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PROJECT REPORT

ON

Submitted By : Section A
Acknowledgement

This project comes out to be a great source of learning and


experience. A lot of effort has been put by various people to make
this project a success. This has greatly enhanced our knowledge
about Dell Inc.

We greatly acknowledge our indebtness to Mr.


Rahul Mishra,for helping us throughout this project and for
providing us in-depth knowledge. This project is a
culmination of efforts of our entire team whose sincere inputs and
focused attitude could bring this project to fruition. Finally, thanks
to almighty God who has been a source of strength and
confidence.
Index

➢ Mission ,Vision , Aim , Objective


➢ Executive Summary
➢ External Environment
• PEST Analysis
• Industry Analysis
➢ Strategy
• Corporate
• Business
• Functional
➢ Competition
• Core Competency
• Porter’s Five Forces Model
• Porter’s Generic Strategy
➢ Internal Environment
• SWOT Analysis
• TOWS Analysis
• Porter’s value Chain Model
➢ Corporate Culture
➢ Forecast
➢ Key Issues & Challenges
➢ Suggestions
➢ Conclusion

MISSION
Mission Statement :
“To provide customers with superb value, high quality, relavent
technology, customized systems, superior service and support
and products and services that are easy to purchase and use.”
Statement Strategy :
To do business with its customers one on one through the phone
and internet. In doing so, Dell will meet its customers’s expections
of :
• Highest quality.
• Leading technology.
• Competitive pricing
• Individual and company’s accountability.
• Best in class service and support
• Flexible customer capacity
• Financial stability.

“The direct relationship continues throughout the


customer experience”
Interpretation : Mission statement tells the purpose of existence
of the company.Dell through its mission statement tells that they
are a totally customer oriented company that aims to provide
customers with high quality and value through
customization,according to the needs of the customers.They want
to deliver high value with the help of latest technology that is
easy to use.They also wanttheir products and services to be
available for consumers at low price.
Dell has been very successful towards its mission statement .They
are no doubt customer oriented as they provide award winning
customer servicesthat is well known through out the world.Their
Direct Business Model is a very efficient and effective way of
doing the business.In this, the products are directly sold to the
customers and interemidiateries are deleted from the
process.This helps in reducing costs for Dell and they in turn pass
on this savings to the customers.Dell provides customization
through which customers get what they want.Along with providing
quality products ,Dell also provides quality services.The purchase
of Dell products have become easy as its all done through phone
or internet (www.dell.com). Its been a successful way of selling
their products.Dell has also started to sell through retail stores
hence making the purchase of their products easy for the
customers.
Suggestions : Dell is the market leader after HP and has been
quite successful w.r.t to its mission .But is not up to the mark
when we talk about its technology part. Dell is quite slow in
adding new value added features to its product and in using the
new technology ,as compared to its competitors.Therefore ,it
should try to bring changes in its products more quickly than its
competitors.If Dell concentrate on this part there is no doubt that
it will become No 1 on the world map.
Dell’s mission is also known as::
OUR PEOPLE- “ THE SOUL OF DELL” :
At Dell, we value and are committed to:
• Customers: creating loyal customers by
providing a superior experience at great
value.
• The Dell Team: our continued success lies in
teamwork and the opportunity each member
has to learn, develop and grow.
• Direct Relationships: being direct in all we do.
• Global Citizenship: participating responsibly
in the global marketplace
• Winning: having a passion for winning in
everything we do.

VISION
VISION STATEMENT:
“Through effective and strategic community partnership, dell
supports educational services programs that address the critical
and most basic technology access needs of its neighbours in Dell
communities prerequisite to success in digital world.”

Interpretation : Dell provides a classic example of how the


principles of strategic
management have been used to translate an innovative vision
into a successful
and sustainable enterprise. Their vision statement basically tells
the way they do their business.They want to be successful in the
digital world for this they rely on latest technology.Dell provides
quality products to cater the needs of the people.In intend to build
good relationship with their customers and suppliers.

