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Dell Inc.: Analysis of the Business Model


Dell, Inc. is one of the largest companies that specialize in the production of computers. The company was founded in 1984 by Michael Dell. The company was developing at high speed, and 17 years after the foundation, it became the global leader in the provision of computer systems. In 2013, Dell was redeemed by Michael Dell so that “to focus on the innovations and long-term investments with the most customer value” (Dell, n.d., para. 15). The merge of Dell and EMC three years later was the most significant technical transaction in history.

Expectations and Objectives

The initial goal of Dell, Inc.s founder was to rethink the way of production and delivery of computers. EMCs founding members were concerned about how to scale data storage solutions to the entire enterprise level. Newly created technologies “changed the way the world sources, builds and sells technology” (Dell, n.d., para. 5). Dell, Inc. managed to achieve the original expectations and purposes because now it sells technology directly to the consumers, escaping retail outlets and implements such data storage technologies that change the way companies data centers function.

Business model

The core assumption of business strategy is the elimination of a middleman between the company and the consumers. Thus, Dell provides customized services and supports each client personally (Dell, 2003). Direct selling implies the ability of consumers to purchase additional goods directly from the website. From push to pull strategy means that the company offers personalized products, and thus clients are free to set their requirements to the purchased goods. Mass customization denotes that Dell anticipates customers’ needs and provides a range of products out of which clients could choose.

Auditorial analysis of the business model

Intel’s payments to Dell that were received between 2003 and 2007 were used to cover quarterly spending. Securities and Exchange Commission blamed Dell for concealing investors on what the money would have been spent. During this period, the business model has undergone some changes due to the intense competition in the computer industry. Auditors should estimate the possible results of Dell’s loss of partner relations with Intel. Besides, the environment’s analysis would indicate possible ways of action in this situation. Auditors should remain skeptical during the investigation of the business’s issues.

Agreement between Dell and Intel

The agreement between Dell and Intel implied that Intel paid $1 billion every year to prevent the usage of AMD chips in production. This measure helped to economize the process of the manufacturing of computer components. As a result of this deal, the companies manipulated the prices of goods of high quality and hindered the market competition.

Besides, this agreement was driven by the self-interest of companies regardless of clients needs.

Exclusivity payments

Exclusivity payments were recorded as a reduction to Dells operating expenses. This accounting treatment violated such management assertions as allocation, accuracy, valuation, and disclosure. These assertions imply that all transactions of holdings should be included in the financial reports and be outlined appropriately and transparently. It could be suggested the discovery of the mentioned accounting treatment occurred because of the examination of Dells application of accounting policy and inspection of cash. The audit of money allows an auditor to discover whether payments are presented correctly.

Dells earnings management

The situation that was described illustrates earnings management that was used by Dell. In other words, it is an intervention into the accounting policy of a company with the aim of managing earnings that were reported on the financial statements. The case indicates that the company did not want to suffer losses in the short term. Therefore, earnings manipulation was used to beat the unfavorable forecast. The problem was that Dell did not indicate actions with the assets in its financial statements. Thus, the accounting policies were considered to be fraud.


In conclusion, it should be noted that currently, Dell, Inc. retains its high position in the market of computer production. It should also be mentioned that the case with financial fraud was a severe lesson to the companys leadership since that time, there are no notions of similar cases. The most significant inference from Dells manipulations is that, eventually, it became futile. The losses that the company suffered because of fines outdone the acquired wealth. In addition, it remains unclear why the Department of Justice did not investigate this case for criminal prosecution.


Dell (2003). Facts you should know about Dell. Web.

Dell (n.d.). Dell Technologies Timeline

Dell (n.d.). Who We Are


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