For Subscribers

Can Profitability Management Help You Grow?

Profitability management helped PC maker Dell pull off a turnaround. Can it help you do the same?

By Mark Henricks • Dec 1, 2003

Opinions expressed by Entrepreneur contributors are their own.

Today, Dell is a business behemoth,the world's largest PC maker with $35 billion in fiscal 2003 revenues, $2.1 billion in after-tax profits, and the moxie to take on Cisco Systems in network gear and Hewlett-Packard in printers. But a decade ago, Dell was coming off a string of troubles that included a misadventure into retailing, serious questions about product quality, and a net loss in fiscal 1994.

Most observers credit Dell's direct sales approach with driving the company's turnaround, but one analysis says the Round Rock, Texas, company's approach to profitability management is what really did the job. Profitability management is largely a matter of selling what you have so that you neither disappoint customers nor incur heavy inventory costs, says Massachusetts Institute of Technology lecturer Jonathan Byrnes, who studies supply chain managment. And you don't have to be Michael Dell to do it. "Most companies have tremendous increases in cash flow and profitability available for free," Byrnes says. "All it takes is good management."

Continue reading this article — and all of our other premium content with Entrepreneur+

For just $5, you can get unlimited access to all Entrepreneur’s premium content. You’ll find:

  • Digestible insight on how to be a better entrepreneur and leader
  • Lessons for starting and growing a business from our expert network of CEOs and founders
  • Meaningful content to help you make sharper decisions
  • Business and life hacks to help you stay ahead of the curve

Editor's Pick

Have More Responsibilities at Work, But No Pay Bump? Use This Script to Get the Raise You Deserve.
Black and Asian Founders Face Opposition at All Levels — Here's Why That Has to Change
Business News

Frontier Airlines Just Announced Its All-You-Can-Fly Summer Pass for $399. What's the Catch?

As travel begins to pick up, the airline hopes unlimited travel will jumpstart its business.

Business Plans

How Startups and Investors Can Thrive in the Current Economic Environment

Despite the bad news in today's economic environment, startups must refine their business strategy, and VCs must take advantage of less competition to invest.

Leadership

How to Be An Accountable Leader During an Age of Layoffs

If you are a leader, you eat last. Here's how to lead by example during economic uncertainty.

Growing a Business

6 Ways to Continually Grow Your Business Without Going Insane

This guide will help you create a successful, sustainable business that will provide long-term growth and profitability. Discover how you can take your business to the next level by reading on.