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Dells market share in U.S. and Worldwide (in Q1 2009) compared to other top PC maker

Dell impressed many in its early years with its distinct model of supply chain management, selling customized computers directly to customers to meet burgeoning PC demand. By using this innovative sales model, Dell became an industry and shareholders darling, a high-tech pioneer with seemingly limitless growth. hose days appear to be over! Dells profits and shares have dropped considerably from their pea"s in recent times. #pecifically, Chopra posited that the computer manufacturer would have to shift its longstanding direct sales model in the face of the PC businesss increasing maturity. Chopra suggested that to stay competitive, Dell would have to consider selling through retail channels such as Costco or local computer stores. $bout si% months later, Dell announced that it would offer Dimension PCs and &nspiron noteboo"s through 'al-(art and #ams Club. $nd in #eptember )**+ Dell announced that it would ta"e this channel strategy overseas, selling computers through Chinas largest electronics retailer. But what was Dells rationale for the recent sales model shift, o answer this -uestion lets consider the argument behind Chopras assessment. &n the article Chopra ac"nowledges that Dell could still en.oy competitive advantage from customizing computers and selling them directly to consumers, but notes that the mar"et for such offerings has shrun", largely because customer needs and related supply chain costs have shifted in the mature PC business. $s such, Chopra endorses a /hybrid model that embraces both direct and reseller channels0 for Dell, noting that the general lesson is /that your choice of sales channel should depend on the type of product you are selling and its level of maturity.0 &n separate communication Chopra is -uic" to note that he was not the only observer advocating a sales strategy shift for Dell1 others, including several analysts, endorsed a similar model. Chopra presents two potentially complementary routes by which Dell could go retail. he first, a hybrid business model, combines direct and retail sales channels to serve both broad segments of the computer mar"et! those see"ing standard models and those placing a premium on customization. 2sing this approach, Dell would continue selling direct but also offer a selection of pre-configured computer models through retail stores. he second model, most effective when customization is valued, involves the retailers performing the final product configuration, thus decreasing inventory costs3because supplies are maintained in component form3but increasing assembly capacity costs. Chopra notes that this model has been used successfully in &ndia, where customization is valued and technicians ine%pensive to employ.

4igure 5! Dell stoc" price, 6ctober )**7 to 6ctober )**+ http://insight.kellogg.northwestern.edu/index.php/Kellogg/article/a_new_channel_strategy_for_dell $bstract! his case is about one of the leading personal computer 8PC9 manufacturers, Dell &nc. he case discusses Dell:s business model and distribution strategy. Dell, which was "nown for its direct selling model that was bac"ed by strong supply chain management practices, lost its mar"et leadership to ;P 8;ewlett Pac"ard9 in )**<. &n the mid- )***s, some analysts had criticised Dell for stic"ing to its direct-only business model. $ccording to them, the business model that had made Dell so successful in the past was not as effective as before and the company was losing its competitive edge. &n )**+, Dell announced its intention of moving beyond the direct-only model that it had zealously followed until then. #ubse-uently, the company rolled out its retail as well as channel partner initiatives. hough some analysts welcomed the move, others felt that significant challenges lay ahead for the company. he teaching ob.ectives are to! 859 study Dell:s direct-only business model and understand the advantages and disadvantages of such a business model1 8)9 understand the reasons behind Dell:s decision to move beyond its direct-only model1 8=9 understand the issues and challenges faced by companies in managing the supply chain and in launching new channel strategies1 8>9 understand the issues and challenges faced by companies ma"ing a transition from a direct selling model to a multichannel model1 and 879 gain insight into the fast changing global PC mar"et and understand the competitive landscape. he case is meant for (B$ ? (# students as part of the business strategy ? sales and distribution management ? supply chain management curriculum. he teaching note includes the abstract, teaching ob.ectives and target audience, teaching methodology, assignment -uestions, feedbac" of case discussion and suggested readings and references. &t does not contain an analysis of the case.

Corporate (ass Customization @;igh-performance products ;igh-performance products. he standard, then, was set by . he standard, then, was set by &B(, and that was what customers wanted - and what Dell &B(, and that was what customers wanted - and what Dell offered.

offered. @Direct relationship with customers Direct relationship with customers. Dell had an ongoing . Dell had an ongoing dialogue with customers. he information gave the company a dialogue with customers. he information gave the company a competitive advantage in tailoring its products and competitive advantage in tailoring its products and communications to customer thin"ing. Direct mar"eting also communications to customer thin"ing. Direct mar"eting also avoided dealer mar"ups. his remains true today - even with avoided dealer mar"ups. his remains true today - even with the prices of PCs declining, such rates may still be as high as a the prices of PCs declining, such rates may still be as high as a -uarter of purchase price. -uarter of purchase price. @Afficient and fle%ible manufacturing Afficient and fle%ible manufacturing. he fledgling firm didn:t . he fledgling firm didn:t have much capital and the issue of inventory was a serious have much capital and the issue of inventory was a serious one. $lthough the firm now garners most of the mar"et share, it one. $lthough the firm now garners most of the mar"et share, it continues to monitor inventory levels, practicing B& to remain continues to monitor inventory levels, practicing B& to remain fle%ible to build machines to customers: orders. fle%ible to build machines to customers: orders usin

Issues:
C #tudy Dell:s direct-only business model and understand the advantages and disadvantages of such a business model. C 2nderstand the reasons behind Dell:s decision to move beyond its direct-only model. C 2nderstand the issues and challenges faced by companies in managing the supply chain and in launching new channel strategies. C 2nderstand the issues and challenges faced by companies ma"ing a transition from a direct selling model to a multi-channel model. C Dain insight into the fast changing global PC mar"et and understand the competitive landscape.

The Direct Model has been a revolution, but is not a religion. We will continue to improve our business model, and go beyond it, to give our customers what they need."1 - Michael Dell, CEO, Dell, Inc., in 2007 6n Banuary =5, )**+, Dell:s founder (ichael Dell 8(ichael9 too" over the position of the CA6 replacing Eevin Follins 8Follins9. #oon after ta"ing over, (ichael revamped the top e%ecutive order and followed this up with various changes in strategy in a bid to turn around the company. 6ne of the most significant changes brought about was its willingness to move beyond its direct-only business model. 6n the one hand, Dell formed alliances with leading retailers such as 'al-(art #tores, &nc.8 8'al-(art9, Carrefour #$98Carrefour9, etc., while on the other, it also started a formal channel partner program for value added resellers10 8G$Fs9.

They also noted that the company had been secretly working with some channel partners even before 2007. Dell had also made limited forays into retail in the past which had not been too successful. Analysts expected the company to indulge in a lot of activity through all the channels stores! kiosks! and "A#s! in addition to its direct selling channel. $%all it the &atling' gun approach!$((!(2 said #oger )ay! principal at *ndpoint Technologies Associates.(+ ,hile some analysts welcomed Dell-s decision to move beyond its direct selling model! others felt that the company was taking a huge risk by straying from what had made it so successful in the .% industry... /0T#210
MIGHTY HIGH TARGET. $s things stand, Dell:s growth prospects are less than stellar. Aven after recent downward revisions, the #treet:s e%pectations might still be too high. 'hile most analysts predict )*H earnings growth in the ne%t few years, 5<H to 5IH might be more realistic, says Jac" #chroeder, an analyst with BBK $sset (anagement in Faleigh, L.C. $nd while the consensus pro.ects sales to rise 5<H in that period. #chroeder believes 5)H to 57H will be more li"e it. #uch growth concerns have sent Dell:s stoc" down +.7H, to M=N, since Banuary. Dell claims that growth will come. $fter the mar"et close on $pril <, Dell reaffirmed its guidance for the fiscal first -uarter, when it e%pects to earn M*.=+ a share, up =)H from the prior year, on M5=.M> billion in sales, a 5<H increase on the yearago -uarter. he company also announced it will spend M) billion on its stoc" repurchase program in the current -uarter, more than double its prior guidance. During its analyst conference slated for $pr. +, Follins is e%pected to outline his plans for turning Dell, with M>N.) billion in revenue last year, into an MI* billion company within three to four years. hat target may ta"e longer to reach if Dell:s growth slows down.

Dell India
TOO FAR AWAY. Dell:s lac" of retail presence could hurt as well. &n des"top and noteboo" PCs -- which contribute +NH of sales -- much future growth will come from outside of Dell:s 2.#. stronghold, where PC sales have slowed. $bout I*H of total PC unit sales from now to )*5* will come from developing mar"ets li"e China and &ndia, according to tech consultancy 4orrester Fesearch. But Dell is struggling there. ;ere:s why! Because of cultural and technological reasons, customers in those mar"ets buy computers from stores and system integrators, says 4orrester analyst #imon Oates. hat:s not surprising, considering that in &ndia, where PC ownership should .ump from +.N million units to +I million by )*5*, most people don:t have 'eb access. (any rural areas lac" phone lines, and most people "now little about computers. #o they go to local stores or computer specialists to as" for advice and to ma"e their purchases. $nd because Dell doesn:t have a strong presence there, consumers buy their computers from local heavyweight ;CP echnologies, ;P, and &B(, whose PC division is now owned by China:s Penovo. $s a result, Dell gets a measly >H

share China:s PC shipments, according to tech consultancy &DC.

THREE O TIO!". he conse-uences of that reach far beyond PCs. oday, more than I*H of Dell:s printers -- a product line that has generated lots of buzz among financial analysts in the past year -- are sold or given away with purchases of PCs, says Charles PeCompte, president of imaging consultancy Pyra Fesearch in Lewtonville, (ass. hus, the lower the PC sales growth, the lower, potentially, are the printer sales. Bottom line! Dell has three options. 6ne, it could stic" with the direct-sales model, waiting for mar"ets li"e &ndia and China to mature technologically. wo, it could e%it the PC business, as &B( has done. 6r three, it could establish more of a retail presence in developing countries to ensure that it grabs a chun" of their PC sales in the ne%t few years. hat can be done through a partnership with or purchase of a local manufacturer already commanding a substantial mar"et lead over 2.#. companies in countries li"e &ndia and Fussia. 6r Dell could set up relationships with retailers and system integrators in these countries. 4or the time being, however, Dell says it:s stic"ing with option Lo. 5. Q'e:re completely committed to the direct-sales model and have no plans to go retail outside of the 2.#.,Q says a Dell spo"esperson. M#R$Y O#T%OO$. &ndeed, investors wouldn:t li"ely be enthusiastic about any moves away from the direct-sales model. $fter all, that could reduce Dell:s margins. oday, at I.<H, they:re way higher than ;P:s 7.>H. ;owever, much faster revenue growth that might result from modifying that model could cover up some of that disappointment. (ore important, it might allow Dell to reach its MI* billion target faster. 6f course, even if Dell:s growth slows as e%pected, chances are investors will stic" with the stoc". $fter all, most other tech companies can:t grow above the high single digits, says Parry Aa"in, senior director of large-cap-growth e-uity at $rmada 4unds. Oet, Dell shares have already lost some ground, and for the first time in years, the future loo"s mur"y. imes have changed. (aybe Dell should, too.

