Jeffry Timmons as an Entrepreneur - Case Study Example

MICHAEL SAUL DELL by Student’s name Code+ course name Professor’s name University name City, State Date Introduction to the entrepreneur According to a model developed by Jeffry Timmons, a successful business company needs to have critical elements of opportunity, resources and entrepreneur so as to grow and develop. This model is evident in Dell Computer Corporation, a company developed by Michael Dell. Michael Saul Dell is in the list of the youngest entrepreneurs with a net worth of billions of dollars. Dell initialized a corporation called PC’s Limited during his college years at the University of Texas. His company promptly grew which saw him drop out of college at the age of 19 years. He later changed the name of the company to Dell Computer Corporation. At the age of 27 years, he was named the youngest CEO on the Fortune 500 list of the largest companies in the United States. Dell has received many awards including the “Top CEO in American Business” of the Worth Magazines, “Man of the Year” of the PC Magazines, and “CEO of the year” of the Industry Week, and “Chief Executives of the Year” of the Chief Executives (Dell Computer Corporation 2001). Besides being ranked the forty-first richest person in the world, he was worth 15.9 US billion dollars as of 2012.The growth, development, and challenges of Dell Computer Corporation is through the narrative of Michael Dell, who applied Jeffry Timmons’ element of opportunity, entrepreneur and resources so as to be successful. Entrepreneur background analysis The Timmons’ model (Spinelli, Neck, & Timmons 2007) According to Timmons’ model, entrepreneurship is propelled by opportunity and the market defines the opportunity (Spinelli, Neck, & Timmons 2007). A good business concept is never a good business opportunity, and the existing market environment defines the significance of the concept. A concept only becomes relevant when it is rooted in the products and services that generate or increase values to customers while constantly being attractive, timely and durable. Michael Saul Dell was born on 23rd February in 1965 to a middle-class Jewish family. His father was an orthodontist while his mother, a stockbroker. Dell’s school years began at Herod Elementary School, Texas (Dell 1965). He also worked in stocks as a part time job. Dell was interested in electronic when he first bought his first calculator at the age of seven, which he programmed after junior high. He bought his first computer at the age of fifteen which he dissembled to understand how it functioned. At age sixteen he received his first job selling newspaper subscription for the Houston Post. While making cold calls, Dell observed that the recently married couples and the one moving into the new houses were likely to buy the newspaper (Dell 1965). He focused on this demographic group by retrieving the names and address from the mortgage and marriage applicants. His income during that year, 1981, was near $18,000 which exceeded the income of his teachers. He used his earnings from selling newspapers to buy himself a white BMW when he joined the University of Texas, Austin. At that time, he began developing an interest in computers as a new business idea. During his years as a freshman at the University of Texas, Dell began the unofficial business of integrating and upgrading parts of personal computers his is a residential building. His idea was to advance personal computers in the same means people soup up cars so as to sell their cars for enough cash to buy another car and upgrade it parts (Dell 1965). During this times, IBM’s personal computers cost nearly $3,000. Computer spare parts would be bought for nearly $700. Besides, employees at the PC stores had little information about PC, and these stores were making a profit of nearly $1,000. Consequently, customers lacked support when buying PC. In addition to these opportunities, Dell realized that personal computer stores were increasing in all Houston (Dell 1965). Dell saw an opportunity to apply what he already knew and sought what he needed to learn and how to he could learn about it. Dell expanded his business by applying for vendor license and bidding for contracts provided by the states. Although his business developed and grew, his grades suffered at an alarming rate. Dell’s parents were concerned about his grades and asked him to drop computer business and concentrate on his studies. His father’s vision for success propelled him to become a physician which resulted in his enrollment in biology as a freshman in med school. However, his vision for opportunity made him understand how the computer market was developing. Driven by his vision, he represented his ideas to his parents and friend. Through his parents and friend, he learned that different individuals have contradicting areas of interest. He was likely to get less encouragement from people who had little knowledge of his area of interest. After his first year in University, his profit margin had increased to $50,000, and this propelled him to drop out of school with a completely new vision to pursue. The opportunity to soup computers and to assemble them completely made him think of ways of saving customers by selling the assembled computers directly to them rather than using dealers and wholesalers. Stack with this concept, he opened a business, “PC’s Limited,” in 1984 registered in the Texas State. During this times, the monthly salary of sales people dealing in assembled computers, kits, and computers components in