OBJECTIVES
1. Modify laptop designs according to student’s preferences.
2. Double laptop sales in student market.
3. Increase revenues by 25% by the end of the second year of
launching.
4. Develop a promotional campaign to promote the modified
laptops.
5. Increase awareness of the existent agency project objective
research strategic plan conclusion.
Executive Summary

About Dell :
• Founded in 1984 by Michael Dell
• No.1 PC provider in the U.S. and No.2 worldwide
• Based in Round Rock, Texas
• Employs more than 82,700 people worldwide
• Grew during the 1980s and 1990s to become a brand
• Direct Business Model is the foundation for Dell’s business
• Dell maintains a consistent focus on offering the best value
and customer experience
• Dell is a trusted technology innovator with a diversified,
comprehensive IT portfolio
• Dell is a global company committed to its customers and
employees

Dell Competes in :
• Computer Hardware
○ Personal Computers (primary)
○ Computer Networking Equipment
○ Computer Peripherals
• Computer Services
○ Information Technology Services

History :
• In 1996, Dell began selling computers via its web site
• Introduced the 316LT, the company’s first notebook
computer in 1989
• Joined the top-five computer system makers worldwide in
1993
• Earning appr. $1 million per day 7 months after the launch of
dell.com in 1996
• Introduced E-Support, an online tool to provide technical
support to customers 1999
• 1999, Dell overtook Compaq to become the largest seller of
personal computers in the US
• 2007, Dell set a goal of becoming the greenest technology
company on Earth for the long term. The company launched
a zero-carbon initiative
• For the first time, Dell achieves No. 1 ranking in global
market share in 2001
• 2003, name was changed to "Dell Inc."
• 2006, Dell purchased the computer hardware manufacturer
Alienware
• January 2007, started a turnaround plan that promises to
yield $3 billion in annual savings over the next three years.

Dell Structure : It conducts operations worldwide, and manage


business in three geographic regions:
• Americas region, based in Round Rock, Texas, covers the
U.S., Canada, and Latin America.
• Europe, Middle East and Africa (EMEA) region, based in
Bracknell, England, covers Europe, the Middle East, and
Africa.
• Asia Pacific-Japan (APJ), based in Singapore, covers the Asian
countries of the Pacific Rim as well as Australia, New
Zealand, and India.

Acquisition :

• September 8 1999 - First acquisition ConvergeNet


Technologies on
• May 8 2006 - Acquired Alienware, a specialty computer
desktop manufacturer, integrated it into the company's high-
end product line. It introduced several new items to Dell
products, including AMD microprocessors.To prevent cross-
market products, Dell continues to run Alienware as a
separate entity but still a wholly-owned subsidiary.
• January 28 2008 - Acquired EqualLogic to gain a foothold in
the iSCSI storage market.It was the largest acquisition of
$1.4 billion .Integrating EqualLogic's products into the
company drove manufacturing prices down. It extended
Dell's leadership in simplifying IT for customers and partners.
• 2008 – Three acquisitions ,EqualLogic, The Networked
Storage Company, and MessageOne
• 1999-2000 -Purchased stakes in four companies(NaviSite, Com2001.com,
Fast Search & Transfer, Netyear Group).
• Divested two companies, in 2000 and 2008.

Major customers:
• large corporations,
• government agencies
• medical and educational institutions
• small business
• individuals

Coming products :
• New PowerEdge Servers
• New Enterprise Computing Portfolio
• Innovation Aids Recovery
• Ultra-Thin Laptop, Adamo
Financials :
• Revenue in the QY 09 fell 16% from the same period a year
ago to $13.4 billion. Profits plummeted 48% to $351 million,
or 18 cents a share, from $679 million, or 31 cents a share.
• Revenues of $61,133 million during the financial year ended
February 2008, an increase of 6.5% over 2007.
• Operating profit of the company was $3,440 million in
FY2008, an increase of 12.1% over 2007
• Net profit was $2,947 million in FY2008, an increase of
14.1% over 2007

Recent Developments :
• In January 2009, Dell announced that they will withdraw
all manufacturing from Limerick and move it to its new
plant in the Polish city of Lodz by January 2010.
• Raised their cost-reduction target to $4 billion.
• Dell also announced that it aimed to become a "one-
percent company," giving away 1 % of pretax profits to
education and digital inclusion projects mainly in
emerging markets, by February 2010.