Dell&s 'usiness M()el


&ndividual $ssignment 5! Dells business model &. Dells history and performance. Dell Computers is one of the largest Personal Computer 8PC9 manufacturers in the world and was founded by (ichael Dell his 2niversity of e%as dorm room in 5NI>. 4rom the beginning, the company has served its products directly to end customers without retailer outlets, at a significantly lower price than its rivals. &n 5NII, Dell raised =* million 2#D in its &P6, increasing its mar"et capitalization from M2#D 5,*** to 2#D I7 million. &n 5NIN, Dell entered mobile computing industry by introducing the =5<P , the companys first noteboo", which soon became a core product liner for Dell. &n 5NN=, Dell .oined the top five biggest PC ma"ers worldwide. $ccording to 'illet 8)**+9, during the &nternet boom period, direct sales brought Dell the annual growth rate of about 7>H in 5NN*s. &n )**5, Dell became the biggest of PC ma"er in term of global mar"et share. $fter high growth rate period and facing difficulties in management, Dell firmly developed it position in the personal computer sector by pursuing a low-cost strategy. Despite being ta"en the number one position by the ;ewlett Pac"ard 8;P9 in )**< and facing fierce competitions by other rivals, Dell has maintain its relatively high growth rate of revenue and profit. he e%as-based company accounted for )N.<H mar"et share in the 2nited #tates in )**+. &n the past 5* years, Dell maintained it high growth rate of >*H although high- tech industry faced some serious crisis. #ource! Dells annual financial performance, Oahoo financeR

&&. Dells business model 6bviously, Dells e%cellent performance has made it become one of the most profitable companies in personal computer industry which condenses high pressure of competition. his brilliant performance can be e%plained by Dells uni-ue business model with the following characteristics! 5. Pow- cost competitive strategy! his strategy is based on the following "ey elements! - Direct selling! Dell sells most of it products directly to end users, thus helping the company save on retail mar"ups. he value of distribution through retailers reduces as PCs become standardized on the 'indow- &ntel platform. Dell was the first company to e%ploit this trend. &n 5NN<, Dell began its selling products via internet. $fter that, Dells online sales has accounted for a significant part of its annual revenue. (odel 5! Dominant (odel, model of other PC companies 8$rms length transactions from one entity to the ne%t9! (odel )! Dells direct model 8eliminate time and cost of third party distributors9! - hird- party service! Dell used two low cost maintenance services of telephone-based and third party maintenance. Gia comprehensive electronic maintenance system, Dells technicians could diagnose and help its customers settle most of cases. &n case of necessity of the on-site maintenance, Dell hired third party services from office e-uipment companies such as Sero%. his strategy helped Dell avoid investing in an e%pensive service networ" without compromising on service -uality. - Pow accounts receivable! Dell can reduce its accounts receivable time to minimum by encouraging customers to pay by credit card or by electronic payment at the time of purchase. - 4ocused investment in research and development 8FKD9! recognizing that the most of technical innovations in PC sector were launched by component suppliers and software producers, Dell has relied on its suppliers technologies and focused on FKD to improve its assembly lines, manufacturing, sales, services and high velocity organization to -uic"ly respond to changes. (ichael Dell claims that a great deal of FKD spending is /Tto protect proprietary and it does not benefit customers.08Chaffin )**=9. Dells FKD does not follow things that other companies have invested. ). 'eb-based business applications! &n Bune 5NN<, Dell was the first firm in the PC industry to sell products over the &nternet. #urprisingly, within three months, Dell had become one of the largest &nternet commerce firms. #i% years later, Dell was the largest online retailer of goods, accounting for )) percent of all &nternet retail sales 84ields )**>, p.5I+9. $dditionally, the &nternet applications reinforce Dells capacity to manage collaborative relationships among Dell, suppliers and customers. Dell implemented a supply chain integration pro.ect "nown as D#i), which was originated from the idea of building its business with the &nternet at its core 84ields )**>9. &n a strategic sense, the pro.ect was to enable Dells demand and supply planning, parts procurement, build-to-order production schedules, customer order inta"e, and product delivery processes to operate on a single but fle%ible &nternet-based information platform. &n this way, due to the &nternet communication, all involved parties could obtain business information in real time and Dell could reduce costs of inventory and logistics. 4ields 8)**>, p.+I9 also notes that almost N* percent of Dell purchases from suppliers were occurring through 'eb-based interaction by mid )**5. =. Customer-centric business process! hrough the direct model Dell can receive direct orders and immediate feedbac"s from customers about its products without via distributors. Conse-uently, Dell is li"ely to modify their products, forecast demands, and adapt to mar"et changes faster than other competitors are. 4ields 8)**>9 assessed that other PC manufacturers mainly wor" with wholesalers to get the demand of customers, which caused the delay in catching the right response from the mar"et. 6n the other hand, Dells build-to-order manufacturing allows mass customization in Dells products, which benefits customers, especially corporate customers, in terms of offering a wide range of configurations and designs that fit their business demand. &&&. 'hy to choose Dells business model as ob.ect of the assignment. 6bviously, Dell poses a uni-ue business model in comparison with other companies in the PC industry. $nd as a result of the above business model, Dell has achieved a significant cost and focused customer advantages over its rivals. hese advantages has helped Dell maintain highly constant growth rate, increase mar"et share, and get very high profitability in an industry that characterized by rapid technology changes, significant supplier and buyer power

and intensive competition. #ince the business model of Dell involved activities that are highly interrelated and involved continuous organizational innovations, Dells business model was difficult to replicate, ma"ing its competitive advantages sustainable. Dells success evo"ed its competitors such as &B( and Compa- to imitate parts of its business model. ;owever, no rival has been able to replicate Dells business model successfully. &t is clear that (ichael Dell became one of the youngest billionaire than"s to his clever business model, which is different with other competitors in the PC industry. herefore, Dells business model is interesting to do research. he high stoc" price of Dell has been trading on Lew Oor" #toc" A%change proves that investor continues appreciate Dells competitive advantage and its successful performance will li"ely continue in the future in spite of fierce competition in PC industry. Feferences! 5. $llison, E., Ewong, F. )**+. China chapter of Dell:s retail adventure opens new analysis- Computer ma"er:s latest move is part of the overhaul of its long held direct sales model. 4inancial imes, )7 #ep, p.)<. ). $mes, B. )**+. Penovo launches UNN PC. http!??www.pcadvisor.co.u"?news?inde%.cfm,newsidV5*=*+. $ccessed 5> (arch )**I. =. Barrett, P. )**+. Dell 4inds $ Dome &n China. http!??www.internetnews.com?bus-news?article.php?=+*5>55. $ccessed 5= (arch )**I. >. Chaffin, B. )**=. (ichael Dell Defends ;is Company:s FKD Fecord. http!??www.macobserver.com?article?)**=?55?)>.7.shtml. $ccessed 5< (arch )**I. 7. Coates, P. )**<. Dell goes retailTand why thats a tough sale. imes, =5Buly, vol.5<I, issue 7, pp. 7<-7+. <. Awing, B., Bush, B., Pee, P., Jegnal, B. )**+. 'here Dell sells with bric" and mortar. Business 'ee", *I 6ct, p.+I. +. 4ields, D. #. )**>. erritories of Profit! Communications, Capitalist Development and the &nnovative Anterprises of D.4. #wift and Dell Computer. #tanford 2niversity Press, 2nited #tates. I. Donsalves. Dell to sell PCs in Chinas largest electronics retailer. http!??www.informationwee".com?show$rticle..html,article&DV)*)5*5*=*. $ccessed 5I (arch )**I. N. Barvis, B. )**+. Dell learns to listen. Business 'ee", )N 6ct , &ss. >*7<1 p.55I. 5*. Pearlson, E. K Oeh, F. 5NNN. Dell Computer Corporation $ Jero- ime 6rganization. 2niversity of e%as at $ustin, 2nited #tates. 55. #hah, $. )**I. Dell ops ;P as Pargest PC #upplier in the 2.#. http!??www.pcworld.com?businesscenter?article?5>5>>N?dellWtopsWhpWasWlargestWpc supplierWinWtheWus.html. $ccessed 5I (arch )**I. 5). 'illett, B. )**+. Dell falls on positive earnings but high price to boo" ratio. http!??www.mar"etoracle.co.u"?$rticle)N>5.html. $ccessed 5I (arch )**I. --

Dell "*+a*e,- An) .uali*# F$ ADO Dells business strategy is based on a system of .ust-in-time inventory, mass customization, and e%ceptional customer service. Dell is able to cut costs by using .ust-in-time inventory, give consumers choices when are they building their computer by utilizing mass customization, and convince consumers to return to Dell by providing e%ceptional customer service. Dell is a strong believer in .ust-in-time inventory and mass customization, which they refer to as the /direct model.0 he direct model is based on listening to the customer, responding to the customer, and delivering what the customer wants when they want it. he direct model is based on direct selling without any retail selling. Oou will not find any of Dells computers at 4rys, Best Buy, or anywhere else. (any of Dells competitors have to guess what the customer will thin" is popular, but not Dell. he direct model allows Dell to build a computer after the customer has already placed the order. By developing and building only the systems that customers want when they want them,

they almost eliminate the costs associated with buying too many components, having to store them, and then selling the surplus at a loss. &n 5NNN, Dell was storing only si% days of inventory. his enables them to save time and money and allows them to pass the savings onto the customer. Dell has basically eliminated the middleman and it has proven to be the most effective way to sell computers. Dell has always sold their computers directly, but the &nternet greatly enhanced the direct model. 6riginally, Dell too" orders over the phone, then face-to-face selling for their larger clients, and since 5NN< they have been selling online. hey launched Dell.com in 5NN>, but at that time, it was simply a technical support site for early adopters of the &nternet. #hortly after the launch of Dell.com, Dell realized that the &nternet was a perfect e%tension of the direct model and they implemented an online ordering system in Bune 5NN<. By December 5NN<, Dell.com was generating sales of about M5 million per day. &n the year )***, Dell.com reached sales of M7* million per day. Dell believes in purchasing -uality products from -uality suppliers. 6riginally, Dell and many other computer companies were forced to build their own computer components, such as hard drives, CDF6( drives, and others. $s the industry grew, companies that specialized in computer components started to surface. Dell decided it would be best to purchase components from suppliers instead of manufacturing the components themselves. Dell has learned that they can actually gain more control over the -uality of the their products than if they were building the components themselves because they are able to choose from the best suppliers in the world. hey are able to save money on research and development and focus on adding value for the customer. #ince Dell uses a .ust-in-time inventory system, it is important that they can rely on their suppliers. $s mentioned earlier, Dell has only about si% days of inventory. &f a ma.or supplier could not deliver their products, Dell would be in serious trouble. Dell originally started out with over 5>* suppliers, but now they have less than forty. Dell also believes in "eeping suppliers close by. his lowers shipping costs and shortens the lead-time of the product. 'hen Dell decided to ta"e the business global, they told their current suppliers that they needed to become global suppliers and that they must develop the capacity to server Dell around the world. #ome of the suppliers followed this advice and immediately began building factories near Dells locations around the world. 4or e%ample, one of their suppliers in &reland built factories in (alaysia, China, and e%as, directly ne%t to Dells plants. Dell is aware of the needs of their customers. hey "now that not all of their customers have the same needs. $n individual or small business may only need one or two computers and not often need service or technical support, but it is completely different with a large business. Dell provides different levels of sales and technical support depending on the customer. 4or e%ample, Dell has over thirty people on-site at Boeing that provide software installation, peripheral merging, warranty maintenance, asset recovery, and recycling of obsolete products. Basically, Dell handles everything that Boeing or resellers would have to deal with themselves. X2$P& O C6L F6P Xuality control is an important issue at Dell. Dells main method of promoting -uality control is by forming strong relationships with its suppliers. Dell teaches their suppliers their re-uirements, shares testing and validation data, and continuously helps them improve. 6ne of the ways that Dell measures a suppliers performance is by using a supplier report card. &n

