STARTING AN IT COMPANY
Group 8
Mutia Putri
Sona Hovasapyan
William Prada
STARTING AN IT COMPANY
OVERVIEW
 CISCO
 TECHNOSOFT
 DELL
 SUMMARY

Emerging of Digital
Economy 2002
Digital Economy 2002
“Despite and economic slowdown and recession,
U.S Industries have continued to build the IT capital
stock, to marshal the human skill and IT services
that make the installed base of IT capital more
productive, and to create as a result the enduring
foundation of a stronger economy”
Source: Digital Economy 2002, Economic and Statistics Administration
US Department of Commerce, February 2002
Highlights in
Economy 2002
- “During 2000, business investment in ITproducing industries accounted for 37% of
the U.S. GDP.”
-
“By contrast, in 2001 reductions in business
investment in IT-producing industries had a
negative effect on economic growth.”
Source: Digital Economy 2002, Economic and Statistics
Administration US Department of Commerce, February 2002
Investment in Information Processing
Equipment and Software
Billion of 1996 dollars, annual rate
700
700
2000
600
600
2001
500
Percent change 4Q95 – 4Q00:
20% annual rate
500
1999
400
400
Percent change 4Q00 – 3Q01:
-14% annual rate
300
200
1995
300
200
1996
1997
1998
1999
2000
2001
Source: Digital Economy 2002, Economic and Statistics Administration
US Department of Commerce, February 2002
Highlights in
Economy 2002
“Despite the 1.4 % decline in the total
private sector employment during 2001,
employment grew by 0.5% in
telecommunication services and 1.4% in
computer software and serviceindustries.”
Source: Digital Economy 2002, Economic and Statistics Administration
US Department of Commerce, February 2002
Continued Strength in IT Service Job
Index, January 1999 = 100
Number of employees (in thousand)
130
Recession
125
130
125
Computer services
120
120
115
115
Telecom services
110
110
105
105
Private nonfarm
100
100
95
95
1995
2000
2001
Source: Digital Economy 2002, Economic and Statistics Administration
US Department of Commerce, February 2002
Some estimates indicate that surge in
dot.com failures that began in mid-2000 peaked
in first half of 2001 and has begun to subside.
10% of the 7, 000-10, 000 “substantial”
internet companies that received some venture
funding closed between Jan 2000-December
2001.
Through middle of 2001, these failures,
staff cuts at surviving dot.com companies had
resulted in an estimated 135, 000 layoffs .
Source: Digital Economy 2002, Economic and Statistics Administration
US Department of Commerce, February 2002
STARTING YOUR OWN
IT COMPANY
Company Life Cycle
Promising
Start-Ups
Transitional
Initiatives
Corporate
Initiatives
The Origin and Evolution of New Businesses, Amar V. Bhide
What differentiates
companies?
Nature of the opportunities
Different initial conditions:
different level of project uncertainty,
amount of investment,
and likely profit
The Origin and Evolution of New Businesses, Amar V. Bhide
What differentiates
companies?
Tasks and Strategy
- degree to which they rely on prior
analysis and planning rather than
adaptation to unforeseen circumstances
The Origin and Evolution of New Businesses, Amar V. Bhide
What differentiates
companies?
Personality and Traits
Characteristics of founders that differentiate
the successful initiatives from the unsuccessful one
Social and economic contributions:
different sizes and maturity affect the development
of new technologies and market, and the interaction
with existing economic structures
The Origin and Evolution of New Businesses, Amar V. Bhide
Common Perceptions for
IT Start-Ups
Brilliant idea
Breakthrough creativity
High capacity to innovate
Leadership &
Management Skill
Technical education
High tolerance for risk/loss
SUCCESSFUL??
The Origin and Evolution of New Businesses, Amar V. Bhide
Initial Conditions:
IT Start-ups
 most successful business started
with the notion of no proprietary idea
and no verifiable human capital
( such as: no knowledge, and no
reputation )
The Origin and Evolution of New Businesses, Amar V. Bhide
“Most promising business started by
someone who is working for another
business, who sees a small niche
opportunity. And the person jumps in
