Synopsis of Case
The Dell case looks at the history of the company from its establishment through to the decision to take the company private in 2014. The focus of the case is on (a) understanding Dell’s rise to the top of the PC industry, (b) analyzing the reasons for Dell’s fall from grace after 2006, (c) discussing the changing economics of the global PC industry, and (d) understanding the rationale Michael Dell had for taking the company private in 2014.
The main teaching objectives are as follows:
1. Analyze the competitive structure of the global PC market.
2. Describe the establishment of competitive advantage through strategy in a highly competitive market.
3. Explore how the rise of new technologies and business strategies can disrupt established markets and create challenges for once successful incumbents.
4. Discuss the difficulties associated with changing the core strategy of a company.
5. Look at the rationale for taking a company private.
Because the case touches on some important corporate level strategy issues, including acquisitions, product diversification, and corporate governance issues, the case is probably best position towards the middle of a strategy course. At the same time, the case is an excellent vehicle for discussing the competitive forces model (chapter 2), and for analyzing how an innovative business level strategy that is well executed at the functional level can give a company a significant competitive advantage (chapters 3, 4 and 5). I use the case both to summarize some of the key lessons from the earlier chapters of the book, and as an introduction to some of the corporate strategy and governance issues covered in the latter part of the book. The case also works as a nice complement to my Microsoft case.
Strategic Issues and Discussion Questions
1. What were the foundations of Dell’s success during its first two decades?
2. Why did establish manufacturers not switch to Dell’s direct selling strategy in the 1990s once the emergence of the WWW demonstrated its considerable utility?