this report card, they tell the supplier how many defects per million they will tolerate, outline what they e%pect to see in field performance, on the manufacturing lines, and in delivery performance, and the ease of doing business with the supplier. he report card also trac"s the suppliers progress compared to what Dell e%pects of them and how reliable the supplier is compared to other suppliers of the same products. Dells goal in 5NNN was to achieve fewer than 5,*** defects per million finished computer systems. his means that individual components must have a defect rate of *.****5 percent. his is a difficult tas" for a computer product, since the components are from many different suppliers, but Dell has been able to achieve this goal and they are constantly loo"ing to improve it.
Dell has transformed the computer industry in recent years, establishing the direct sales model that many have tried to copy but without Dell:s success. Dell moved away from the model whereby PCs were sold by manufacturers to wholesalers and dealers before reaching the buyer, going direct to the buyer. his has numerous advantages which result in lower cost to Dell, lower cost to the buyer and higher profitability, such as! Y #ignificantly lower inventory re-uirements. Y $bility to respond to consumer demand changes instantly. Y Detting closer to the consumer. Y Aase of introducing new technology. Y Lo need to dump QoldQ technology in the channel.Q $n efficient manufacturing system with .ust-in-time inventory ensures that not only are the costs of holding inventory low but there is no ris" of holding out-of-date components. his means that, as new technologies or faster components emerge, Dell is able to integrate them more or less instantly into its products while competitors have to dispose of older products first. he customer focus was routed through =<* degree feedbac" to employees and stoc" options called F6&C 8e%panded as return on invested capital9. Amployees themselves were actively part of the organizational decisions and policies. his created a system of chec"s and balances at every level and accountability was perfect. Closeness to customers is also very important. hrough dealing direct, Dell is actually tal"ing with the customers, not the dealers. his means that they are better able to ascertain customer demands and re-uirements and ad.ust products and services accordingly. 'hat is interesting is how the approach to consumers changed over time, increasing the detail of the segmentation so that appropriate products and communications strategies could be developed for customer types. 'ithin that, the direct model with every PC manufactured for a specific consumer enabled much more accurate response to consumer needs. Consumer focus and the direct model has also enabled Dell to broaden its product range, for e%ample, to include servers. &t had recognized that competitors were using the high price of servers to cross-subsidize PCs. By selling servers direct, and at a much lower price, it was able to force competitors to reduce server prices, thus preventing them from subsidizing PCs. Dell see"s to change the whole relationship to suppliers of parts and components from Qoutside suppliersQ to Qinside members of the Dell family.Q 4or e%ample, Dell computers use Jip Drives. #o Dell has gone to pains to bring &omega, the company that manufactures Jip Drives, right into the internal corporate planning and development areas of Dell .ust as if they were fellow employees, and has wor"ed to bring about an inventory relationship which is as seamless as possible. &t is an attempt to move from a Qthem and usQ status to an Qall of us togetherQ status, and it has wor"ed consistently well. $bove all, the company:s early move to &nternet sales is a "ey success factor. Dell recognized the benefits of the 'eb early on and, increasingly, its customers have moved towards configuring and ordering PCs over the 'eb. $gain, this is very much geared towards reaching different types of consumers with different and more appropriate offers. &n Assential Corporation, the value chain consists of many primary and support activities. &ncluded in the primary activities is inbound logistics, which consists of transportation of products. $nother primary activity, operations, includes the biggest manufacturing plant layout of Assential, which is located in Pogandale 8the suburb of Drandville9. $nother plant location was the ;angar, which is the FKD lab for Assential. $t the ;angar was where the building

and testing of the system too" place. he ne%t two primary activities, mar"eting and sales, and customer service were also in need of much improvement. 4or e%ample, there was a new product that Assential had been wor"ing on, the #6#, which they "ept changing and enhancing because they were encountering problems with. hese changes "ept Assential from producing their new product, which they thought was going to be their /brea"through0 product. Due to the outbound logistics inade-uacy, the organizations reputation was being threatened by their customers. 4urthermore, they were lac"ing their motto of /providing the best customer service0 because their customers were complaining. (oving onto Assential Corporations support activities, procurement was yet another area that Assential needed improvement on. hey had long-term relationships with their suppliers, however, when they could not meet customer needs, they did not thin" of alternative sources for obtaining the needed parts or products. $nother support activity on Assentials value chain was their FKD activities. hey seemed to be ta"ing too long with the development of their new product, the #6#, which was their primary ob.ective and what they thought was going to better their business. &n addition, the relationship between the FKD department and all other departments seemed to be lac"ing communication. $nother support activity, their human resource management, seemed to have e%perienced a high turn over rate with their employees. here had been people who had -uit Assential because of the lac" of communication and also because employees felt intimidated by management. &n my view, Dell has the right attitudes to get things done the right way. Assential is definitely wor"ing harder to get better and & thin" they succeeded in ma"ing things right. Dell, (ichael1 4redman, Catherine QDirect 4rom DellQ #trategies that Fevolutionized an &ndustry 8)***9 Collins Paul, Dan and Co%, Beff Q he Cure! Anterprise (edicine for BusinessQ 8)**=9 'iley

In*e+na*i(nal 'usiness Anal-sis


&nternational Business $nalysis able Contents &ntroduction = Fesearch, 6b.ectives and (otivation > Company 6verview > Piterature Feview < Porters Diamond < Competitive Challenge + Dells $dvantage 5> Bartlett and Dhoshals ransnational ypology 57 #ources of Competitive $dvantage 57 DAPP Competitive $dvantages 5< Changing for new economies of scale 5I Dovernment, laws, regulations and policies )5 Bartlett and Dhoshal framewor" )5 ;ofsted:s Cultural Dimensions )) Porters Diamond 6f Lational $dvantage )+ Conclusion =5 Competitive challenge =) Collaboration Challenge =) Culture Challenge =) Feferences >> Bibliography 7*

In*+()uc*i(n Dell is considered a very successful company. $ccording to Dovindara.an and Dupta 8)**79 one of the successes is its customer-direct concept that has been practiced since the companys inception. he concept involves dealing with customers directly and not through a third party, which helps maintain the -uality of the relationship with its customers and the products. &n addition, this concept allows Dell to eliminate unnecessary inventories, warehouse space and storage e%penses. Dell succeeds by e%panding its business, which can be measured by how it creates relationships with other big businesses, such as 'almart, Boeing, and 4ord. Dell e%pands its business by providing products other than computers, for e%ample, PCD Gs, digital cameras and financing services. Dell possesses a uni-ue ability to manage its business well enough to continue down a path of notable growth and success in a fiercely competitive industry. he Companies commitments to reducing costs, developing its products to meet customer demands, and providing the best value to its customers are some of the ways that continue to drive the growth in Dell. Afficiencies in Dells direct business to personal customers and development of its appeal to enterprise computing customers also contribute to the success and growth of the Company. Dell follows a te%tboo" model of effective management by incorporating planning, organizing, controlling and leading within its organization. Planning is setting goals and deciding on courses of action, developing rules and procedures, developing plans, and forecasting 8Dessler, 5NNI9. 6rganizing entails identifying .obs to be done, hiring people to do them, establishing department : groups : teams, delegating or pushing authority to subordinates, establishing a chain of command and coordinating wor" 8Dessler, 5NNI9. Controlling is setting standards, comparing actual performance with these standards, and ta"ing corrective actions as re-uired 8Dessler, 5NNI9. Pastly, leading means influencing other people to get the gob done, creating and sustaining a vision of direction and improvements, maintaining morale, molding company and group culture, and managing conflicts and communication. hese are the four basic functions of management. Resea+ch, O/0ec*i1es an) M(*i1a*i(n his report focuses on the topic of Dells international business. his report is going to analyse Dells strategies for &nternational Business in the light of following Z Porter:s Diamond Z Bartlett and Dhoshal framewor" Z ;ofsted:s Cultural Dimensions C(23an- O1e+1ie4 Dell was a corporation that had been formed as a result of the PCs open design. &n 5NI=.$t Dell new product groups and customer segments were formed to manage e%ploding opportunities, and new employees were hired. &n the fourth -uarter of )***, the growth came to a screeching halt. Dell along with its rivals saw a slump in the stoc" price and mar"et capitalization. &n spite of the slowdown and Dells significantly reduced growth targets for )**5)**), the companys top management remained supremely confident of Dells future success. #ome in the industry however believed that the hyper e%pansion phase of the industrys growth was over, and that the players would have to ad.ust their strategies to reflect the commodity nature of the environment. &n addition to continually improving its position in PCs the dell companys leadership was aggressively pursuing a multi-growth categories 8storage and server9, opportunities in the service side and to e%pand in the international mar"et. Piterature Feview Porters Diamond Porters Diamond of Lational $dvantage attempts to e%plain why certain companies are more stable and more capable of innovating than others and if Dell uses this diamond before ma"ing their strategies for &nternational (ar"ets they will be able to study the mar"et but also will be able to align their business goals and ob.ectives through better strategies. Porter uses the Diamond to demonstrate the main factors re-uired to survive in an industry and e%plains that each point of the Diamond reinforces each other through co-operation and networ"ing. 4or an company li"e Dell to remain strong, it must be dynamic, able to change and be embedded in the local economy.