with very little preparation and analysis - and pretty much does what somebody
else is already doing, but does it better
and faster.” – Amar Bhide
Interview of Inc.com editor-in-chief George Gendron with Amar Bhide,
author of The Origin and Evolution of New Business, February 1 2002
Initial Conditions:
IT Start-ups
 most successful business started
with no exceptional trainings
and no managerial experiences
(i.e.: Bill Gates, Michael Dell,
Steve Wozniak ….)
The Origin and Evolution of New Businesses, Amar V. Bhide
Initial Conditions:
IT Start-ups
 most start-ups do not have
significant up-front investment
 uncertain market niches
The Origin and Evolution of New Businesses, Amar V. Bhide
Nature of Opportunities:
IT Start-ups
Entrepreneurs pursue highly
uncertain projects
Face significant constraints
Unlikely to generate large profits
The Origin and Evolution of New Businesses, Amar V. Bhide
Tasks and Strategy:
IT Start-Ups
Strategy to face the problems:
Opportunistic adaptation
- High uncertainty requires entrepreneurs to
extensively adapt to unexpected
circumstances and opportunities
- High uncertainty limits the value of prior
planning
and research
The Origin and Evolution of New Businesses, Amar V. Bhide
Personality and Traits:
IT Start-Ups
Important attributes:
High tolerance for Ambiguity
Open-mindedness
Ambition
“IT takes a really extraordinary individual to
build on a start up business – extraordinary in
terms of someone who has an almost maniacal
level of ambition,…”– Amar Bhide
The Origin and Evolution of New Businesses, Amar V. Bhide
…… Continued
Resilience
Perceptiveness about the wants and
needs of customers
Sales skills
Self-control
The Origin and Evolution of New Businesses, Amar V. Bhide
Proportions about
Promising Start-Ups
Entrepreneurs with
meager endowments
INITIAL CONDITIONS
No proprietary
idea or technology
+
Limited verifiable
human capital
… thrive in …
NATURE OF
… face the tasks of …
BUSINESSES
Low
High
Low
investment
uncertainty
likely profit
OPPORTUNISTIC
… requiring
ADAPTATION
to unforeseen
circumstances
TRAITS AND
SKILLS
Tolerance
Unavailability of
outside funding
for
ambiguity
Open-
mindedness
Resilience
Sales
Self
Skill
Control
…
Cisco Systems
one of the World’s most admired companies
• the world leading supplier of enterprise
internetworking solutions
• expanded from a small startup to an industrial
leader with around 19 billion net income
• captured 85.5% of the market for routers*
• one of the most successful companies to
emerge from Silicon Valley
http://www.nwfusion.com/news/0516cisshare.html
Cisco Systems
Nature of Business
Core activities (at the time of start-up):
 the first product – the router;
manufacturing networking and communications
products;
Currently
 provides a broad line of products for transporting data,
voice, video over LANs, WANs and all over the Internet
 provides strategies and solutions that can help solve
critical business problems
 services associated with the equipment and its use
Cisco Systems
Nature of Business
Target Market
(at the time of start-up):
• higher education and research institutions
• large size corporations
Currently targets also small size businesses
Cisco Systems
Customers:
“Nasdaq, the world’s largest electronic stock market, is
only as good as our network, and we have built this
network with Cisco technology”.
- Steve Randich, Executive Vice President, Operations
and Technology, and CIO, The Nasdaq Stock Market
“At Sprint, the bottom line satisfying customers. We were
able to increase Sprint IP network capacity by a factor of
nine, positioning the company to quickly meet new
customer requirements in Europe and the US”
-Bob Azzi, VP, Network Engineering, Sprint
Cisco Systems
Customers:
“With more than 3.5 billion viewers watching
the 2002 Olimpics, the network had to be 100
percent reliable. There was no margin for error
and we met our goal”.
-Bob Donohoo, Chief Network Engineer for Olympic
Operations and Olimpics Network Manager, Salt Lake
2002 Olympic Winter Games, IKANO Communications,
Inc.
Cisco Systems

Since the beginning of 2001, 53 public
telecom companies have filed for bankruptcy.

