Bloomberg.com reports that Dell Inc. could possibly sell all of its production plants within the next eighteen months. Dell is in the process of negotiating with contract computer manufacturers to outsource what might end up being 100% of its production operations.
After missing analysts’ second-quarter profit estimates, managers of the world’s second largest maker of personal computers feel that outsourcing production to third-party manufacturers will provide the company with the flexibility it will need to compete in today’s market. An analyst from HSBC Holdings says, “As the company moves away from its direct sales business model, it needs to offer a wider range of products and respond more quickly to market demand.”
This scenario exemplifies just how much a market can change over time. In the not-so-distant past, Dell was praised for its production dexterity. Since Dell specialized in customized, just-in-time manufacturing of a narrow line of products, the company was able to give consumers computers they wanted without having to hold large inventories. This approach was gravy back when everyone wanted this particular product line. Even Dell’s ad slogan, “Dude, you’re getting’ a dell” represents the company’s former position in the marketplace. At the time, the purchase was a no-brainer. Now, however, in a market with exponentially growing product offerings Dell needs to reshape its business model and widen its focus.
After missing analysts’ second-quarter profit estimates, managers of the world’s second largest maker of personal computers feel that outsourcing production to third-party manufacturers will provide the company with the flexibility it will need to compete in today’s market. An analyst from HSBC Holdings says, “As the company moves away from its direct sales business model, it needs to offer a wider range of products and respond more quickly to market demand.”
This scenario exemplifies just how much a market can change over time. In the not-so-distant past, Dell was praised for its production dexterity. Since Dell specialized in customized, just-in-time manufacturing of a narrow line of products, the company was able to give consumers computers they wanted without having to hold large inventories. This approach was gravy back when everyone wanted this particular product line. Even Dell’s ad slogan, “Dude, you’re getting’ a dell” represents the company’s former position in the marketplace. At the time, the purchase was a no-brainer. Now, however, in a market with exponentially growing product offerings Dell needs to reshape its business model and widen its focus.
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