[pic\ C(23e*i*i1e Challen,e Competitive advantage is a companys ability to transform inputs into goods and services at a ma%imum profit on a sustained basis, better than competitors. Comparative advantage resides in the endowments of a particular region. hese include land, natural resources, labour and the size of the local population. (ichael A. Porter argued that a nation can create its own endowments to gain a comparative advantage. Created endowments include s"illed labour, the technology and "nowledge base, government support, and culture. Porters diamond of national advantage is a framewor" that illustrates the determinants of national advantage. his diamond represents the national playing field that countries establish for their industries. Fun)a2en*al Anal-sis Dell, &nc is primarily a designer, developer, producer, mar"eter, and supporter of des"top, portable, and enterprise computers. $s well, Dell provides & support and services. Dell competes in three ma.or mar"ets! Lorth $merica, Aurope, and $sia. he company appears attractive in light of a combined analysis of the following four "ey measures! Felative competitiveness, prospects for growth, current earnings, and business stability. A%penditures will also be considered, as they are an important secondary confirmation of growth potential and business cost. 5alue Chain C(s*s Dell has very effectively streamlined its operations1 all production processes have been calculated according to the principles of B& manufacturing. his has resulted in improved efficiency. Dell production now has e%tremely low relative transfer time due to strict inventory control, and high productivity. Dell has also e%tended their efficient management techni-ues to the other aspects of their value chain, and has in-sourced these processes. he resultant efficient structuring has resulted in reduced costs-to-mar"et and a higher profit margin. G+(4*h: The Fu*u+e Prospects for growth appear favorable! he last three analyst initiations pro.ected 4O )**7 earnings to be 5.)), 5.)7, and 5.>7, respectively 85.=*+ average9. 'ith the trailing twelve month AP# at .N*N, these estimates call for growth over the ne%t two years to be 5+.7H per year. Consensus estimates call for )**7 earnings of 5.)5. he difference between these numbers increases the li"elihood of increasing consensus earnings estimates, a catalyst for stoc"price appreciation. 5alua*i(ns Galuations appear attractive! he stoc" trades at M=>.>5 per share, or at =<.*I times trailing twelve month AP#, well below the companys 7-year average P?A ratio of 75.N<, although this is reasonable, given decreased earnings growth e%pectations. he company trades with a much lower P?AD ratio than competitors1 the company has a P?AD ratio of ).<>. 4or comparison purposes, competitors ;PX and $$PP have P?AD ratios of =.)N7, and I.)>, respectively 8based on 7-year AP# growth pro.ections, and trailing earnings9. Ca3i*al E63en)i*u+es &t is e%pected that DAPP will spend appro%imately =** million on capital e%penditures this year, in line with the prior year. he money will be spent on e%pansion and research and development. his is neutral information, consistent with e%pectations. Financials Dell has a mar"et capitalization of II.)> billion, has earnings of =.>7 billion 8AB& D$9 for the trailing twelve months, carries 7.5) billion in cash, and 7*< million in debt. he company is sufficiently capitalized to proceed with operations and planned capital e%penditures

[pic\

Cus*(2e+s Dell offers in-person relationships with corporate and institutional customers1 telephone and &nternet purchasing1 customized computer systems1 phone and online technical support1 and ne%t-day, on-site product service. Dellss products! PC, #evers, #torage and printers, were only bought for homes, offices and educational centers. But now, the new strategy e%pands the segment, adding all this new technology to Dellss portfolio, the company massificates and products are for everyone in the planet. $e- C(23e*i*(+s ;P $ year has passed since the controversial merger between ;ewlett-Pac"ard Q;PQ and Compa- was initiated. he results to-date have been better than the s"eptics and the opponents of the merger predicted. his was most evident in the cost savings area where ;P has already reached M=.7B in annualized savings versus its forecast of M).7B in )**>. he company did well in constructing a detailed merger process, and then e%ecuting it with diligence and decisiveness. his accomplishment was especially significant in an environment where revenue growth had stagnated due to the overall economic slowdown, and in particular, the mar"et recession in the & sector. he critics of the merger point to the lac" of revenue growth as proof that the merger was ill conceived. &t is true that a mega-merger cannot be .ustified and sustained solely on cost reductions. &t has to prove that the merged resources and collective product offerings are stronger and more competitive than the sum of the two companies operating independently. 4rom a product and technology portfolio perspective, the new ;P is better positioned in the mar"et. Compa- brought strength in des"top PC, handheld devices, storage, high end servers, consulting and services, and the direct selling model to better compete with Dell. he resulting company did move -uic"ly to sort out the product overlaps and eliminated the wea"er ones regardless of which side they came from. his allowed them to avoid protracted internal debates and uncertainties for their customers. &t has also contributed to their ability to align the organizations -uic"ly and achieve the cost reductions ahead of plan. &t is true that ;P has shown little revenue growth during the past four -uarters. ;owever, that was true of the overall & mar"et sector, especially in the enterprise area. elecoms have and should remain wea" due to overcapacity, pricing deflation, and a lac" of significant new revenue sources. he same was true for the other sectors of the technology industry, but some are beginning to emerge from it, albeit at a slow pace. & spending should pic" up as companies invest again to get more productive use of their technology, to refresh their technology infrastructure, and to implement new business models driven by new technology. 4or ;P, the test is whether or not it will be able to grow its revenues when that happens, and more importantly, whether it can gain mar"et share against its "ey competitors &B( and Dell. &B( he number one competitor in Dellss view is &B(. Amotionally, being number two to &B( is a good reason to gain on &B(, but the challenge is significant. &B(]s business has shifted its revenue and profit growth during the past decade from a dependence on hardware, to solutions?services. &t was recognition of the fact that as customers move away from proprietary systems, 8which was &B(:s differentiation9, towards open standards, hardware was becoming more of a commodity, which favors low cost producers. &B( was not one of them. &n addition, commodity buyers do not have strong loyalty to their suppliers. ;owever, solutions and services carry uni-ue characteristics and values from the supplier to the customer, and therefore, they are differentiators against competitors. hey support higher margins and have higher growth prospects because customers will depend on suppliers to provide complete solutions, ongoing support, and an increased trend towards outsourced management of their & . o support a solution-selling model, &B( has chosen to invest heavily in software, not the pac"aged applications, but primarily middleware upon which the applications sit. his was an important strategic decision, because having control of the middleware made it easier for &B( to manage the integration of the third party applications. &t is more effective to deliver solutions wor"ing with one ma.or outside party than two outside parties. Fecent evidence of &B( reinforcing this direction was the

ac-uisition of the Price 'aterhouse consulting business and the selling of its storage business. ;P has been wor"ing to boost its consulting?solutions revenues in its enterprise business for some years including its failed ac-uisition of the same P'C unit in )***. 'ith the merger of Compa-, ;P has ac-uired significant assets in these areas, but it still is far less than what &B( offers. 4uture ac-uisitions in this area are li"ely with potential targets such as AD# and 2nisys. &n the software area, ;P has not had good success in the past, with the e%ception of the 6pen Giew networ" management platform. &t had good technologies but could not turn them into commercial successes due to a lac" of effective software business management process. ;as the Compa- merger brought new competence in this area, &f not, ;P must continue to wor" with multiple partners to deliver complete solutions, which can put it at a disadvantage vis-^-vis &B(, which has control over more pieces of a total solution. &n the & services outsourcing area, ;P has made good progress with the recent high profile wins of customers such as C&BC, Procter and Damble, Lo"ia, and others. he -uestion is, at what cost, hese are long-term contracts1 therefore sacrifices made in margins today should carry forward for years to come. he good news is that ;P has to be ta"en as a serious player in this growing business trend and will be given the opportunity to compete for future contracts. [pic\ &n this DAPP (odel chart we can see their distribution chain process, and what they can achieve becoming the owner of their core business by processing all their production, plants and other processes without the ris" of sharing confidential "nowledge, remember that Fesearch and development is one of the "ey tools for their absolute advantage.

Dell7s A)1an*a,e Dell is a formidable competitor to ;P an &B(, not only in PCs, but also increasingly in other areas including printers, storage, and handheld devices. Dellss success grounded in its direct selling business model is well proven. Dellss direct model has a > to < percentage margin advantage over ;Ps historical indirect channel model. 6ne has to assume that the manufacturing costs are similar for similar products, given that the products are based on standard hardware and software components and are manufactured by many of the same contract manufacturers or 6D(s. Both ;P and Dell have such sufficient large unit volumes that it is -uestionable that either can gain significant cost advantages through higher volumes. #o we believe ;P has no choice but to move more aggressively towards a direct model and the Compa- merger is a catalyst in that effort 8as Compa- was moving fast in that direction prior to the merger9. &t is a difficult transition for ;P, as it has to be very careful not to alienate its long-standing channel partners. ;P should have a viable PC business as the mar"et will want an alternative to Dell, so the continuing challenge is how to ma"e it a sustainable profit contributor to the company. Dell will be e%pected to use pricing pressure to gain mar"et share globally as long as it en.oys those margin advantages. Dell has now entered into the low-end printer business with its direct model, clearly aimed at challenging ;Ps ma.or profit contributor. Can Dell have the margin advantages that it en.oys in PCs in printers and supplies when it has to 6A( them from Pe%mar" or others, Probably not now, but it has the resources to become a serious competitor over time. ;owever, ;Ps brand image in printers and its commanding global mar"et share in e%cess of <*H pose a very strong line of defense against Dell and other competitors. ;Ps imaging business should continue to do very well under a very e%perienced and seasoned management team.

Bartlett and Dhoshals ransnational ypology _#trategic 6b.ectives _#ources of Competitive $dvantage _ _ _Lational Differences _#cale Aconomies _#cope Aconomies _ _Afficiency in _A%ploit factor cost differences _#cale in each activity _#haring investments and costs _ _6perations _Pow coordinator costs _&ntegrating online ordering _4uture trend of cutting price of _ _ _6utsourced based supplier chain _#upply chain management _storage

_ _ _Feal time access to orders information_A-commerce enable firms to intensify _ rends for (erges and ac-uisitions _ _ _ _relations with trading partners _ _ _4le%ibility _(ar"et or policy-induced changes _Balancing scale with strategic K _Portfolio diversification _ _ _ echnology focused on entertainment _operational ris"s _(P= ? G #creens ? (usic Download ? _ _ _ _Big technological player _Printers _ _ _ _Fange of products _ _ _ _ _(ar"et adaptability 8new trends9 _ _ _ _ _Bust in time philosophy _ _ _&nnovation and _#ocietal differences in management and_A%perience - cost reduction and _#hared learning across activities _ _Pearning _organization _innovation _Closer partnership with #2L ? A(C _ _ _(atri% structure _Pow labor costs ? no costs _ _ _ _ _&nventory management ? _ _ Dhoshal`s $nalysis

DE%% C(23e*i*i1e A)1an*a,es Z Dell today aims to bring the same model of success it has found in the des"top PC and wor"station world into the data center! Z $chieving economies of scale through the use of standard, off-the-shelf components. Z &ntegrating online ordering Z AA--commerce enables Dell to intensify relations with some of their trading partners. Z (anufacturing, integration and distribution of their systems. Dell has started manufacturing its own storage area networ" Z Cut the price of storage by bringing the manufacture of #$Ls in-house - mar"ing a change to Dell:s partnership with storage giant A(C sDell will still have to depend on its relationships with other vendors such as A(C Z oday outsourcing fle%ibility inbuilt in the non-integrated business models of Dell Computer is the competitive advantage. Z Dell ta"es ownership of components Z Disintermediation and Fe-intermediation Z Dell provides direct sales to businesses and households Z Dell has made selling and distribution more do-it- yourself activities, replacing distributors, value-added resellers and retailers Z Dell has efficient customization has tended to replace do-it-yourself at another level. &t ma"es less sense for an individual to buy all the software and Z Dell has increased specialization in one area, while eliminating it in another small number of partners considers low coordination costs. Z &nventory process enables .ust in time process. Z Constant supply of real-time information Z 'eb based integrated value chain Z $llows its supplier to access to its data warehouse Z Customers can trac" the progress of their orders.