In 2002, publicity held telecom companies
announced 165,840 job cuts. In the last 18
months, some 500,000 telecom jobs have
been axed.
“We have been stunned as just about everybody else has, by the
severity of the downturn in telecommunications business” *
Anthony Muller, Chief Financial for JDS Uniphase headquarters
in San Jose
Chris O’Brien, Mercury News, Telecom Failure Hitting Home in Silicon Valley", Sun, Jul.7, 2002
Cisco Systems
Net Income(Loss)
(Dollars in billions)*
2.7
2
1.9
1.3
'98
'99
'00
'01
-1
Cisco Systems, 2002 Annual Report
'02
Cisco Systems

Cisco’s fiscal 2002 revenue of 18.9 billion
resulted in major market share gains
compared to their competitors.

Fiscal 2002 net income according to GAAP
was 1.9 billion and earnings per share were
$0.25, as compared to FY 2001 loss of $1.0
billion and loss per share of $0.14.

Average cash flow from operations(FY 2002)
$1.5 billion per quarter
Cisco Systems, 2002 Annual Report
Cisco Systems
Net Sales (Dollars in Billions)*
25
22.3
18.9
20
15
10
18.9
12.2
8.5
5
0
'98
'99
'00
Cisco Systems, 2002 Annual Report
'01
'02
Cisco Systems
Key players:

John T. Chambers,
President and CEO
Widely recognized as one of the great
motivators and customer driven chief
executives in the technology business.
John P. Morgridge,
Chairman of the Board
 Donald T. Valentine,
Vice Chairman of the Board

Cisco Systems
2001 – “Best Investor Relations Officer”
and “Best Investor Relations by a CEO” Baron’s and Investor Relations
magazines
 2002 World Communications Award For
Fixed Networks
 “Best Trained Sales Force”
- Sales and Marketing Magazine


Customer satisfaction rating 4.63 in a
five-point scale
Cisco Systems, 2002 Annual Report and http://newsroom.cisco.com/dlls/ts_102402.html
Cisco Systems
The Legend
Sandra Lerner of Stanford University
Business School and Leonard Bosack of the
Computer Science Department wanted to send
love letters to each other via university e-mail,
but… the local computers at different
departments would not talk to each other.
So they invented the router – the black magic
box
David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems
Leonard Bosack
Education:


major in electrical-engineering from University
of Pennsylvania
Stanford master's degree in Computer Science
Personal Characteristics:





Open-minded
Philosophical
Non-confrontational
Hard working
Sense of humor
David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems
Sandra Lerner
Education:


an Economics major from Stanford University
Stanford master's degree in Statistics and
Computer Science
Personal Characteristics:
Aggressive
 Intelligent
 Notoriously extravagant
 Hard working

David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems:
Behind the Legend
Sandy – the director of the computer facilities
at Stanford University Business School
Len - the director of Stanford's Computer
Science Department
David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems
Needed to find a way to get the
local computers networked!
Data could be transmitted more quickly,
reliably and safely
Business
Dpt
Computer Science
Dpt
Data Traffic
ARPAnet IMP
terminal worth of
$100.000
ARPAnet IMP
terminal worth of
$100.000
Cisco Systems
The Breakthrough Idea:
The Router – allows the two LANs to remain
distinct, while being able to communicate.


