Explanation of Entrepreneur Case Study: Dell Computers - Succeed as an Entrepreneur: Starting Your Own Business. Also refer to Michael Dell, salesmanship, PC, great idea, business model, funding, marketing, Ron Kurtus, School for Champions. Copyright © Restrictions
Case Study: Starting Dell Computers
by Ron Kurtus (9 April 2009)
The creation of Dell Computers by Michael Dell is a good case study of entrepreneurship.
Dell showed skills in salesmanship early on in his youth. While in college, he built a desktop computer by buying parts from local dealers. He then started making and selling computers to his college classmates. Business was so good that he quit school to start up his computer business.
Questions you may have include:
- What interests and skills did Dell have?
- How did he get the idea for his business?
- How did he start Dell Computers?
This lesson will answer those questions. There is a mini-quiz near the end of the lesson.
Interests and skills
When Michael Dell was 15, he showed a fascination of the inner workings of a computer by breaking down his brand new Apple II computer and then rebuilding it.
Dell did not excel academically while attending Memorial High School in Houston, Texas. However, he exhibited great business instincts while selling subscriptions for the Houston Post. He was able to sell $18,000 in subscriptions by focusing on selling to newlyweds, thus earning himself a BMW automobile.
Part-time business
Dell realized that the IBM and IBM-compatible personal computers were not made of IBM parts, but rather stock parts from various vendors.
In 1984, while a student at the University of Texas at Austin, Dell got the great idea of making IBM-compatible computers to sell to fellow students at a price much lower than they would have to pay in a computer store.
With capital of only $1000, Dell started a part-time business, working out of his off-campus dorm room.
Started Dell Computers
By 1985, the demand for his computers motivated Dell to focus full-time on his business.
Funding
He dropped out of school. His grandparents had enough faith in his idea and determination that they provided him with $300,000 so that he could expand his business into a full-scale company.
Marketing
He advertised his computers—which were custom-made according to a selection of options—through popular computer magazines. His prices were lower than retail stores and were sold and shipped directly to the customers.
Business model
This business model—which was the first of its kind in the computer business—and his reputation for quality and customer service resulted in an astounding $73 million gross in the company's first year.
Summary
Michael Dell showed interest in the workings of computers, as well as astute skill in business. He got the idea of putting together IBM-compatible computers from stock parts and selling them to other students. Demand for his computers motivated him to form a company, using capital from his family.
Be aware of new trends and markets
Resources
The following are some resources on this topic.
Websites
Books
Top-rated books on Dell Computers
Top-rated books on Starting a Business
Top-rated books on Entrepreneur
Mini-quiz to check your understanding
If you got all three correct, you are on your way to becoming a Champion Entrepreneur. If you had problems, you had better look over the material again.
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Entrepreneur Case Study: Dell Computers