Dells Failure in Retail Distribution Essay example

2283 Words Nov 14th, 2006 10 Pages
This rapid success of the Dell Computer Corporation has interested business analysts the world over. The paper from the Harvard Business School is an analysis of the meteoric rise of this company until 1994. It delves into the factors that made the company a success and the kind of strategic decisions that the management of the company needed to make at various junctures. One such strategic decision that the management made was to shift from its existing "Direct – Made to Order" business model to a more hybrid model that combined it with a retail presence. Yet, by 1994 Dell realized that it wouldn't be able to sustain itself and withdrew from the retail distribution channel.

Our paper will analyze the reasons behind its exit from the
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This group preferred shopping through the retail channel because it gave them a chance to ‘touch and feel' multiple brands prior to their purchase. Since Dell only had a limited range of preconfigured sets, it may not have been able to stand out amongst the numerous big players.

It turns out that Dell's decision to exit from retail has been a good one. However, a trend that has been noticed in overseas markets is that because of the inherent difference between customer preferences and maturity, the retail distribution channel works a lot better vis-à-vis the direct model that works so well for the company in the United States.

Also, 1989-1994 has seen a major spurt in growth in overseas markets for Dell. It contributes over a billion dollar in terms of revenue for the company. Dell today has a significant presence in Europe with regional headquarters in most countries while its presence in Asia is growing.

This overseas expansions has been pursued by means of subsidiaries working independent of the parent organization and following a channel strategy markedly different from that of Dell Computers, USA.

This leaves the Dell management with a number of questions that it needs to ask itself. Should Dell adopt a global channel strategy? Should it concentrate on expanding overseas or simply focus on increasing current market share in the

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