The Stanford experimenter Bill Yeager
developed a crude router based on a DEC
minicomputer.
Bill, Len, Sandy, Kirk Lougheed and others
created the interface to connect DEC
minicomputers to the Ethernet network.
David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems
Initial Conditions
Started the company in late 1984
Start-up Budget:
financed their own start up costs
with their credit cards.
Brand Name:
cisco Systems (with a lowercase c, as
in the tail of San Fran)
1986 - cisco shipped the black magic
box named a router
David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems
“My take on the Cisco vision: it was a very clever way
to sell software by the simple expedient of concealing
the software inside hardware. They (Bosack and
Lerner) were in the right place at the right time. They
also are very smart, very hard working and
incidentally, very lucky. They also had the benefit of
being in an environment that was on the cutting edge
of applying networking on a large scale”.
–Ralph Gorin, Stanford University, former Director of
Computer Facilities
Cisco Systems
Getting Customers:

no professional sales staff or official marketing
campaign

founders fired out commercial e-mails to
friends and colleagues, asking them to spread
the message to others over the Web's early
links

have not purchased their first advertisement
until 1992
Cisco Systems
1987 - Donald Valentine, founder of
Sequoia Systems agreed to front $2.5
million dollars, recruit management and
salespeople for a 32 percent share in
the company
"Apple in 1977 solved no problem. It had to create the
application. Yahoo! in 1997 had to create a business
model. But Cisco in 1987 filled a desperate need. I
never met a company that entered the market in such a
timely way with no competition”. –Donald Valentine
David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems
- 1987, Congress made a commercial Internet
possible
- The demand for routers increased dramatically
by the late 1980s
- Cisco's financial success was the need for
corporations to find solutions for connecting
computer networks. Without the router, they
would not be able to connect to other parts of
their businesses.
Cisco Systems
“As more and more people were replaced with
employees that Valentine brought in,
animosity grew between himself and the
founders, particularly outspoken Sandy”
-David Bunnell
1988, John P Morgridge, president and chief
executive officer (CEO)
David Bunnell, Making the Cisco Connection, UpSide Media 2000
Cisco Systems

February 16, 1990 - Cisco went public
Cisco stock opened at $18 a share and closed
at around $22.50

In August 1990, Sandy left Cisco Systems

In December, 1990, two founders of cisco
decided to sell their two-thirds stake in cisco
for about $170 million
Cisco Systems

Len - started a new venture, XKL, producing
server-class computing and networking
equipment

Sandy - founded a cosmetics company Urban
Decay in 1995.
TECHNOSOFT
Ashok Subramanian –
entrepreneur
Ashok Subramanian
EDUCATION
Ph.D.University of Houston, Business Administration,
1992
Major: Management Information Systems
Minor: Marketing.
M.B.A.University of Houston, Business Administration,
1987
Major: Marketing.
B.Sc.University of Bombay (India), 1980
Major: Chemistry
Minor: Physics.
http://www.umsl.edu/~subraman/ashokvit.html
Ashok Subramanian
EMPLOYEMENT
Associate Professor
Management Science and Information Systems
School of Business Administration
University of Missouri - St. Louis
http://www.umsl.edu/~subraman/ashokvit.html
Ashok Subramanian
How did he conceive the idea of his business?
“I founded that there was a gap between high level
IT Consulting Group and the mid-size company -- Our company provided the IT consulting
service with lower cost.”
- Ashok Subramanian
Interview in person with Dr. Subramanian on 10/31/02
TECHNOSOFT
Company Initial Condition

started in August 2000
- story
 start-up budget : $500,000.00

3 founders
Interview in person with Dr. Subramanian on 10/31/02
TECHNOSOFT
Company Profile
Number of employees
11 people (including 3 owners) in US
60 employees in India :
- 50 software architects
- 10 administration staff
Interview with Dr. Subramanian on 10/31/02
TECHNOSOFT
Company Profile
Average Annual Revenue
1st year (year 2000) : $200,000
2nd year : not even covered cost
Interview with Dr. Subramanian on 10/31/02
TECHNOSOFT
NATURE OF BUSINESS
Company core activities:
-
providing high level strategic consulting
work
-
Offshore software development
-
Providing IT engineers
Interview with Dr. Subramanian on 10/31/02
TECHNOSOFT
NATURE OF BUSINESS
Company target market:

mid-size companies
- more receptive with the idea of
offshore development

Software development clients
Interview with Dr. Subramanian on 10/31/02
TECHNOSOFT
NATURE OF BUSINESS
How did the company get the customers?