Product line :
• Business/Corporate Class :
• OptiPlex - office desktop computer systems
• Vostro - office/small business desktop and notebook
systems
• n Series - desktop and notebook computers shipped
with Linux or FreeDOS installed
• Latitude - commercially-focused notebooks
• Precision - workstation systems and high-performance
notebooks.
• PowerEdge - business servers
• PowerVault - direct-attach and some network-attached
storage (NAS)
• PowerConnect - network switches
• Dell/EMC - storage area networks (SANs)
• EqualLogic - enterprise class iSCSI SANs
• Home Office/Consumer Class :
• Dimension - Consumer desktop systems.
• Inspiron - consumer desktop and notebook systems
• Studio - medium-end consumer slim hybrid desktop and
laptop systems
• XPS - enthusiast and high-performance desktop and
notebook systems
• Studio XPS - high end design focus of XPS systems and
extreme multimedia capability
• Alienware (XPS Extreme) - high-performance gaming
systems rivaling HP's gaming division,VoodooPC
• Adamo - high-end laptop brand to compete with the
MacBook Air
• Peripherals:
• USB keydrives, LCD televisions, and printers.
• Dell monitors LCD TVs, plasma TVs and projectors for
HDTV and monitors
• Services and support:
• Dell On Call - extended support services (mainly for the
removal of spyware and computer viruses)
• Dell Support Center - extended support services (similar
to "Dell On Call") for customers in the EMEA. The
Solution Centers also support hardware for customers
outside of warranty.
• Dell Business Support - a commercial service-contract
that provides an industry-certified technician with a
lower call-volume than in normal queues; it covers
hardware- and some software-support.
• Your Tech Team - a new support-queue available to
home users who purchased their systems through
either Dell's website or Dell phone-centers. These
customers gain access to a specialized queue currently
located in Tampa, Florida. Customers can request a
technician with whom they have worked previously, and
the technicians can troubleshoot a wider range of
problems — including some that would fall under the
"Dell on Call" category. Data backup and virus removal
remain out-of-scope for this queue.
Analysis of Dell in RECESSION
• Dell's biggest market, the US, revenue fell 17% and unit
shipments dropped 23%.
• Sales were down significantly among all customers,
particularly small and medium-sized businesses and the
largest corporate customers.
• Dell's changes have failed to drive consistent growth.
• Global job cutting programme.
• Dell announced a 10% cut in global jobs and announced
further job cuts at its Ireland sites earlier this year.
• There was a continuing decrease in end-user PC demand,
and that was before the world's banking system went into
meltdown according to Dell
• Shutdown of its Edmonton, Alberta office, losing 900 jobs.
• Ending of about 8,800 jobs in 2007-2008 — 10% of its
workforce.
• On January 8, 2009 , announced the closure of its
manufacturing plant in Limerick, Ireland with the loss of
1,900 jobs and the transfer of production to its plant in
Poland.
• Profits fell by nearly half in the fiscal fourth quarter, and it
would slash $1 billion more in expenses to bring costs in line
with falling sales in the economic downturn.
PEST Analysis
Political : The political environment in the US has been changing
abruptly in the previous year. Dell being an integral part of this
economy has also been greatly affected by these changes and
has not been able to counter them. Changes in the legislation and
laws of the US govt. have tried to revive the PC business but the
reciprocations have been less then what was expected. The
company has been able to beat the expectations of Wall street
who predicted more dip by posting less losses by cutting costs.
The conservatism that exists in the consumer spending has been
increasing which has adversely affected Dell’s performance.
Issues of environment policies has also affected Dell as Dell came
under significant pressure from environmental groups across the
US to assume responsibility for its old products and this
experience sensitized company officials to the risks and
opportunities of state and federal e-waste regulations and the
need to take proactive steps against them.
Economic : high tarrifs on IT products makes Dell difficult to
enter other markets apart from USA . since most of the population
of the world is young and adaptive to change in technology, dell
aimed to manufacture its products which are more user friendly
and can be afforded by young professionals, because purchasing
power of working population saw an increase over the past few
decades. Since the economy saw a change due to the meltdown
and recession, dell also had to modify some of its policies to cope
up with the changing scenario.The change in the US economy
also effected Dell with it bring change in its core policies of
inventory and credit management of receivables and inventory
conversion days to decrease its operating cycle and thus reduce
cost.
Social : Increase of younger population and working population
have led to the increase of the use of computers.A technological
revolution has been around the corner, people have become tech-
savy ,that have resulted in the increase in the demand for
computers .These days people have time constrains and as a
result of it they prefer to buy the product online ,which has given
Dell an advantage over others because of dell.com.