Austin was between $50,000 and $80,000. Dell changed the business name to “Dell Computer Corporation” in May and relocated it to North Austin (Dell 1965). Rather than supporting the popular belief that availability of resources reduces the risks of starting a business, Timmons framework argues that bootstrapping with insufficient resources is a means of attaining competitive advantage (Spinelli, Neck, & Timmons 2007). Among the significance of bootstrapping include: lowering the market cost; motivating discipline and leanness in the business; and motivating creativity with the limited resources so as to accomplish more with the insufficient resources. Driven by the ambition to grow, Dell employed a few order takers and three people who assisted with screw driving. Most of the people he hired had a sense of adventure and versatility. Dell allowed the sales team to set up their computers which enabled them to understand what the customers went through in setting up their computers as well as understanding their interaction with the product. The capital cost of the established business was around $1,000. To avoid the space and capital demanded to establish a large inventory, Dell applied the direct model based on the needs of the customers. In this “make to order” system, the products were only made when the customer ordered them or until the existing product was sold. Specifically, this strategy eliminated the need for a network of dealers and wholesalers. Consequently, this approach avoided the high cost of inventory and dealer markups as well as reducing the risk of outdated product connected to the rapidly transforming technological environment. Timmons’ framework significantly emphasizes on the team and insist on a good team as the driving force for success (Spinelli, Neck, & Timmons 2007). A bad team can destroy the great business concept. Besides resources, a great team can define a high significance with the opportunity and control the challenges and pressure connected to growth and development. Dell has gained valuable lesson and leadership style in his experience at the Dell Corporation as well as in his work with the suppliers and the customers. He is considered a very accessible role model because he had done what most are trying to do. He gave most of the authority to his employees because he believed that the best outcome originated from the talented employees who had the freedom and responsibility to accomplish the vision of the business. Dell has always been keen on developing a good relationship with employees, customers, and dealers. By 1988, Dell Computer Corporation was the leading company with the fastest computers (Dell Computer Corporation 2001). It also was the first company with a money back grantee as well as the first computer industry to provide onsite product services. In the early 1990s, Dell Computer Corporation was ranked among world computer companies such as the Tandon, Commodore, and the Mitac. One key element in the success of Dell Computer Corporation has been Dell’s interest in learning from mistakes. Future entrepreneurial suggestions Nearly 80% of American’s household owns a computer. Resultantly, it predicted that sales to the new household will likely decline in future. Therefore, Dell should expect future sales as older types of computers become useless and are substituted by the highly advanced computer system. The economic condition in United Sates has reduced the general rate of growth to nearly zero. Besides, the significant drop in the stock market since 2001, the level of consumer confidence has declined. Manufacturer of computer reacts to these decline demands of the computer by reducing prices. Specifically, this has led to declining in the number of companies through merging and discontinued functioning. Since dealers are not able to predict correct sales effectively, the mostly end up overstocking computers in their inventory. These suppliers inventory are often provided to customers at lower prices and substantial discount. This kind of market is referred as gray market. In Dell’s case, he could purchase personal computers from the gray market and upgrade with computer component from manufacturers such as Apple and Intel. This opportunity would enable him to fulfillment the demands of the new generation which might lead to high profits. Conclusion For individuals to consider themselves entrepreneurs, they have to experiment and be able to make mistakes. Self-drive and self-initiative are significant components of entrepreneurship (Sexton 2001). People need to have an instinctual feeling about something so to be on the road to entrepreneurship. Dell believed in associating himself with smart people and seeing opportunities in all industries around the world as well how nations and societies are evolving and embracing technology. Interestingly, Dell defined his career path by not following what his family wanted him to do. Although he built a pediatric research institution, he did not venture into the field of medicine like his brother and father. Reference list Sexton, D. 2001, Wayne Huizenga: Entrepreneur and wealth creator. The Academy of Management Executive, Vol. 15, No. 1 Dell Computer Corporation, 2001, Company facts. www.dell.com Dell, M, 1965, Directed from Dell, New York, Harper Collins Publishers, Inc. Spinelli, S., Neck, H, M, & Timmons, J, A, 2007, The Timmons Model of the Entrepreneurial process, In M. Minniti, A. Zacharakis, & S. Spinelli (Eds.), Entrepreneurship: The engine of growth. Westport, CT: Greenwood Publishing Group. Read More