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His strategy was to sell directly to end users; by eliminating the retail markup, Dell's new company was able to sell IBM clones at about 40 percent below the price of an IBM PC. The price discounting strategy was successful, attracting price-conscious buyers and producing rapid growth. By 1985, the company was assembling its own PC designs with a few people. The company had 40 employees, and Michael Dell worked 18-hour days. By the end of fiscal 1986, sales had reached $33 million.
During the next several years, however, PCs Ltd. was hampered by a lack of money, people, and resources. Michael Dell sought to refine the company's business model, add needed production capacity, and build a bigger, deeper management staff and corporate infrastructure while at the same time keeping costs low...
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