Dell Spells Success in China

Dell was founded by Michael Dell in 1984 in Texas, US. The company changed the dynamics of the Personal Computer (PC) industry with the launch of its innovative 'Direct Model' of selling. By choosing to sell directly to the customers, Dell eliminated intermediaries like retailers and distributors. This helped Dell to develop low cost, customer oriented products within a short span of time. This way, it could avoid the unnecessary time and cost factors the intermediaries added - a factor that hampered the profits and growth of other players in the market (companies with long distribution channels had to maintain large inventory stocks in order to meet their sales targets. Also, this did not give them a real understanding of the customer requirements).

Using this model, the company took orders from customers over the telephone, sometimes even helping them select the system. This not only helped buyers determine exactly what they wanted, but also helped them control costs. The orders were then passed on to the manufacturers. After the system was assembled, it was delivered to the customer. Apart from this Dell offered free technical support services and an immediate (next day) onsite product service to its customers. By following this model, Dell could introduce latest technology products in the market much earlier than its rivals, since the latter operated through slow moving, indirect distribution channels. By eliminating intermediaries, Dell could, on an average, turn over its inventory every three days or less...