since 2007, when Michael Dell resumed being the company's CEO, Dell has made more than 10 acquisitions, cut about 10,000 jobs, and hired executives from Motorola and Nike to add more excitement to its product line. Its $3.6 billion purchase of Perot Systems allowed it to expand into higher-margin computing services. Nevertheless, Dell's stock fell 42% since January 2007,during a period in which Hewlett-Packard’s stock gained 11% and IBM gained 31%.
The industry’s focus shifted from desktop PCs to mobile computing,software,and technology services-areas of relative weakness at Dell.Due to a changing industry, the company’s original business model based on direct sales and value chain efficiencies had been abandoned. It was now using the same distribution channels,component providers,and assembly contractors as its competitors.Unfortunately,Dell’s emphasis on cost reduction and competitive pricing ment that it was no longer perceiveding hight-quality personal computers or the quality service to go with them. Previously a strength of the company,its customer service rating in 2005 fell to a score of 74(average for the industry)in a survey by the University of Michican.Complaints about Dell’s service more than doubled in 2005 to 1,533.Although the company successfully worked to improve customer satisfaction by adding more service people,more people meant increased costs and smaller margins.
In order to improve the company’s competitive position,Dell’s management initated a three-pronged strategy: