Monday, May 17, 2010

Chapter 17 - Dell and its Single Formula Growth

There was a very interesting article in Chapter 17. It talked about the growth and decline of Dell Computers. Dell is a company that does one thing well and thats selling computers at a cheap price. It doesn't have any retail stores so it avoids overhead fees. They do all their business online. This business model has worked great for Dell, until recently.

The problem is that thats all Dell does. It relies on one formula for its success. The problem is, according to the article, is that when the company exhausts its one forumla, the company starts declining. It needs to start a new growth platform while it can, as there is no point in waiting. Dell is slowly slipping into decline and if it does not change its strategy, they will lose a lot of market share.
The reinstatement of founder Michael Dell as CEO seems to be a good change for Dell. He claims that although his company's main business strategy will always remain it's best one, he want's to implement other strategies to effectively bring the company back up. This is the mark of an organization being effective.

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