Technological : Tecnological changes are happening at a very


fast rate due to which Dell is able to provide advanced technology
products to the customers.As a result of technological changes
Dell has also increased their product line.It is adopting to the
technological changes as he old technology is becoming
obsolete.One of the most important affets of technological
changes that have led to the increase of the demand of Dell
computers is their Direct Business Model.They have excellent e-
commerce capabilities, which can be seen with the success of the
dell.com .
The recent technological changes can be seen in their recent
products like New PowerEdge Servers, New Enterprise Computing Portfolio,
Innovation Aids Recovery, Ultra-Thin Laptop, Adamo,which will be in the market
very soon.
Dell could exploit the network-internet,extranet to reach the corners of the world.
Industry Analysis

Q1 was a slow quarter for PC sales: The worldwide market fell 6.5% year-over-
year to 67 million units,
Apple's Mac business leveled out after strong growth last year. U.S. Mac
shipments were down 1% year-over-year, representing 7.4% of the market,
according to Gartner. But that's a significant deceleration after the company grew
U.S. shipments about 33% year-over-year during Q1 '08. (And grew U.S.
shipments 8% year-over-year in Q4 '08,.)
Meanwhile, Dell (DELL) sunk, as its shipments fell 16% to 26.2% of the U.S.
market. And netbook specialist Acer grew its shipments by 49% to 13.6% of the
U.S. market, third to HP and Dell.
COMPETITORS
Hewlett-Packard (HP):: HP recently posted better financial results than Dell, but has
announced around 26,000 redundancies as part of its attempts to cut costs and integrate the
£7.2bn acquisition of EDS.Dell rival Hewlett-Packard has also suffered in the global recession.
The world's largest computer maker reported last week that profits in the fiscal first quarter
ended Jan. 31 fell to $1.85 billion from $2.13 billion in the year-ago period. Revenue rose 1%,
but failed to meet Wall Street estimates.
Dell has been very very slow in introducing most of the value added features its competition has
incorporated (Such as face recognition of Lenovo, fingerprint recognition, Swivel Monitors and
Tablet PCs by HP,

Apple,IBM,Sun Microsystems,Gateway, Lenovo, Sony, Acer, Toshiba and Asus. Dell and its
subsidiary, Alienware, compete in the enthusiast market against AVADirect, Falcon Northwest,
VoodooPC (a subsidiary of HP), and other manufacturers.

Strategy
Corporate strategy:
Dell’s corporate strategy is to provide products directly to
customers.To provide high technology quality products and
services through customization.Their strategy also includes cost
cutting where ever possible.
Business strategy: Dell's business strategy combines its direct
customer model with a highly efficient manufacturing and supply
chain management organization and an emphasis on standards-
based technologies.
This strategy enables Dell to provide customers with superior
value; high-quality, relevant technology;customized systems;
superior service and support; and products and services that are
easy to buy and use.

Functional strategy::: Cost leader ship through direct sell model


In direct sales model it sells directly to customers ,which
has the following characteristics:
 Efficient supply chain/distribution system
 Just-In-Time inventory system reduces costs
 Direct sales by using www.dell.com
 Internet increases good relations with consumers & suppliers
 Impressive Supply Chain Management
 Strong strategic alliances with other companies
Direct Business Model = Customisation+ Customer service

CORE COMPETENCY
Dell has an edge over its competitors due to the core competecy that exits
within the organization.This is Dell’s Competitive advantage and has created
superior value above its rivals.