Z Pi"e in $mazon. C6( they have builds an online framewor" that enables to introduce new products to the mar"et, (P= media players, etc. Z Anables Dell to ad.ust production to demand. Changing for new economies of scale &n this graphic we can see that most of what in the past was their target in mass-mar"et products such as #tandard PC, #torage Devices, #ervers, etc, they are building a new niche in order to ta"e advantage of their online web based integrated model. (ost of the new devices such as (edia Players, (P=, G screens, downloads, etc are being part of the distribution chain of most of the companies that have build a portal in the internet to show their products. a"e advantage of the web culture that is transforming mar"et. Lowadays the mar"eting is focusing much more in Brands and the distribution and promotion of products by web pages, this allows Dell to have low costs in distribution chain and also diversification.

Dell 3+()uc* +an,e 2a+8e* [pic\ Dell leads all other PC brands with the highest repurchase rate among the ma.or manufacturers. he Fepurchase Brand Poyalty measure is calculated annually by (eta4acts, &nc. as part of their echnology 2ser Profile study. he )**= research is based on a survey of 55,5+7 respondents and leaves no doubt that Dell is the PC repurchase brand leader. $ccording to the study, Dell has attracted the most-loyal PC buyers, rising to ran" first among the ma.or brands with a ++H repurchase rate. his is off the heels of the )**) research which had Dell at an industry-leading <>.+H repurchase rate, a 5NH year-over-year increase. $pple came in second in )**= with a 7+.<H repurchase rate, improving nearly 55H over its )**) result. $lthough Compa- alone en.oyed a healthy >=H year-to-year improvement, when you combine ;P K Compa-, the two brands are stronger than last year by 5+H though still ran"ed third among the leaders. 'ith Dateway decreasing from 7>.7H to >+.7H from the )**) to )**=, &B( Clones now ran" fourth with >I.>H. 8#ee table below.9 _)**= PC Brand Poyalty Fan"ing 8Previous Fan"ing9 _ _H of Pro.ected &nstalled PCs that were the same brand as the previously installed brand when purchased new in )**) and )**5 _ _ _ _)**) _)**= _Or?Or _ _5 _Dell 859 _<>.+H _++.*H _5N.*H _ _) _$pple 8=9 _7).5H _7+.<H _5*.<H _ _= _;P?Compa- 8>9 _>+.>H _77.<H _5+.=H _ _> _Clone?&B( Compatible 879 _>7.<H _>I.>H _<.5H _ _7 _Dateway 8)9 _7>.7H _>+.7H _-5).IH _ _< _Compa- 8N9 _=).5H _>7.NH _>=.*H _ _+ _e-(achines 8I9 _=<.+H _>+.5H _)I.=H _ _I _;ewlett-Pac"ard 8<9 _=I.7H _>5.>H _+.7H _ _N _&B( 8(ade by &B(9 85*9 _)7.>H _=+.*H _>7.+H _ _5* _#ony 8+9 _=<.IH _)>.*H _-=>.IH _ _#ource! (eta4acts, &nc. a echnology 2ser Profile a )**= and )**) _

4or Dell, repurchase brand loyalty is a "ey measure for PC ma"ers as they loo" to e%pand beyond the maturing personal computer mar"et and into the highly competitive consumer-electronics mar"et. 'ith new products such as portable digital-music players, an online music stores and flat-panel television sets, leveraging their strong brand loyalty with consumers will be a ma.or factor in obtaining success in these new mar"ets.

Dovernment, laws, regulations and policies Z (onetary and fiscal policies and their impact on price trends and inflation Z Commercial policies such as tariff controls, import restrictions Z A%port controls and restrictions on trade Z a% policies Bartlett and Dhoshal framewor" his framewor" is very crucial for any organization li"e Dell who enters into &nternational Business because the nature of the business o Dell is such that there are very few but very strong rivals so in order to be a successful they need to understand the Bartlett and Dhoshal framewor". $ligning these into a matri% results in the following framewor"! _#trategic 6b.ectives _#ources of Competitive $dvantage _ _ _Lational Differences _#cale Aconomies _#cope Aconomies _ _Afficiency in _A%ploit factor cost differences _#cale in each activity _#haring investments and _ _6perations _ _ _costs _ _4le%ibility _(ar"et or policy-induced changes _Balancing scale with strategic K _Portfolio diversification_ _ _ _operational ris"s _ _ _&nnovation and Pearning_#ocietal differences in management and _A%perience - cost reduction and _#hared learning across _ _ _organisation _innovation _activities _ H(9s*e)&s Cul*u+al Di2ensi(ns Culture environment could strongly influence e%patriate manager for Dells global assignment. Fesearches show that one of the top reasons for failure of international managers is their inability to adapt to a new environment. (any of them, including the most effective international mangers, suffer from culture shoc" because of the culture distance among countries. #ome personality characteristics and coping strategies are found to be critical for e%patriates to con-uer cultural barriers, such as open-mindedness, acceptance, etc. Based on these researches, various criteria are provided in the paper for international human resource selection for Dell. ;ofstedes 85NI*9 dimensions of culture have turn out to be the most e%tensively used model for e%planation various effects across cultures. ;ofstedes five dimensions comprise the subse-uent. Z Power Distance Z 2ncertainty $voidance Z &ndividualism and Collectivism Z (asculinity and 4emininity Z Pong erm 6rientation 8P 69 C+i*icis2 he competitors to Dell are as follows! ;ewlett-Pac"ard, &B(, and #un (icrosystems 8;oovers9. ;P and &B( pose the biggest threat in competition. Dells sales overview has increased each year e%cept for )**5 to )**>. &n )**5 the annual sales in millions were M=5,III and a ma.or increase in sales in )**> at M>5,>>>.*. 8;oovers9. &n terms of entry barriers, Dells direct to consumers sales approach has increased their sales each year and will soon be among their top competitors. Because of this approach, Dell has entered into this highly competitive mar"et in a uni-ue way. he biggest entry barrier that Dell has to face when entering into the technology industry is having customers gain the trust of company over the more popular veteran computer companies. Levertheless, many of competing companies use a range of different suppliers. Competitor #un (icrosystems annual sales are lower than Dells. hey offer an online service where customers can order servers, and personal computers. hey differ from the rest of the organizations is that they do not use the (icrosoft operating system which is a wea"ness compared to the rest. #un does not see Dell as a ma.or competitor, in obvious place of Dell1 they see (icrosoft as a ma.or

competitor along with ;ewlett-Pac"ard and &B( his being said, Dell is performing in the right direction and sales are increasing dramatically overtime as mentioned above, and the competition e%ist between the companies and that what ma"es Dell uni-ue. he increase in sales between )**5 and )**> proves the success for the organization. heir economic status continues to improve and to grow. O3e+a*in, En1i+(n2en* Consumers view Dell as a -uality brand at a good price. #ome consumers find that Dells competitors may be a little more e%pensive but still offer a -uality brand, a new sales campaign : /Dell on &ce0 : will offer 57H discounts on its Blade Centre system and on its %>>* top-end &ntel server. 8#han"land9. Dell ran"s high with customers because the company offers free technical support if needed. he purchasing process has changed for the consumers with Dell because all the ordering is done online which offers convenience to its customers and minimize inventory. he flow of materials from suppliers into Dell starts by the company putting in orders to factories that are based on two categories. hese two categories are product type and geography. 'hen putting in orders for product type Dell wants to select the right factory that specializes or deals with a certain product. Deographic orders mainly focus on the where the order is coming from to minimize the transportation e%pense. /(ichael Dell and his team have superb relationships with their suppliers1 they maintain those superb relationships, by ensuring that the suppliers win every time Dell wins0. 8Fizzo9 $s a conse-uence, Dells suppliers are perfectly willing to "eep a truc" load of inventory at Dells loading doc". 8Fizzo9 Dell leads the way in innovative material handling in that industry Dell will go through some several changes in the ne%t couple years to develop its system, improve customer service, reduce cost, and improve supplier control. Dell will lead the technology industry and be a good e%ample to the competitors. (ore technology of software and hardware will be available in the ne%t couple years with less cost. Re2(*e En1i+(n2en* he internet mar"et has been e%panding and e%ploding across the globe. his mar"et has varied by mar"et segment and already has been a big hit in the 2.#. Dell "nows that the way to globalize the company successfully is through e-business. $nalysts agree that e-business is the most significant trigger to the achievement of economic globalization. 8Feynolds9 Ec(n(2ic 4or Dell to penetrate into this mar"et it must oust the Pegend brand PC which is already a big hit in China and therefore Dell has already built a factory in Siamen, which is on the southeastern coast of China. Dells facility inside of China is a ma.or step into the Chinese mar"et. 'ith this factory in Siamen, Dell can promote its ne%t day delivery too >** cities which is one of the company trade mar"s. 8Foderic"9 /Dells China mar"et share has grown from near zero in 5NNI, to >.>H0. 8Foderic"9 Dell does not produce and manufacture parts only, it searches and sets up long-term strategy to accommodate global customers. (ore business and more production facilities will be opened world wide to adopt and globalization system and the global demand in the ne%t decade. %(n,-Te+2 O/0ec*i1es Dell is starting to ta"e on new pro.ects li"e focusing on mar"ets globally. Dells ob.ective is to ta"e over )*H of the $sia mar"et. he internet mar"et has been e%panding and e%ploding across the globe. Dell "nows that the way to globalize the company successfully is through e-business. he greatest opportunities for future profits are in the global mar"et. China has a huge computer mar"et and is growing fast. he main computer company right now in China is the Bei.ing-based Pegend computer. here are many opportunities here for Dell because there is low penetration cost into the Chinese mar"et, and is considered to be the third largest in the 'orld. /Despite relatively low penetration rates, Chinas M5* billion computer mar"et is already the third largest in the world1 within in a few years it is e%pected to past Bapan and become second only to the 2.#0. 8Foderic"9 he pro.ect that Dell is trying to ta"e on is to advance into the Chinese mar"et where they see a huge potential increasing their revenue greatly. Dell should continue with their staff education program related to the

global areas that they wor" to continue to develop "nowledge, understanding, e%pertise and leadership effectiveness. o continue to remain competitive Dell should continue to e%pand their global supplier relationships that will enable them to operate cost effectively. (+*e+7s Dia2(n) O9 !a*i(nal A)1an*a,e [pic\ he individual points on the diamond and the diamond as a whole affect four ingredients that lead to a national comparative advantage. hese ingredients are! 5. he availability of resources and s"ills, ). &nformation that companies use to decide which opportunities to pursue with those resources and s"ills, =. he goals of individuals in the companies, >. he pressure on companies to innovate and invest. he points of the diamond are described as follows! 4actor conditions Z $ country creates its own important factors such as s"illed resources and technological base Z he stoc" of factors at a given time is less important than the e%tent that they are upgraded and deployed Z Pocal disadvantages in factors of production force innovation. $dverse conditions such as labour shortages or scarce raw materials force companies to develop new methods, and this innovation often leads to a national comparative advantage Demand Conditions Z 'hen the mar"et of a particular product is larger locally than in foreign mar"ets, the local companies devote more attention to the product than do foreign companies, leading to a competitive advantage when the local companies begin e%ploiting the product Z $ more demanding local mar"et leads to national advantage Z $ strong, trend-setting local mar"et helps local companies anticipate global trends Felated $nd #upporting &ndustries Z 'hen local supporting industries are competitive, s en.oy more cost effective and innovative inputs Z his effect is strengthened when the suppliers themselves are strong global competitors Dell #trategy, #tructure $nd Fivalry Z Pocal conditions affect company strategy Z Pow rivalry ma"es an industry attractive. 6ver the long run, more local rivalry is better since it puts pressure on companies to innovate and improve. ;igh local rivalry results in less global rivalry. Z Pocal rivalry forces companies to move beyond basic advantages that the home country may en.oy, such as low factors costs. he Diamond $s $ #ystem Z ` he effect of one point depends on the others. 4or e%ample, factor disadvantages will not lead companies to innovate unless there is sufficient rivalry. Z he diamond is also a self-reinforcing system. 4or e%ample, a high level of rivalry often leads to the formation of uni-ue specialised factors. Dovernments Fole he role of government in the model is to! Z Ancourage companies to raise their performance, for e%ample by enforcing strict product standards Z #timulate early demand for advanced products

