DELL COMPUTER
CORPORATION
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INTRODUCTION
As On January 2005, Dell Computer
Corporation Was The World's Largest
Direct Selling Company.
57,600 Employees In More Than 80
Countries.
Customers In More Than 170 Countries.
Market Leader – Persistent Focus On
Delivering The Best Possible Customer
Experience.
Incorporated In 1984 By Michael Dell
At The Age Of 20 With $1000.
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Conti…..
Best understand customers’ needs and
efficiently provide the most effective
computing solution by selling them
directly.
This business model eliminates the
retailers.
It became no# 1 $100 billion company.
Itbecame no#1 retailer of personal
computers, outselling IBM and Hewlett-
Packard.
3
Conti…..
Traditional business model of
competitors:
“Build- to- Stock.”
Retailers and other intermediaries
takes long time to dispatch the
computers.
In 1980, Michael Dell got the chance
to reengineer the value chain of PC
industry because of two reasons:
1) Corporate customers were becoming
sophisticated and therefore didn’t required
personal selling.
2) Mass Customization.
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Business Model Of Dell:
It outsourced all components but
performed assembly.
Eliminated retailers and shipped the
components directly from its factories to
end –users.
Took orders from internet and phone.
Designed integrated supply chain
linkage .
5
Conti…..
By October 2004, it increased its
product line and started to sell large
no. of consumer electronic goods like
Digital music player, flat screen
television to cameras and printers.
It adopts the strategy of direct sales
in all its product.
In November 2004, 15% of Dell’s
revenue came from consumer
electronic goods.
It also moved to the business of
servers and storage in 2005.
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Achievements of Dell
Ranked as Most admired co. of
America by Fortune in 2005.
Revenue growth @ 19% - 7% higher
than industry.
Net margin of 6% - 5% in the
industry.
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Que. 1 :-
(A) What is Dell’s Strategy ?
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DELLCAN BEST UNDERSTAND
CONSUMERS NEEDS EFFICIENTLY,
PROVIDES THE MOST EFFECTIVE
COMPUTING SOLUTIONS ,TO MEET
THOSE NEEDS BY SELLING
COMPUTER SYSTEMS DIRECTLY TO
CUSTOMERS.
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(B) What is the basis on which Dell
builds its competitive advantage ?
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ENVIRONMENTAL INTERNAL
ANALYSIS ANALYSIS
Competitors Technology Know-how
Customers Manufacturing Know-
Suppliers how
Regulatory Marketing Know-how
Social/Political Distribution Know-how
Logistic Know-how
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ENVIRONMENTAL
ANALYSIS
Competitors IBM .
HEWLETT-
Customers
PACKARD.
Suppliers (Through
Regulatory Intermediaries)
Social/Political
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ENVIRONMENTAL
ANALYSIS
Customers in
Competitors more than 170
Customers countries.
They provides
Suppliers best experience
Regulatory to the customers
through mass
Social/Political
customization.
Increase the
loyalty.
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ENVIRONMENTAL
ANALYSIS
Different
suppliers for
Competitors different
Customers peripherals.
Large no. of
Suppliers suppliers for
Regulatory other consumers
electronics.
Social/Political Very closely to its
assembly
factories.
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ENVIRONMENTAL
ANALYSIS
Competitors
Customers
Suppliers
Regulatory No regulatory
Social/Political hurdles.
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ENVIRONMENTAL
ANALYSIS
Competitors
Customers
Suppliers
Regulatory ◦ Best match of
social/political
Social/Political
issues in
different
countries.
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INTERNAL
ANALYSIS
Best technology
for order-taking Technology Know-
through internet how
and phone
according to Manufacturing
consumers’ Know-how
needs. Marketing Know-how
And also best
technological Distribution Know-
communication how
with suppliers. Logistic Know-how
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INTERNAL
ANALYSIS
Outsourced all
Technology Know-
components but
performed how
assembly. Manufacturing
(Customization) Know-how
Marketing Know-how
Distribution Know-
how
Logistic Know-how
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INTERNAL
ANALYSIS
Technology Know-
how
Direct Selling to Manufacturing
customers. Know-how
Effective Marketing Know-how
Advertisements. Distribution Know-
how
Logistic Know-how
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INTERNAL
ANALYSIS
Good supply
Technology Know-
chain policy.
Quick delivery how
to consumers Manufacturing
according to Know-how
their needs. Marketing Know-how
(Just need to Distribution Know-
assemble all the
how
components)
Logistic Know-how
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INTERNAL
ANALYSIS
Technology Know-
how
Manufacturing
Know-how
Good logistic Marketing Know-how
chain between Distribution Know-
suppliers to how
consumers.
Logistic Know-how
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Sophisticated Directselling by
customers removing
having intermediaries.
experience &
Knowledge of
computers.
Mass
customization.
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Best internal competencies :
Technology Know-how
Manufacturing Know-how
Marketing Know-how
Distribution Know-how
Logistic Know-how
External Opportunities :
Sophisticated customers having
experience & Knowledge of computers.
Mass customization.
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DELLCAN BEST UNDERSTAND
CONSUMERS NEEDS EFFICIENTLY,
PROVIDES THE MOST EFFECTIVE
COMPUTING SOLUTIONS TO MEET
THOSE NEEDS BY SELLING COMPUTER
SYSTEMS DIRECTLY TO CUSTOMERS.
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Que. 2 :-
How do Dell’s control systems
help execute the firm’s
strategy ?
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MANAGEMENT SYSTEM
Speed & pace at every step of
business
Reduced number of workers in line.
Buying & assembling components as
per need of customers
evaluation is on two basis…
A) Financial (ROIC, component purchasing
cost, selling & adm. cost
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B) non financial measures (inventory,
receivable days, payable days,
accuracy of demand forecast)
Information
Localized decision making
Implementation of employees’ ideas
Quick strategies implementation
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