Direct Business Model (low cost advantage+ customization)


• Sell directly to consumers. By selling directly to the
customer Dell removes all the cost that they would have
incurred during the holding and marketing of the products.
• Dell’s model is based on build-to-order process, where
company builds each PC on demand.Customers can choose
what components they want for their computer, Dell then
assemble the order and ships it.This strategy improves
customer satisfaction and reduces costs and risks to the
company.
• No intermediaries
• No warehousing
• Selling direct lowered dell costs by 25-40% compared to
competitors.Dell passed these savings to customers.Dell
believed that this could help best understand customers’
needs and provide the most effective computing solutions to
meet these needs.
• Build products to consumer order
• Eliminate retail mark-ups and costs
• Reduce risks associated with large inventories of finished
goods
• Close relationship with consumers & suppliers
• Use information to enhance the Value Chain
• Total customization of their personal computers.

ADVANTAGES::

Price for Performance. By eliminating resellers, retailers and


other costly intermediary steps together with the industry's most
efficient procurement, manufacturing and distribution process
Dell offers its customers more powerful, more richly configured
systems for the money than competitors. Saves money and time
Customization. Every Dell system is built to order. Customers
get exactly, and only, what they want.
Just In time: Orders are build at the time of order. a just-in-time
(JIT) manufacturing approach, which minimizes inventory costs.
Service and Support. Dell uses knowledge gained from direct
contact before and after the sale to provide award-winning,
tailored customer service.
Latest Technology. Dell's efficient model means the latest
relevant technology is introduced in its product lines much more
quickly than through slow-moving indirect distribution channels.
Inventory is turned over every 10 or fewer days, on average,
keeping related costs low.
Superior Shareholder Value. Dell was the top-performing stock
among the Standard & Poor's 500 and Nasdaq 100, and
represented the top-performing U.S. stock on the Dow Jones World
Stock Index.
Profitability:Through the direct business model Dell has
eliminated the reseller’s markup as well as the risks associated
with large inventories of parts and finished goods. Dell frequently
receives parts just hours or even minutes before assembling a PC
to fill a customer’s order. Since the prices of computer
components are constantly going down, it makes sense to avoid
buying large inventories of stock that could be purchased at a
later date for less. And since computer components also go out of
date quickly, this avoids antiquated stock. This, in turn, improves
profitability and allows Dell to sell its products for a lower price to
the customer.
Customer Focus:Is dedicated to meeting the expectations and
requirements of internalcustomers; gets first-hand customer
information and uses it for improvements in products and
services; acts with customer in mind; establishes and maintains
effective relationships with customers and gains their trust and
respect.

Internet Leadership Sales via Dell’s Web site surpassed $18


million per day during early 1999, accounting for 30 percent of
overall revenue. The company's application of the Internet to
other parts of the business --including procurement, customer
support and relationship management -- is approaching the same
30-percent rate.
The world's second-biggest computer maker has recently switched from a pure
online and phone sales model to build an expanding network of retail stores,
putting its PCs and laptops within the reach of consumers without Internet access.

Porter’s Five Forces model


Threat of New Entrants: MODERATE

The entry of new comers in quite difficult because of the entry barriers that
are caused by:

• Buyer loyalty

• Brand name

• Low price

• Award winning customer service

• Customisation

Decreasing profitability shows that there is a threat of new entrants.HP


overtook dell few yrs back

Rivalry: HIGH

• Price War
• Decreasing profitability
• Low differentiation

However, in the midst of sever competition, Dell can still gain market
share from other competitors. That proves Dell’s business strategies
have been successful.
Threat of Substitutes: LOW
• Strong presence of PC’s throughout society
• One computer for every three people in the U.S.
• Customer service
• Direct Business Model

However, high price, and lack of software support prevent people from
switching to Apple system.

Bargaining Power of Buyer: High

• Highly price sensitive


• The cost leader has high market share which leads to high bargaining
power relative to its suppliers
• Reliability and customer service become important factors.
• Dell’s products are very reliable and customer service is outstanding.
These two factors help Dell to create certain brand royalty. But that’s
given the fact that the Company set the prices very low. If the prices
are raised too high, customers will not hesitate to switch.

Porter’s Generic Strategies


D

Cost leadership: Dell has been very successful because of its


cost leadership.It has been able to reduce the costs with the help
of its Direct Business Model.In this Dell sells directly to its
customers hence eliminating the intermediateries.The cost is
reduced by:

(1) passing distributors and retail dealers that reduced marketing


and sales costs by eliminating the markups of resellers,
(2) building to order greatly reduced the costs and risks
associated with carrying large volumes of both and finished
goods.
3) cutting out the intermediaries between the manufacturer and
the consumer.