Based on personal contact

Word of mouth
Interview with Dr. Subramanian on 10/31/02
TECHNOSOFT
What were the challenges?

Economic slowdown

Marketing the product
- hard to penetrate into market
- hard to find new market due to lack of reputation

The company could not meet the set target
Company shut down, in Nov. 2001
Interview with Dr. Subramanian on 10/31/02
Ashok Subramanian
“We did not have any problem with
technology. Technology is easy
to create.”
- Ashok Subramanian
Interview with Dr. Subramanian on 10/31/02
Ashok Subramanian
Personalities / Traits

It is important to have high tolerance for
ambiguity

Open mindedness

It is important for entrepreneurs to know when
to quit from business
“It is not good to say, “well, I will keep doing
this business regardless anything.”
– Ashok Subramanian
Interview with Dr. Subramanian on 10/31/02
Michael Dell entrepreneur
BACKGROUND INFORMATION
Dell was born on February 23, 1965 in Houston, Texas,
and attended the University of Texas in Austin. Dell has
earned the titles of:
“Entrepreneur of the Year” from Inc Magazine
“Man of the year” by PC Magazine
“Top CEO in America Business” by Worth Magazine
“CEO of the Year” by Financial World & Industry Week
Was on Business Week’s list of “Top 25 Managers of
the Year” from 1997-1999
Dell became the youngest CEO to earn a spot on the
Fortune 500. He also sits on the U.S. President’s
Advisory Council on Science and Technology.
Source: NCOE-Stories of Entrepreneurs-Michael Dell http://www.ncoe.org/toolkit/stories_dell.html
Education:

Dell enrolled at the University of Texas at
Austin after graduating from high school in
1983. (In reality when he was eight years old,
he earned his GED equivalent high school
diploma). His major was biology, but
computers fascinated him. He finished out his
freshman year in the spring of 1984, but
instead of selecting classes for next
semester, he used his savings to incorporate
his business as PC Limited.
SOURCE: Newsmakers, Issue 2, Gale Group, 1996
COMPANY PROFILE:
Headquartered in Austin, Texas, Dell is world’s most
preferred computer system company and a premier
provider of products and services required for
customers worldwide to build their informationtechnology and internet infrastructures.
 Dell climbs to market leadership is the result of a
persistent focus on delivering the best possible
customer experience by directly selling computing
products and services based on industry-standard
technology.
 Revenue for the last quarters totaled $32.1 billion and
the company employees approximately 36,000 team
members around the globe.

SOURCE: http://www.dell.com/us/en/gen/corporate/factpack_000.htm
THE BIRTH OF BEING DIRECT
FIRST EXPERIENCE


Power and the rewards of being direct
Dell starts a stamp collection business
 Bought stamps at an auction
 Created his own auction
 Advertised “Dell’s Stamps” in Linn’s Stamp Journal
 Created a twelve-page catalog and mailed it out
 Made $2,000 and learned an early power lesson
about the rewards of eliminating the middleman
Source: “Michael Dell.” Gale Encyclopedia of U.S. Economic History. Gale
Group, 1999. <http://www.galenet.com/serviet/BioRC
SEEING THE PATTERN



At 16, Dell got a summer job selling newspapers
subscription to the Houston Post
Dell noticed a pattern. He noticed two kinds of people
who almost always bought subscriptions to the Post.
 People who had just married
 people who had just moved into new houses or
apartments
The enterprising teenager’s paper route made $18,000,
which he used to buy his first BMW.
SOURCE: Direct from Dell. Strategies that revolutionized an
industry, 1999
ENTER THE COMPUTER

Computer interest started at 7, when Dell purchased his
first calculator.
 Played with the computers at Radio Shack
 Apple computer the most popular personal computer in
U.S. at the time.
 Dell got his first computer for his fifteenth birthday and
promptly took it apart to see how it worked
 Like had happens with the stamps, his hobby for
computers evolved into a business opportunity.
 Dell enhanced a PC the way another guy would soup up a
car, and then he would sell it for a profit.
 Dell learned about the latest prototypes and previewing
technology that would soon becoming to market in the
1982 National Computer Conference.
CONT.






