Dell Inc.s Application of the Direct Sales Model Case Study

Dell Inc.s Application of the Direct Sales Model - Case Study Example The researcher states that Dell, Inc. was revealed to exhibit exemplary financial success in terms of substantial increases in revenue and net profits from 1998 to 2003. Exhibit 4a shows that the market share for Dell in the US PC industry was the highest at 27.6% in 2002 and in worldwide perspectives, Dell’s market share was also indicated to be the highest from among its major PC competitors at 17.1% for the first quarter of 2003. The financial and operating performance of major PC manufacturers, shown in Exhibit 5, show that although IBM and Hewlett Packard (HP) surpassed Dell’s revenues in 2002, their financial ratios, particularly profitability ratios manifested through returns on an asset, investment, and equity all exceeded those posted by all of its major competitors. Further, the net profit margin of IBM was only 2.1% greater than Dell’s 6.3%, as five-year averages ending in September 2003. Dell’s overall sales growth over a five-year period was t he only one posted at more than 20% (at exactly 23.5%) which was significantly greater than any of its major competitors, particularly IBM which only exhibited a five-year growth in sales of 0.7%. Case facts indicate that Dell was ranked fourth as the most admired American company by Fortune magazine due to the direct sales model that they applied and was identified to be instrumental in catapulting Dell into unparalleled heights. Dell’s direct sales model is simply described as the key to the organization’s financial success. The approach enabled the organization to be a producer of personal computers using the most minimal costs and pave the way to dominate the PC industry known for falling prices, which was actually exhibited during the period from 1997 onwards and low-profit margins.