Initially, Dell's direct from the factory approach relied on


telephone sales.
With the emergence of the Internet, Dell Computer could extend
the reach and
scope of the direct sales model at a relatively low marginal cost.
The company
was ideally positioned to take advantage of the Internet because
of its
distinctive supply chain. Unlike its major rivals, Dell did not face
any channel
conflict with resellers or distributors by going online. Moreover,
with a build-to order manufacturing process already in place,
customers could easily configure
their own products online, just like they were already doing over
the telephone.

Dell's build-to-order and sell-direct approach attracted


growing numbers of
customers, not only in the United States, but all over the
world.The supply chain compression resulting from the direct-to-
customer model gave his company a substantial unit cost
advantage over everyone else. With an inventory turnover rate of
about 60 times per year, Dell has minimized the rapid
depreciation and inventory write-off costs that have chronically
plagued the PC industry. It has also greatly reduced its working
capital requirements by operating on negative cash conversion
cycle – receiving payment from its customers before it pays its
suppliers for components.

Many of the major players in the PC industry have continued to


manufacture
their products in bulk and keep their distributors and retailers
stocked with
ample inventories. As a result, Dell has sustained a comparative
advantage as
a result of its lower overhead costs.
For example, Dell's overhead costs (selling, general and
administrative expenses) in both 1999 and 2000 were less than
10% of its total revenues versus industry norms of 15-17 percent.

The direct sales model also enables closer customer integration.


Dell has built
strong and stable relationships with both the large corporations
and smaller
enterprises that are its core customers. Unlike its rivals, who
depend on
indirect sales, Dell possesses a great deal of information about its
customers.
By logging all of its interactions with customers, Dell knows their
purchasing
behaviour, demand patterns, and satisfaction levels. With a little
bit of data mining, Dell managers can determine how customers
buy computers, what
motivates different types of buyers, and thereby accurately
forecast demand in
various market segments.Dell also collects timely information
about the performance of its products. This enables it to respond
quickly to emerging problems and, in some cases, avoid costly
refunds and service calls. More generally, Dell Computer knows
who each end user is, what equipment
they have bought, where it was shipped, and how much the
customer has
spent. This information helps Dell to provide high levels of
customised service;
to offer complementary products and services; to coordinate
maintenance and
technical support; and even to forecast (if not encourage) PC
replacements and upgrades. Some of its corporate customers
have even outsourced their entire
range of PC inventory activities, from purchase to disposition, to
Dell.
SWOT ANALYSIS
Strengths Weaknesses

• No inventory buildup • No proprietary technology


• Acquition with Equalogic • High dependency on
• Quality product and service component suppliers
• Whole world focus • occasional product recall.Eg.In
• Brand name 2004 Dell had to recall 4.4
• Customer service million laptop adapters
• Cost efficiency because of a fear that they
• Direct sell could overheat, causing
model=customization+fast+ electric shocks or fires.
delivery+low cost • unable to switch supply
• Winning culture dues to the lack of large
• latest technology suppliers in the World
• First mover advantage • high attrition rates among
• e-commerce capabilities: visitors to Dell.com
www.dell.com • no physical presence ofservice
• Buid to order manufacturing centres
process • slow in introducing fancy
• Product design+after sales features
service • Lack of innovation
• Expert Supply Chain
Management

Opportunities Threats

• Network-internet, intranet and • Competition


extranet • Currency fluctuation in
• Developing nations market countries outside the US
• Low costs and growing • Political instability
advanced technology • Tariff trade barriers
• Growth in business, education • Recession
and government markets • Decling sales
• global wide access to customers and
market.
• Expansion
• Increasing income of consumers
• Globalisation

TOWS Analysis
Strenghts-opportunities:: Dell has cost leader ship in the market .They provide
quality at reasonable price ,which would help them to establish themselves in the
growing economies.The income of consumers is also increasing and they could
exploit this situation and increase the profis of th company.Business,education and
government markets are growing and therefore the demand for computers will also
increase in the coming time ,so Dell should try to reach even to the smallest
corners of the world to increase the sales.Globalisation would help Dell to present
itself on the global platform.It would be able to exploit this opportunity because of
its core competencies.
Opportunities –Weakness::Dell lacks innovation as compared to its
competitors.It is also slow in creating value added features to its products and slow
in bring change in its product line so as to carter any new product or technology
launched in the market .

