Rising, then Falling Innovation at Dell

Dell's competence was based on selling PCs direct to customers and cutting out wholesalers and retailers. It found innovative ways to manage its supply chain to minimize the costs of holding inventory, leading to rapid growth. Between the mid-1990s and 2007 Dell was far more profitable than competing PC makers. Dell's performance started to erode after 2007 because the recession led to a fall in demand from business customers, it lacked adequate competences in research and development needed to compete with HP and Apple, and Apple was gaining market share from Dell through product differentiation. To increase demand for its PCs it was forced to sell through regular bricks-and-mortar retailers, which further lowered its profits. Dell is now struggling to find innovative ways to turn around its performance.

1. What were the keys to Dell's success as it grew? How did entrepreneurship help the company grow?

2. Why has innovation at Dell been falling in recent years? Search the WWW for information that discusses how Michael Dell is making innovative changes to strategy and structure to turn around his company's performance.