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Submitted By : Section A
Acknowledgement
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.
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.”
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.
Acquisition :
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.
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.
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.
ADVANTAGES::
The entry of new comers in quite difficult because of the entry barriers that
are caused by:
• Buyer loyalty
• Brand name
• Low price
• Customisation
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.
Opportunities Threats
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 .
OPERATIONS
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 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.
Year
GDP in %
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.
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.
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.
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.
• 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
Conclusion
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.