Z 4ocus on specialised factor creation Z #timulate local rivalry by limiting direct cooperation and enforcing antitrust regulations Disadvantages 6f he Diamond (odel Z &t does not address cultural issues in different regions Z he political dynamics of a region are not factored into the model Conclusion Dell is a global leader in the computer technology industry. &t is no accident when they provide innovative ways to reach out to their customers. Afficient and uni-ue mar"eting techni-ues are carefully calculated to create and identify specific needs of customers. Dells customer-direct concept gives it a competitive edge on rivals, helping the company gain customer loyalty on a global level. &n addition, Dells management team has been able to handle difficult internal?e%ternal factors effectively, ma"ing them one of the most successful companies in the world. heir ability to recognize "nowledge management will guide their worldwide employment. Dell will then effectively develop global talent for diverse ideas and s"ills. hey can then hope to understand international customer needs and convey desirable technology to developing economies. 6ne plans success begets another. Dell opens up more time to focus on its efforts to providing low cost, high -uality products. hey "eep up with technology changes allowing them to stay ahead of other companies. 'ith the progress of globalization, an overwhelming ma.ority of large-scale enterprises loo" globally for their mar"ets, technologies, labour and capital, they becomes multinational enterprise and frames a series of modes to enter the world mar"et. Lowadays, information technology has become the hottest industry and the mainstay industry of the whole world economy, Dell, a giant in this industry, is actively throwing itself in international business, and it has made enormous strides in e%ploiting the world mar"et. Competitive challenge Decision-ma"ing moves to the lower managerial levels in flat organization structure, which puts forward higher -ualification re-uirement towards employees, besides, communication and interaction among lower level managers increases the efficiency of decision-ma"ing. 4or one thing, Dell should offer staff more opportunities of further study and training in order to strengthen individual technology "nowledge. 4or another, creating more open communication environment in the firm is feasible. 8;uang, )**<9 Collaboration Challenge Because of the natural limitation of direct mode, Dell could only gain outstanding achievement in cities with perfect infrastructure. Practically, electronic product mar"et of these cities are tend to saturation, on the contrary, lower developed cities, where Dell is absent, is booming in computer operations. Dell ought to modify its mode to adapt the changing mar"et environment, and its operation more diversiform and fle%ible than before to access more customers. 8Jhong, )**79 Culture Challenge Dells direct mode performances insufficiently when it comes to lower developing area, identified culture and custom, if they can see the product actually, they would not buy. Dell should strengthen its supporting technologies to "eep contact with these "inds of customers, made them "now better about their products and confident about their products. 8Oou, )**79 Fiding with the technology wave, many firms invested in the internet and related technologies in an attempt to try to gain competitive advantage over rivals by being the first to offer their products or services online. (any firms although have found serious problems with pursuing this. he profitability of the industry was often undermined as companies competed on price in order to try to build up their mar"et share. (any firms also saw the development of internet capabilities as a separate strategy and not an integrated part of the firms strategy, often resulting in failure of its online operations. 6ver the last years Dell, as a company, has proved that the increase in product variety offers the possibility of customisation, when this is combined with modern production techni-ues, using the internet to ta"e

customised orders, it can prove to be a very serious competitive advantage, for the company that cannot erode easily. he sales numbers for Dells web-site are enormous, at (arch 5NN+ Dell was selling M5 million per day through the web-site and by (arch 5NNI this number doubled to M) million sales per day, but while much of the internet mar"et is untapped there is still potential for this number to grow even more. Dell has created a very important advantage over their competitors because the direct to customers business model enables the company to be e%tremely responsive to any problem they might have to face at any point of time. $nother important aspect for Dell is the service they offer, as they have created an e%cellent service capability based on the bDell Gision which states that a customer must have a -uality e%perience and must be pleased, not .ust satisfied and further on this gives them an even larger advantage over their competitors as they have created a very strong relationship between the company and their most profitable customers. / he monetizing concept argues that online businesses must first capture large audiences of users or shoppers, and then later monetize those audiences through subscription fees, advertising and e-commerce0 8Fayport : 5NNN9. 4ollowing from the above, it is obvious that Dell has an advantage over any new company that enters the mar"et, as new entries will have to attract large number of customers first and then be able to play an important role in the mar"et, while Dell already has captured a very large and also satisfied and dedicated audience. here is also a widely held belief that once a customer starts wor"ing with a vendor, it is much easier to "eep that customer than it is to bring in new customers. #o if you can build brand loyalty for a web-site early, it gives you an advantage over other vendors who try to enter the mar"et later. Dell implemented its web-site very early and that presumably also gives them an advantage over the competition. 4urther on the internet can be a very useful tool for other companies that already trade in the pc mar"et. $t this point it is useful to mention Dells main competitors in the mar"et, which are &B(, $pple, 'all-(art, Dateway, ;ewlett-Pac"ard-Compa- and also many small local manufacturers in every region separately but there is no reason to probe on each one separately as each company follows their own strategy and different to Dells strategy, in order to gain larger mar"et share and it is not fair to compare. Dell Computers is an e%cellent e%ample of a manufacturer that has successfully used the &nternet to manage many of the channel activities and it is difficult for any other company to achieve the establishment that Dell has achieved. Dell has resulted positive brand recognition by consistently building and servicing its low-cost, customized computers to customers. &t fosters brand loyalty by continually providing superior customer service and technical support along with continuously incorporating the latest technology in its products. Dell has achieved mar"et focus and competitive advantage by assembling purchased components from suppliers, thereby becoming one of the most successful companies in the global computer systems industry, as it must be noticed that in )*** it was the Lo. 5 computer company in the 2nited #tates and Lo. ) world-wide. Dells potential for continued growth is enormous and at the same time the possibility to erode is minimised, because of its capability of providing up-to-the-minute pc technology customized for and sold directly to individual customers. he internet as a mar"eting channel can become a very strong advantage for any company, although at the same time Dell has been able to build up a very strong competitive advantage for the company, something that ma"es it very difficult for any other company in the pc mar"et to compete and attract customers from Dell. Dell is a thriving company due to the efficient alignment of its information systems plan with its business plan. Dells business model has proved to be e%tremely successful due primarily to two main advantages1 59 selling straight from the factory to end users eliminated the mar"ups of resellers, and )9 custom building orders significantly reduced the costs and ris"s associated with carrying large stoc"s of parts, components, and finished goods. hese two "ey aspects of Dells business model is almost totally dependent on the fusion of its business ob.ectives and processes with & 8Eearns =9. #trategic &# alignment facilitates Dells business model, competitive advantage, success within the industry, and the attainment of Dells mission /to be the most successful computer company in the world at delivering the best customer e%perience in the mar"ets we serve.0 8www.dell.com9 Dell produces all its computers, wor"stations, and servers to order. his allows Dell customers to order custom-built servers and wor"stations based on the needs of their applications. Des"top and Paptop customers can order whatever configuration of microprocessor speed, F$(, hard dis" capacity, CD?DGD F6( drive, modem, monitor, and other accessories preferred 8www.dell.com9. Dell has assembly plants in $ustin, e%as1

Lashville?Pebanon, ennessee1 Pimeric", &reland1 Siamen, China1 Penang, (alaysia1 and Al Dorado do #ul, Brazil 8 hompson I)9. Prior to 5NN+ assembly lines were operated in a traditional fashion, with each wor"er performing a single operation. Dell however has shifted to cell manufacturing techni-ues where a team operating at a wor" station assembles an entire PC to customer specifications. his has reduced assembly times by +7H and doubled productivity 8 hompson I)9. Dells philosophy is to strategically partner with reputable suppliers of PC parts and components 8for e%ample &ntel and (icrosoft9 as opposed to adopting bac"ward integration into parts and components manufacturing. (ichael Dell, CA6 of Dell Computer .ustified this strategic tactic with the following -uestion1 /&f youve got a race with )* players all vying to ma"e the fastest chip in the world, do you want to be the twentyfirst horse, or do you want to evaluate the field of )* and pic" the best one, 8 hompsonI=90 ;ence Dell evaluates the various ma"ers of each component, pic"s the best one or two as suppliers and partners with them as long as they remain leaders in their specialty. #uch partnerships yield several advantages. 4irstly, using the best components enhances the -uality and performance of Dell PCs. #econdly, Dell is assured of getting the volume of components it needs on a timely basis. hirdly, engineers of partners are assigned to Dells product design teams. 4ourthly, Dells long run commitment to its suppliers is based on the .ust in time delivery of supplies to Dell assembly plants. &n order to facilitate the B& inventory system Dell openly shares its daily production schedules, sales forecasts, and new model introduction plans with vendors 8 hompson I>9. 2sing online communications technology, Dell communicates inventory levels and replenishment needs to vendors on a daily or even hourly basis. his is done through valuechain.dell.com, which provides suppliers with secure personalized access to Dells operations through a single portal. his facilitates real-time collaboration on the -uality of items being supplied, helps assure the continuity of supply while minimizing inventory, and ma"es it possible for engineers at Dell and its suppliers to .ointly develop online designs of ne%t generation components and products. &n addition an online scorecard for suppliers shows their performance against the -uality standards that are agreed on and how well they are doing against other suppliers in the same class. Both tools help the company achieve its strategic ob.ectives of product -uality and reliability, rapid inventory turnover, and low costs. $ccording to (ichael Dell1 /'e tell our suppliers e%actly what our daily production re-uirements are. #o its not, b'ell, every two wee"s deliver 7*** to this warehouse, and well put them on the shelf, and then well ta"e them off the shelf. &ts, b omorrow morning we need I7<), and deliver them to door number seven by + $( 8 hompson I>9.0 he emphasis on B& inventory yields many cost advantages, and has shortened the time it ta"es Dell to get new generations of its computers to the mar"etplace. Lew advances are coming so fast in certain components that any given item in inventory is obsolete in a matter of months, sometimes -uic"er. ;aving a couple of months in component inventories can mean getting caught in the transition from one generation of components to the ne%t. he advantages of minimal component inventory are ma.or e%plains (ichael Dell1 /&f &ve got 55 days of inventory and my competitor has I* and &ntel comes out with a new chip that means &m going to get to mar"et <N days sooner. &n the computer industry, inventory can be a pretty massive ris" because if the cost of materials is going down 7* percent a year and you have two or three months of inventory versus 55 days, youve got a big cost disadvantage. $nd youre vulnerable to product transitions, when you get stuc" with obsolete inventory 8 hompson I>9.0 Collaboration with suppliers is close enough to allow Dell to operate with only a few days of inventory for some components, and a few hours of inventory with others. Dell supplies data on inventories and replenishment needs to its suppliers at least once a day 8hourly in the case of components being delivered several times daily9. Dells partnerships and B& inventory system allows zero inventory levels in some cases. 4or e%ample, using sophisticated data e%change systems, Dell arranges for its shippers 8$irborne A%press and 2P#9 to pic" up computers at its $ustin plant, then pic" up the accompanying monitors at the #ony plant in (e%ico, match up the customers computer order with the monitor order, and deliver both to the customer simultaneously. he savings in time and cost are tremendous. &n addition, since Dell has no stoc" of finished goods inventory and they sell directly to end consumers, they do not have to wait for resellers to clear out their own inventory before bringing a new model to mar"et 8 hompson I79.

