Ajesh Raj 1261
Management Control System
• Dell-World’s largest direct selling company
• With 57,000 employees in 80 countries & customer’s in 170
• Headquartered in Austin, Texas
• Founded by Michael Dell in 1984 at the age 20 with $1000
• Youngest CEO by 1991
• By 2005 Dell valued more than $100 billion
• Dell became top retailer of personal computers
• Competitor’s used “build-to-stock” technique
• Dell changed the tradition by eliminating retailers
• Dell shipped product directly to customers
• Accepted customized order’s from customer’s for hardware
• Declining personal computer market pushed Dell into
• Dell set up kiosks in malls and planned their marketing
• In 2005 Dell was ranked as America’s most admired
company by Fortune
• Growth rate 19%
• In August 1993, Dell engaged Bain & Company, Inc., to
judge business-unit performance
• Dell’s Direct Business Model
• Customized products
• Understanding need of customer & provide effective
• Switching on to other consumer durables
• Evaluation of market place, price category and supply
• Setting up Dell Stores in Mall
Building Competitive Advantage
• Customer knowledge advantage
• Direct Sales Model
• Efficient Supply Chain/Distribution Model
• JIT Technique which operate for only 6 days of inventory
• Replacing inventory with information
• Technology Advantage
• Diversification into other consumer durable products
• Global Manufacturing plants-Cheap Labour
Dell’s Control System
• Performance Measures: Dell’s scorecard included both
financial measures (such as ROIC, component purchasing
costs, selling and administration costs) and non-financial
measures (component inventory stock outs, finished goods
inventory, A/R day and A/P days).
• Expedited the assembly process: Dell recognized early the
need for speed, or velocity, quickening the pace at pace at
every step of business.
• Localized decision making system: Dell used its structure
as a flat organization as a competitive advantage and
localized its decision-making. If an issue did not require a
higher up’s attention, then decision would be made
without involving him. This would not have been possible
in companies bogged down by layers of bureaucracy.
• Business unit Performance: in 1993, Dell developed a set
of metrics to judge business-unit performance.
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