Dell bought his first hard drive disk, and used it to set up
a bulletin board system on which he exchanged
messages with other interested in computers.
An IBM computer that typically sold for $3,000 didn’t
make a lot of sense to Dell because he could purchase
the same components for $600
Another thing that didn’t make sense was that the people
operating the the computer stores didn’t know much
about PCs.
Dell started buying the exact same components that were
used in those machines and he upgraded his machines
and sold them to people he knew.
Dell thought, “Wow, there’s a lot of opportunity here.” and
his mind started filling with questions: What did I already
know that I could use? What did I need to learn? How
could I learn it?
Dell left for college in his BMW with three computers.
THE MAIN IDEA – THE BIG OPPORTUNITY

Dell saw a great opportunity in providing computing
technology in a much more efficient way. That was
the core idea of what became Dell Computer
Corporation, and it’s one that he has stuck with ever
since.
 Dell also sensed that the demand for personal
computers was not being sufficient met (1983).
 Retail stores sold computers at high mark-up prices
 Employee salespeople who knew little or nothing
about the product
 There had to be a better way, and Dell quickly
thought of one – selling customized computers
directly to purchasers through telephone orders.
Direct from Dell. Strategies that revolutionized an industry, 1999
HOW DELL STARTED HIS BUSINESS



Dell started the business with a simple question:
How can we make the process of buying a computer
better?
His answer was: Sell computers directly to the end
customer.
Eliminate the reseller’s mark up and pass those
savings on to the customer.
Direct from Dell. Strategies that revolutionized an industry, 1999
HOW DELL STARTED MAKING HIS
OWN COMPUTER

Dell called six or seven engineers and a group of
engineers that worked as a team and ask them:
That he wanted to design a PC, a 286 computer
He asked what it will cost? How long it would take?
and what the risks were?
Jay Bell, an engineer replied, “I can do it in about a
week, week and a half, for $2,000.”
Direct from Dell. Strategies that revolutionized an industry, 1999
SALES FORCE



His sales force has to set up their own computers
This give them a real sense of what the uneducated
customer would go through to set up his system and
it help them to develop a more intimate
understanding of the product they are selling
That marked the start of his reputation for great
service, one of the tools for staying ahead of the
competition
Direct from Dell. Strategies that revolutionized an industry, 1999
THE DIRECT MODEL, VERSION 1.0

What marked the official beginning of what they call
the “Direct Model” was:
 They were constantly talking with both perspective
customers and people who bought their products.
 It made more sense to Dell to build a business
based on what people really wanted rather that
guest at what they thought they might want.
 They started with little capital and not extra time to
fool around with extra excess inventory.
 The direct model is based on direct selling – not
using a reseller or the retail channel.
 Dell build a product that could meet the
customer’s exact needs.
Direct from Dell. Strategies that revolutionized an industry, 1999
How the indirect model works
There are two sales forces: Forces from the
manufacturer to the dealer, and from the dealer to the
customer.
How the direct model works
There
is just one sales force, ant it’s totally focused on
the customer, and not just any customer, but specific
type of customers.
The
direct model it all evolved from the basic idea of
eliminating the middleman.
Direct from Dell. Strategies that revolutionized an industry, 1999
Business model

Dell believed that by assembling computers to order
he could give customers exactly what they wanted at
a price that was superior to what they might spend for
a similar system in a retail outlet. (Computer stores
example)
 The best part of this model is that since the customer
is buying directly from Dell, Dell makes more on each
unit because they do not have to build a distributor’s
markup into their sale price.
 Provides a made-to-order personal computer that is
shipped within 36 hours.
 Customers can place orders by calling a toll-free
number or by logging on to the company’s web site,
where models can be customized on-screen, prized,
and ordered with a credit card.
“Michael Dell” Business Leader Profiles for Students. Vol. 1. Gale Research, 1999
COMPETITIVE STRATEGIES