6ver time Dell has refined and enhanced its inventory trac"ing capabilities, its wor"ing relationships with suppliers, and its ability to operate with smaller inventories. &n 5NN7 Dell averaged an inventory turn ratio of =) days, which it brought down to 5= days in 5NN+, and down further to < days in 5NNN. his was favorable to the industry average of 7* days1 obviously Dell had created a competitive advantage for its self. he companys long term goal is to get its inventories down to a = day average supply. Dell created this competitive advantage by aligning its supply chain e%pertise with internet technology in a first mover strategy 8Eearns )<<9. Dell has indeed managed to streamline its supply chain to ma%imize efficiency and minimize the costs associated with inventory 8Chan 5>I9. Dells competitors are yet to replicate such an efficient supply chain model. (ichael Dell believes that the &nternet has revolutionary business potential, and he was instrumental in ma"ing Dell Computer a pioneering first-mover by using internet and e-commerce technologies. &n a speech in 5NNN he said! he world will be changed forever by the internetT he &nternet will be your business. &f your business isnt enabled by providing customers and suppliers with more information, youre probably already in trouble. he internet provides a dramatic reduction in the cost of transactions and the cost of interaction among people and businesses, and it creates dramatic new opportunities and destroys old competitive advantages. he &nternet is li"e a weapon sitting on a table ready to be pic"ed up by either you or your competitors 8 hompson N)9.0 (ichael Dell believes that /for a company to harness the power of the &nternet and succeed in revolutionizing the way business is done, it has to recognize that compressing time and distance in business relationships with suppliers and customers to increase the speed of business transactions is the ultimate source of competitive advantage. ransacting business with suppliers and customers in real time drove big improvements in business efficiency : re-uiring fewer people, less inventory, and fewer physical assets and speeding new products to mar"et 8 hompson N)9.0 Dell e%tensively utilizes & in providing service to its customers. his has resulted in yet another competitive advantage Dell en.oys over the industry. #elling direct allows Dell to build close customer relationships thus resulting in e%tensive "nowledge of customer needs. $side from using this "nowledge to help customers plan their PC needs and configure their PC networ"s, Dell uses this information to add value to its product. 4or e%ample, Dell would load a customers software onto large Dell servers at the factory with its high speed server networ" in a matter of seconds. &n addition asset tags would also be placed on the PC at the factory. he savings of Dell carrying out these functions were considerable. 6ne large customer reported savings of M7**,*** annually 8 hompson IN9. he companys website has 7* country specific sites in local languages and currencies. Buyers can view Dells entire product line, configure and price customized PCs, place and trac" orders. he closing rate through www.dell.com is )* percent higher than sales through telephone or fa%. he company also developed several webbased customer service and support tools to enhance customers online e%perience. 6f these tools perhaps the most ingenious is A-#upport, where Dell systems detect, diagnose, and resolve most problems without the need for users to interact with Dells support personnel. he goal is to create computing environments where a PC can maintain itself, thus moving support from a reactive process to a preventative one. $ccording to (ichael Dell A-#upport was1 / he beginning of what we call self-healing systems that we thin" will be the future of online support 8 hompson N*9.0 his service shortened the time it too" to fi% glitches and problems, reduced the need for service calls, cut customer downtimes, and lowered Dells tech support costs. &t is estimated that such online support tools were used by appro%imately >7 percent of customers by )***, and that customer support calls were reduced by )7 percent, thus generating savings to Dell of about M5* per call 8 hompson N59. he internet is also utilized to improve order status trac"ing by customers from the manufacturing process through delivery, therefore eliminating tens of thousands of order in-uiries coming in by phone. $ppro%imately I* percent of Dells order status in-uiries in )*** were being handled over the internet at a cost close to zero, saving Dell about M)5 million annually and allowing employees to wor" on more productive tas"s 8 hompson N=9. Dells ability to respond -uic"ly gave it a significant advantage over rivals, particularly PC ma"ers in $sia, which operated on the basis of large production runs of standardized products and sold them through retail channels. Dell saw its direct-sales approach as a totally customer-driven system, with the fle%ibility to change -uic"ly to new

generations of components and PC models 8 hompson N=9. Dell has become the global industry leader in controlling costs and s-ueezing the efficiency out of its directsales, build-to-order business model. Dell is widely regarded as having the most efficient procurement, manufacturing, and distribution process in the global PC industry. Dell has truly embraced &# within its organization, viewing it as a critical weapon to create competitive advantage and gain mar"et share within the PC industry 8Eearns )<I9. he company adopted several of the critical success factors outlined by hompson #.;. eo. 6f the 5I critical success factors those most applicable to Dell are1 top management commitment to the strategic use of & , &# management "nowledge about the business, top management confidence in the & department, top management "nowledge of & , and business goals and ob.ectives are made available to the &# department 8 eo 5+I9. Dell is a pioneer and world leader in incorporating e-commerce technology and use of the internet into its business practices. he goal was to achieve what (ichael Dell called /virtual integration- a stitching together of Dells business with its supply partners and customers in real time such that all three appeared to be part of the same organizational team0 8 hompson +59. Dells success is due greatly to seamless strategic &# alignment. Dells &# strategy truly compliments the companys business plan, and without this perfect fit Dell would not be at the forefront on the Dlobal PC industry. $ll in all, when a company is strong enough locally, it is willing to ta"e a global approach to pursue profit from the world mar"et, but the entry mode is so complicated that every multinational enterprise is supposed to do a integrative research based on both internal organizational and the environmental of international business. Dell uses 4D& mode to enter all its target mar"et, and its mode usually involves a choice of ac-uiring a going concern through mergers and ac-uisitions, Dells success not .ust from the right entry decision, but also its effective and efficient operation concept, whatever, a strategy, which could best allocate resource and satisfy customerscd needs, will create profit for the company, loo"ing at Dell Company, 4ocusing on customers and contribution to offer best consumption e%perience is the "ey of Dells success, however, Dells direct business model still has its deficit, and Dell should ta"e a pac"age of fle%ible measure to optimize its operation. Feferences $braham, ;. Detting in touch with Dells culture! Oouve got the soulR &n Anterprise&nnovator.com. Dell. #upply chain management. Fetrieved on Buly )+, )**<, from http!??www5.us.dell.com?content?topics?global.asp%?corp?environment?en? Dessler, D. 85NNI9. (anagement, Peading People and 6rganizations in the )5st Century. Prentice ;all. Dovindara.an, G. and Dupta, $.E. 8)**59, #trategic &nnovation! $ Conceptual Foad (ap. Business ;orizons, =-5=, >>, >. Fetrieved $ugust =, )**< from AB#C6host database. ;oovers. 8n.d9 ;oovers 6nline he Business &nformation $uthority. Fetrieved Buly )+, )**<. 4rom http!??www.apollolibrary.com?databases.asp,dbV< http!??finance.yahoo.com?-?co,sVDAPP . Fetrieved $ugust 7, )**< from yahoo finance. ough, (. Creating a (ission and Gision #tatement. &n the #ideroad. Fetrieved Buly )I, )**<, from http!??www.sideroad.com?businessWcommunications?mission-and-vision-statement.html #un (icrosystems. #un (icrosystems news. Fetrieved $ugust 5, )**< from http!??sun.com?aboutsun?media $non. )**>. 6verseas investment of $merican. [6n-line\ 4inance. $vailable from! http!??finance.ic%o.com?htmlnews?)**>?5)?5*?7*>)I*.htm [$ccessed > Ban )**+\ $non, )**<. what can be done to help Dell. [6n-line\ brandcn. $vailable from! http!??www.brandcn.com?ppgg?#how$rticle.asp,$rticle&DV+>*++ [= Ban )**+\ Bennett. 5NNN. &nternational Business. )ed edition. Angland! Pearson Aducation Pimited. Brazil Dlossary. )**>. Dlossary &nde%. [6n-line\ Photius. $vailable from! http!??www.photius.com?countries?brazil?glossary? [$ccessed = Ban )**+\ Cao, B. '. )**5. Dell in China. [6n-line\ #ohu. $vailable from! http!??it.sohu.com?+*?>*?article57><>*+*.shtml [$ccessed =* Dec )**<\ Cheng, S. P and Cheng. O, )**=. $ analysis about flat organizational structure. [6n-line\ ectime $vailable from!http!??www.ectime.com.cn?cgi-bin?db)www.cgi?info.d)w?report,nbrV7))< [= Ban )**+\ Chi, . )**7. Penovo G# Dell. [6n-line\ bo"ee. $vailable from! http!??shinrytao.bo"ee.com [= Ban )**+\

