industry. Dells mission is to be the

most successful computer company in the world at delivering

the best customer experience in markets they serve. In

doing so, Michael Dell is quoted as saying they “will meet

customer expectations of Highest quality, Leading

technology, Competitive pricing, Individual and company

accountability, Best-in-class service and support, Flexible

customization capability, Superior corporate citizenship,

and Financial stability. Dell has a vision of excellence

through quality, innovation, pricing, accountability,

service and support, customization, corporate citizenship

and financial stability.”

This mission statement is clear and easy to

understand. Producing quality work that leads to the

achievement of these lofty goals becomes much more

complicated than writing a simple mission statement. One

thing is clear, the core capabilities of any business stem

from the employees that comprise it. With over 6,000

employees, Dell is a member of the rapidly changing and

expanding computer technology industry. This industry had

achieved enormous growth in the last decade.

As PC sales slow worldwide, the Round Rock, Texas-

based company has embarked on a broad campaign to gain

market share by cutting prices, according to analysts. In

the past, the company focused on keeping profit margins

high, leading to strong profitability, robust revenue

growth and relatively high average selling prices on its

PCs. Now, with the maturation of the PC market, Dell is

undercutting competitors in price to rapidly gain market

share. But the short-term cost to Dell could be high

reduced profitability. Analysts described Dells gambit

trading some profitability for big market share gains to

playing the board war game, Risk. By expanding its lead in

more markets or in Risk controlling enough countries, Dell

hopes to overrun competitors.

Dells pursuit of market share puts many competitors

in a defensive position, according to analysts. Dell has a

way of making life more miserable for people who are

already in a bad way. For example, when Compaq, HP or some

other company has a big inventory of imminently aging

equipment hanging in the wrong place, Dell has a habit of

dropping prices and making that inventory even more

valueless. Smaller companies will face even greater

problems and may have to face the ultimate question of

whether to continue to participate in the PC market. Far

worse for competitors may be Dells determination to

undercut them in price in higher-margin products like

servers and storage systems. The aggressive pricing

environment in PCs is now spilling over into the enterprise

market with Dell pricing its high-density rack servers at

sub $1,000 and NAS (network attached storage) products at 6

cents per megabyte, (1) Kumar noted. Whether Dells

market share gambit will pay off is uncertain, but many

Wall Street analysts like the companys strategy in spite

of lowered margins.

Dell, known for selling built-to-order computers

directly to buyers, is adapting an approach to tap the

consumer sector in China, one of the few healthy markets in

an otherwise ailing industry. Healthy Chinese computer

demand is helping Dell maintain revenue levels as prices

fall drastically worldwide. During the quarter ending

November , 00, Dell China unit shipments went up by 47

per cent as sales climbed 16 per cent in this strategically

important market. The achievements pushed Dells market

share to 4. per cent from .1 per cent in the same quarter

a year earlier, according to International Data Corporation

(IDC) Q 00 report. The aggressive pricing strategy has

helped Dell gain market share in China despite the global

slump in the PC market.

Dell has outperformed IBM as the leading foreign PC

vendor in China in terms of unit shipment in the third

quarter (Q) and is currently ranked fourth in Chinas top

10 PC vendors based on revenue and unit shipments.

Legend, Founder, IBM, Dell, and HP were the top five PC

vendors in China in the first half of the year, with Legend

having 0.1 per cent of the market. The top five foreign

PC vendors in China in terms of unit shipment also include

Acer, HP and Compaq. China is one of the few healthy PC

markets in the world for Dell, which is expecting strong

growth in the home PC as well as servers. Chinas World

Trade Organization (WTO) accession is definitely a good

opportunity for China as well as Dell. It means a much

more open market and will attract a lot of investors to

China. That will give everyone, not only Dell, a bigger

market to tap into. For Dell, the key segment is still the

enterprise business large corporate and medium businesses.

After nearly four years of expansion in China, Dell now has

liaison offices covering Chinas major cities Beijing,

Shanghai, Guangzhou, Chengdu, Nanjing, Hangzhou and

Shenzhen. Chinese customers can order a PC, notebook or

servers, specifying their own configuration and software

requirements, directly to a Dell sales executive, across

58 cities. Its direct, onsite service and technical

support now covers over 1,550 cities.

What is the future for Dell? Already being the number

one computer maker in the world, Dell, will continue

expanding beyond the PC. Michael Dell has already

confirmed the company would soon start making printers.

Dell recently started selling its own brand of held

computers, called the Axim, at an aggressively low price.

Computers are becoming the center of entertainment. Mr.

Dell gave his vision about how computers would be changing,

talking about PCs coming with built-in TV tuners and

software to allow them to become personal video recorders.

Dell Computers business strategy is centered around

its direct business model and is very customer focused, and

with this vision and vision, Dell will continue to grow,

and be the main powerhouse PC maker to compete with.

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