Speed to market
Superior customer service
A fierce commitment to producing consistently high
quality, custom made computer system that provide
the highest performance and the latest relevant
technology to their customers
Early exploitation of the Internet
Finally, Dell’s most critical competitive advantage is
becoming a virtually integrated organization.
Direct from Dell. Strategies that revolutionized an industry, 1999
BIGGEST BARRIER TO SELLING




Fear of customers of shelling out $4000 to a
company they’d never heard of without a physical
store they could walk in.
Dell advertised a thirty-day money-back guaranty for
it’s products. This gave Dell a reputation for reliability.
COMDEX ’86 Computer show (CCS)
Showed the 12MHz 286 that had broken through the
12 MHz barrier.
Direct from Dell. Strategies that revolutionized an industry, 1999
Target Market
 Computer
enthusiasts
 Large corporations
 Boeing
 Toyota
 Shell
Oil
 Government
 Educational
Institutions
INITIAL CONDITIONS:





When he started the company?
Dell started his company in 1987
How much was the startup budget?
Dell started up his company with a budget of… 1,000
Dollars!
Who were the customers?
College students and computer nerds
What were the challenges on the way?
At the end of 1990s, sales of PCs were on decrease
in the U.S. and Dell’s sales growth has also slowed.
Dell has begun offering its products in the stores
such as Best Buy and Wall Mart but could not get a
foothold in the home computer market when battling
against better-known Compaq and lower priced
Packard Bell.
CONT.
By mid 1993 the Dell Computer Corporation seemed to be
coming apart in the following:
Communication between the different divisions of the
company was poor
The sales division did not know the manufacturing
division could handle
Profits and losses could not be tracked by product type
Plans for a laptop computer powered by a 386
microchip were scrapped at the last minute when Dell
realized the product was already obsolete
“Michael Dell” Newsmakers, Issue 2. Gale Group, 1996
http://www.galenet.com/servlet/BioRC
Summary
For
role models to guide us toward our dreams,
we need look no further than Michael Dell. A
college dropout, with nothing more than $1,000 in
his pocket and a good idea. In just 18 short years,
Dell has built a computer empire recognized as one
of the top vendors of personal computes
worldwide. Dell’s sales have skyrocketed to a
whopping #31 billion since its inception with over
33 thousand employees in over 170 countries.
SOURCE: http://www.islandconnections.com/edit/billionaires.htm
Case Study Comparison
Initial Condition
Idea
Startup
Budget
Nature of Business
Getting
customers
Target Market
Technosoft
To serve mid$500 000
size
companies
with lower cost
Personal
contacts
No advertising
Mid-size companies
Dell
sell directly to
the customer,
bypassing the
intermediaries
(wholesalers,
retailers)
$1000
Fellow students
buying from his
collage dorm
room
Small, medium &
large size
organizations, home
users
Cisco
The
breakthrough
concept of the
router
Personal
funds -their
own credit
cards
Through email to
the colleagues
large size
corporation
Case Studies Summary
Customers and
Projects
Challenges
Technosoft
Strategic consulting
work,
Off-shore software
development
Providing IT engineers
Macroeconomic slowdown
Marketing the product
Dell
Assembling computers
and selling directly to
customers
Building the trust selling
computers
Cisco
Higher-education and
research institutions;
large enterprises;
Projects: connecting
networks
Getting funding;
Marketing the product
Case Studies Summary
Personal Characteristics
Ashok
Dell
Cisco
Ambiguity
Tolerance
High
High
?
Openmindedness
High
High
High
Foresight
High
High
High
Case Studies Summary
Personal Characteristic
Ashok
Perceptiveness High
Dell
Cisco
High
High
Resilience
Medium
High
Medium
Selling Skills
Medium
High
Low