Strenghts-Threats::Dell provides quality and is well known for its customer


service.It has an edge over its competitors becaususe of its Direct Business
Model.It could over come its competitors because of this factor.
Weakness-Threats::One of the major threats for Dell is the decling sales of PC’s
and recession.But Dell is not the only one that is affected by this ,every company
in the industry is the victim.

Value chain model


FIRM INFRASTRUCTURE

The main strength of Dell is in its inventory management. As the company


sells through direct model , it mostly receives its payments from its
customers immediately online or through the credit card. It then places
orders on the component vendors and proceeds on the assembly but pays to
the suppliers only after 36days after the product is shipped. As a result , the
cash-conversion ratio for Dell is negative as compared to other PC makers
who have positive cash conversion ratios due to advance payment to
suppliers.

OPERATIONS

Dell outsources all its components manufacturing, including sub-assemblies


like motherboards and nearly the entire production chain for notebook PCs.
However it does not outsource the final configuration and keeps control over
the production supply chains. Regional components manufacturers – which
may be units of Asian, European and American companies – are increasingly
supplying to Dell.

INBOUND LOGISTICS

Since Dell follows build to order and just in time policies, the inventory
remains in the supplier’s books till Dell puts the order.
Dell’s direct – selling model depends critically on lead time management so
that insufficient lead conversion time would not leave the company with
overage and underage of components.

MARKETING SALES

Dell has eliminated from its value chain the intermediaries, who would have
charged a 20 -30 margin, from the value chain and aligning the supply chain
closely to the assembly factories and the order-taking system.

Dell has integrated the direct-selling model intricately with the supply chain.
Even though the company assembles 80000 PC’s a day, it does not have any
warehouse ,the assembly factories hold inventories for maximum of two days
while the entire operation inventory is a maximum of 72days.

TECHNOLOGY DEVELOPMENT

Dell spends little on research and development, at $400 million , a fraction of


HP’s $4 billion. Yet its management of supply chain is near perfect and the
assembly operations are highly efficient and designed such that a PC is
assembled by one worker so that any defects can be traced down to hum
and made accountable.
Corporate Culture
Dell's Culture
• believes in being direct in everything they do.
• success is based on maintaining direct relationships built on trust.
• Winning Culture and comprehensive diversity initiatives create a corporate
environment based on meritocracy, personal achievement and equal access
to all available opportunities.
• focus our internal efforts on cultivating and promoting best practices among
our global workforce in the areas of policy development, training,
recruitment, mentoring, development, advancement and culture change.
• Work/Life Effectiveness and career management programs enhance our
ability to retain and develop valuable team members and demonstrate our
commitment to the Dell Team.
• Dell sponsors a community of networking groups formed by
employees that help foster a more inclusive work
environment, improve communication among employees
and enhance understanding of all employees about the value
of diversity.
• Our goal is to enable employees to maximize their
contribution to the company while also maintaining
effectiveness between their work and personal lives.
• We advocate flexibility in the workplace to empower
employees, teams and managers to hold discussions about
both the needs of the business and each employee's
individual Work/Life Effectiveness goals, and then to
construct a plan for fulfilling both priorities.
• Dell is committed to developing our workforce and helping
employees achieve their personal and professional best.
Through an Career Management Program, we strive to
develop, fully engage, and retain high-performing talent
Forecast

Dell has worked its way through the US economy with changes happening in
consumer spending inflation rates, interest rates and has changed its strategies
accordingly to increase its market share and market presence. Below is a view of
the US economy and an analysis of Dell in this regard.

GDP of the US economy for the year 2003-08.

Year
GDP in %

2003 37685.028 3.70 %

2004 39811.632 5.64 %

2005 41969.756 5.42 %

2006 44118.008 5.12 %

2007 45845.477 3.92 %

2008 46541.179 1.52 %

The US economy is a developed economy and due to this extensive development its
GDP has been decreasing constantly over the years and has decreased to minimal
proportions. In this kind of economy , Dell has provided services to capture a part of
the consumers purchasing capacity in the PC market.

