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ICFAI Business School

MISSION

Mission Statement:

“To provide customers with superb value, high quality, relevant technology, customized

systems, superior service and support and products and services that is easy to purchase and

use.”

ICFAI Business School MISSION Mission Statement: “To provide customers with superb value, high quality, relevant technology,

“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 want their 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 services that is well known throughout 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 intermediateries 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 it’s all done through phone or internet (www.dell.com). It’s 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.

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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.

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 neighbors 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

conclusion.

research

strategic

plan

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INTRODUCTION

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 manages 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.

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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 Converge Net 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.

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.

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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 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 tariffs on IT products make 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 users 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 has led to the increase of the use of computers. A technological revolution has been around the corner, people have become techsavy, 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:

Technological 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 adapting to the technological changes as he old technology is becoming obsolete. One of the most important affects of technological changes that have led to the increase of the demand of Dell computers is their Direct Business Model. They have excellent ecommerce 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.

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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 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 = Customization+ Customer service

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CORE COMPETENCY

Dell has an edge over its competitors due to the core competency that exist within the

organization. This is Dell’s Competitive advantage and has created superior value above its

rivals.

Direct Business Model (low cost advantage+ customization)

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Sell directly to consumers, By selling directly to the customer Dell removes all the cost

No intermediaries

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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

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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.

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No warehousing

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Selling direct lowered dell costs by 25-40% compared to competitors. Dell passed these

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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

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Eliminate retail mark-ups and costs

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Reduce risks associated with large inventories of finished goods

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Close relationship with consumers & suppliers

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Use information to enhance the Value Chain

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Total customization of their personal computers.

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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 building 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 internal customers; 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.

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Porter’s Five Forces model

ICFAI Business School Porter’s Five Forces model Threat of New Entrants: MODERATE The entry of new

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 Customization 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

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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.

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Porter’s Generic Strategies

ICFAI Business School Porter’s Generic Strategies Cost leadership : Dell has been very successful because of

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. 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.

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SWOT ANALYSIS

Strengths

· No inventory buildup · Acquition with Equalogic · Quality product and service · Whole world focus · Brand name · Customer service · Cost efficiency · Direct sell model= customization + fast + delivery + low cost

Weaknesses

· No proprietary technology · High dependency on component suppliers · Winning culture · Latest technology · First mover advantage · E-commerce capabilities: www.dell.com · Build to order manufacturing process · Product design after sales service · Expert Supply Chain Management dues to the lack of large suppliers in the World · High attrition rates among visitors to Dell.com · No physical presence of service centers · slow in introducing fancy features · Lack of innovation

Opportunities

· Network-internet, intranet and extranet · Developing nations market · Low costs and growing advanced technology · Growth in business, education and government markets · Global wide access to customers and market. · Expansion · Increasing income of consumers · Globalization

Threats

· Competition · Currency fluctuation in countries outside the US

· Political instability · Tariff trade barriers · Recession · Decline sales

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