But due to a recession in the market Dell as other PC manufacturers has faced
critical issues regarding sales, job cuts and decrease in market share.

Dell has not been able to sustain its competitive advantage in the US economy due
to wide spread recession but Dell was able to sustain its sales growth in other
countries as compared to the US as seen in revenues of Dell. Dell has arrayed into
different product mixes to sustain its growth in these periods. Dell’s supply chain
and direct build to order models have been able to keep its sales up.

US interest rates for the year 2003-08

June 25,2003 1%
Dec 14,2004 2.25%
Dec 11,2005 4.75%
June 29,2006 5.75%
Dec 11,2007 4.75
Oct 29 ,2008 1%

The US federal reserve has been bring out cuts to keep the momentum in the
economy going and this has also helped the PC market to grow especially Dell. From
2003 to 2007 Dell has reported profits YoY due to the policies followed by the US
government.

Interest rate cuts have had the following implications on Dell.

Thus with the fed cutting rates to provide incentives to the corporate to grow, Dell
has used this opportunity to increase investment in the co. and stretched its wings
further in different markets.

But in 2008 Dell has lost heavily to profits of $351m from $671m in the last year
with a collapse in the supply chain and initial raw material cost increasing and an
overall decrease in consumer spending and low cost behavior of the economy. Dell’s
supply chain has taken a hit with its cost advantage not being applicable in this
scenario and it resorting to retail supply then doing it through its own chain of
suppliers.

Inflation numbers in the US economy.

Year CPI - Inflation Rate*

2008 5.0%
2007 2.8%
2006 3.2%
2005 3.4%
2004 2.7%
2003 2.3%

As is evident in the US economy and world over inflation rates have been on all
times high in the previous year and this high rate of inflation resulted in low
consumer spending in capital goods in corporate bodies and households.

Inflation has taken its toll on Dell with posting sharper-than-expected fall in revenue as
consumers bought cheaper personal computers and overall demand remained weak. And
this fall could be worse if it wasn’t cushioned by cost cuts including job cuts.

Dell is trying to sell its computer factories around the world — a move to overhaul a
business model that previously was central to the company’s strategy, but which
now is no longer competitive. The U.S. firm has approached contract computer
manufacturers with offers to sell the plants to counter the effects if falling profits
and rising costs.

Key Issues & Challenges

• Recession
• failed to drive consistent growth.
• Decling Sales
• Dell is quite slow in providing value added features to its
customers ascompared to its competitors.
• Tough competition
.

Suggestions

• Should look for Alliance-mergers and acquisitions that would


bring synergic benefits for the company
• Reduce the attrition rate by Converting visitors into
customers(people who visit the Dell site)
• Focus on developing nations
• Physical presence of Service centers would add value to their
customer service
• Invest more in Research and Development.
• Reduce errors in Dell’s direct Internet ordering system and
create a “Clearance” area on its website
• Enhance customer support services
• Increase Company recognition through a national advertising
campaign.
• Should not only depend on the internet sales, should give
equal importance to retail stores. Though they have started
with the retail selling but they should give equal importance
to it as they give to online selling
• Build a variety of competencies (build core competencies
into diverse product lines)
• Should focus on developing nations like India, China etc..
• Demand for laptops will increase in the coming future
therefore they should try to exploit this situation

Conclusion

Dell computer is successful in global markets as a result of best


understanding of customers' needs and their direct sell business
model. Dell's environmental programs for product asset recovery
and product design for environment have spanned more than a
decade. The company designs and customizes products and
services to the requirements of the organizations and individuals,
and sells an extensive selection of peripheral hardware and
computing software.
Dell is a well known name in the world that has been very
successful towards its mission.It has focused on customization
and maintaining low cost that has been very profitable for the
company .

But are faced with the proble of de slipping sales in the U.S. .they
are being forced to look at alternative ways of brining revenue to
the company,We believe that they will be able to tackle this
situation and would maintain a tight grip on the market due to
their cost leadership and because of their coming strategies.

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