Chinese Aconomy Fesearch Center of Pe"ing 2niversity. )**=. Comparative advantage. [6n-line\ Dzwww. $vailable from! http!??www.dzwww.com?.ing.idaobao?renwen?)**=555=5*)*.htm [$cceed 7 Ban )**+\ Chinese management 6n-line. )**<. &nternational mar"et entry strategy. [6n-line\ Ibio. $vailable from! http!??www.Ibio.com?$rticle?Class5=?Class57?)**<*>?=5I=<.html [$ccessed )I Lov )**<\ Chou, J. )**<. Core advantage of Dell. [6n-line\ bo"ee. $vailable from! http!??lzzI>*).bo"ee.com [= Ban )**+\ Dell Computer Corporation. )**>. #upply Chain management. [6n-line\=+)). $vailable from! http!??www.=+)).cn?softdown?list.asp,idV+7I7N [$ccessed 7 Ban )**+\ Dell. )**<. ;ome page of Dell. [6n-line\ Dell. $vailable from! http!??www.dell.com? [$ccessed > Ban )**+\ Acon5**. )**7. Dlossary. [6n-line\ Acon5**. $vailable from! http!??www.econ5**.com?eu7e?open?glossary.html [$ccessed =* Dec )**<\ 4ang, P. )**<. $n introduction to Dell. [6n-line\ Jgcol. $vailable from! http!??www.zgcol.net?html?)**<*N?*=?*)*5*5>I+.htm [$ccessed > Ban )**+\ ;u, S. ;. )**<. he rule of ' 6. [6n-line\ Aduboss. $vailable from! http!??www.eduboss.com?content?)**7-55=?55*=+*.html [$cceed > Ban )**+\ ;uang, ;. )**<. Dells three faults. [6n-line\ 5<=. $vailable from! http!??biz.5<=.com?*<?*N5=?5*?)X >;P <***)*XD#.html [7 Ban )**+\ ;uang, O. J. )**7. $ttract investments from overseas for China. [6n-line\ (aoming. $vailable from! http!??w.m.maoming.gov.cn?doc*>?gz?gz5-).htm [$ccessed = Ban )**+\ &nformation Centre of Penovo. 5NNI. $n analysis of Dell. [6n-line\ Ccidnet. $vailable from! http!??www*.ccidnet.com?news?industrye%press?)**)?5)?5N?5*NWI*)5>.html [$ccessed = Ban )**+\ Eang, O. 4. )**>. China is the fourth mar"et to Dell. [6n-line\ #ina. $vailable from! http!??tech.sina.com.cn?it?)**>*7-)+?*N=5=<++N5.shtml [$ccessed ) Ban )**+\ Pi, '. ;. )**=. China has become the fourth mar"et of Dell in the world. [6n-line\ CC'. $vailable from! http!??www.ccw.com.cn?news)?corp?htm)**=?)**=*I*+W5>#OG.htm [$ccessed ) Ban )**+\ Pi, O. )**=. $ study of Dell:s strategy! Published master dissertation. Piaoning! Dongbei 2niversity of 4inance K Aconomics Pi, O. )**=. Dell:s multivariate mode. [6n-line\ Dog. $vailable from! http!??www.gog.com.cn?.-pd?pd*)**I?ca=)<N)N.htm [$ccessed ) Ban )**+\ Piu, P, )**7. report about computer industry. [6n-line\ chuanglianclub. $vailable from!http!??www.cl.lb.com?f%tz?#how$rticle.asp,$rticle&DV)N<)I [= Ban )**+\ Piu, . )**7. he trend of Chinese e%change rate regime! Published master dissertation, ;ubei! 'uhan 2niversity of echnology (a, D. )**<. he secret of #upply Chain (anagement of Dell. [6n-line\ Ibio. $vailable from! http!??www.Ibio.com?$rticle?Class=*?Class=>?)**<5*?>5575W>.html [$ccessed > Ban )**+\ Liven, P. )**7. Dlossary of Eey Performance (anagement erms. [6n-line\ Balancedscorecard. $vailable from! http!??www.balancedscorecard.biz?Dlossary.html [$ccessed > Ban )**+\ Xing, 4. )**>. Dell is a failure in eyes of its employees. [6n-line\ s%lfwater. $vailable from! http!??www.s%lfwater.gov.cn?sl.-pro?dv+?printpage.asp,Board&DV5IK&DV+)< [= Ban )**+\ Fugman, $.( K ;odgetts, F. (. )**=. &nternational Business. =rd edition. Angland! Pearson Aducation Pimited. imeline. )***. Dell ;istory. [6n-line\ imelineinde%. $vailable from! http!??www.timelineinde%.com?content?view?55<< [$ccessed ) Ban )**+\ 'ang, 4. )**<. $ summary of Dell in China. [6n-line\ Driverchina. $vailable from! http!??news.driverchina.com?;tml?news?ye.ie?ye.ie?5N)=775+N.html [$ccessed 5 Ban )**+\ 'ang, F. ;, )**<. #ecret of Dell. [6n-line\ cnad. $vailable from! http!??www.cnad.com?autonews?.indiananli?)**<)<N7I>5=)<*I.htm [= Ban )**+\ 'ang, O. )**>. Dell:s Direct Business (odel. ;ei Pong Biang! ;arbin press. Sia, S. )**<. Dell aims to e%pandsintosthe electronics mar"ets. [6n-line\ eacherwong. $vailable from! http!??www.teacherwong.com?z%yd?#how$rticle.asp,$rticle&DV<7= [$ccessed )I Lov )**<\ Siao, P. )**<. Dell:s supply chain. [6n-line\ Arpworld. $vailable from! http!??www.erpworld.net?content.php, &DV)7I>< [$ccessed > Ban )**+\

Sie, P. P K ;uang, P. P. )**>. Dlobal operations of multinational enterprises. #hanghai! #hanghai culture press. Su, '. )**7. Dell and its products. [6n-line\ &t. $vailable from! http!??www.it.com.cn?f?noteboo"?*7>?)*?5*)7<N.htm [$ccessed = Ban )**+\ Oang, J. )**>. $n analysis of Dell mode! Published master dissertation. Bei.ing! Bei.ing 2niversity of Posts and elecommunications Oou, ;. (. )**7. Dell in China in trouble. [6n-line\ XX. $vailable from! http!??tech.--.com?a?)**75)5*?****N=.htm [7 Ban )**+\ Oou, ;. (. )**7. he direct mode l in China. [6n-line\ XX. $vailable from! http!??tech.--.com?a?)**75)5*?****N=.htm [$ccessed )I Dec )**<\ Ou, X and #un, O. )**<. Dell in trouble. [6n-line\ iw%o. $vailable from! http!??www.iw%o.com?html?rev?biz?info?)**<-5-5N?555I>+-5.htm [= Ban )**+\ Jhang, C. )**<. 4oreign logistic enterprise enter China. [6n-line\ Bctrans. $vailable from! http!??info..ctrans.com?zhuanti?ztb?%w?)**<55N==I)*>.shtml [$ccessed 5 Ban )**+\ Jhang, S. D, )**7. Dells competitive advantages in mar"eting. [6n-line\ Sinhuanet. $vailable from! ; P!??& BB.B6EAA.C6(?)+++)5*.; (P [= Ban )**+\ Jhang, O. P. )**7. Dreat Changes in Business (ode of Dell. [6n-line\ 2fsoft. $vailable from! http!??www.ufsoft.com.cn?sub.ect?digital?dm5.htm [$ccessed ) Ban )**+\ Jhong, B. O. )**7. he limitation of Dell: Direct model. [6n-line\ Sinhuanet. $vailable from! http!??news.%inhuanet.com?newmedia?)**7-55?)>?contentW=I)+=<+.htm [$ccessed )I Dec )**<\ Jhou, #. P. )**<. Anglish training. [6n-line\ singhua. $vailable from! http!??www.sce.tsinghua.edu.cn?publication?-h.%Whtm?*7*>?*I.htm [$ccessed = Ban )**+\ Bibliography Bartlett, C., and Dhoshal, #., ransnational (anagement, (cDraw-;ill, 2#$, )***. Besan"o, D., Dranove, D., and (. #hanley, Aconomics of #trategy 8Part &&&9, B. 'iley K #ons, Lew Oor", )***. Porter, (., he Competitive $dvantage of Lations, (c(illan, Pondon, 5NNI. Dowling, Peter B. and 'elch Denice A., 8)**>9, &nternational ;uman Fesource (anagement! (anaging People in a (ultinational Conte%t, homson Pearning. Z &#BL! 5I>>I**5=S Pewis, Fichard D., 8)**79, 'hen cultures collide! managing successfully across cultures! a ma.or new edition of the global guide, Brealey, forthcoming. &#BL! 5N*>I=I*)) ;ofstede, Deert. 8)**59. Cultures conse-uences! Comparing values, behaviors, institutions and organizations across nations. housand 6a"s, C$! #age Publications. &#BL! *I*=N+=)>5 ;olden, Ligel, 8)**)9, Cross-cultural management ! a "nowledge management perspective., 4inancial imes ? Prentice ;all. &#BL! *)+=<><I*S Leuliep, Bames 'illiam, 8)***9, &ntercultural communication ! a conte%tual approach., ;oughton (ifflin. &#BL! *=N7N=+*I< , )nd ed &#BL! *<5I)5I7>I ayeb, (onir ;., 85NN<9 he management of a multicultural wor"force., , Bohn 'iley. &#BL! *>+5N<)+<+ 'arner, (alcolm, and Boynt, Pat, 8)**)9 (anaging $cross Cultures! &ssues and Perspectives, homson Pearning. &#BL 5-I<57)-N+=-) rompenaars, 4ons and ;ampden urner, Charles, 5NN+, Fiding the 'aves of Culture! 2nderstanding Cultural Diversity in Business, Licholas Brealey Publishing &#BL! 5I7+II5+<5 Clegg, #tewart, F., &barra-Colado, Aduardo, and Bueno, Puis, 85NNI9 Dlobal (anagement! 2niversal heories and Pocal Fealities, #age Publications Ptd &#BL! *+<5N7I57*

!""#$%&'()'&( $#%)'%!*+

Wall Street Journal (WSJ) article dated May 13, 2008 titled Dell Tries to Revive Its

a!e "#s (you need to su$scri$e to

WSJ to read t%e article), tal&s a$out sur'risin( ste's Dell is ta&in( to reinvi(orate its $usiness) It *ill '%ase out +our (a!in( syste!s , its -"S line leavin( .lien*are line t%at it ac/uired in 2000 as its sole o++erin( to $i( s'endin( (a!ers) Multi'le S12s (Stoc& 1ee'in( 2nits) al*ays creates custo!er con+usion) 3avin( a strate(ic 'roduct road!a' t%at continually c%allen(es t%e e4ecutives to reduce t%e nu!$er o+ S12s is very critical in strea!linin( 'roduct line) .lso, a sin(le S12 need to $e clearly de+ined +or a MSS (Mar&etSe(!ent S%are) and t%at re/uires %u(e invest!ent in !ar&etin( e++ort create 5*ide !oat6 $et*een t%e MSS) In Dell6s case, lo* end -"S 'roduct and %i(% end .lien*are 'roducts did not %ave clearly de+ined MSS) W%en t%e MSS is $lurred, t%ere is a tendency *%ere t%e lo* end 'roducts (in t%is case -"S syste!) *ill $e(in to canni$ali7e %i(% end 'roducts (.lien*are)) T%is *as t%e reason, Dell ri(%tly decided to (et rid o+ lo* end -"S syste!s, leavin( .lien*are syste! as t%e sole (a!in( "# 'roduct) T%ou(% t%is is t%e ri(%t !ove, I a! not sure t%at Dell *ill $e a$le to ta&e $ac& t%e !ar&et s%are +ro! its co!'etitors in (a!in( "# se(!ent) 8e+ore $ein( $ou(%t $y Dell, .lien*are (a!in( "#s %ad t%e 're!ier $rand i!a(e) It %ad do!inated in its nic%e area o+ %i(% end (a!in( "#s) .+ter it *as $ou(%t $y Dell, its 're!ier $rand i!a(e (ot conta!inated) Dell *%ose $rand 'ortrays 5lo* cost6 i!a(edistorted .lien*are6s $rand i!a(e) T%us, it started to lose its !ar&et s%are to t%eir co!'etitors) T%is is an i!'ortant lesson +ro! Mer(er and .c/uisition (M9.) 'ers'ective) Most o+ t%e co!'aniesloo& at t%eir 'ort+olio o+ 'roducts) I+ t%ere is a %ole in an 'ort+olio !i4, t%ey (o s%o''in( to +ind tar(etco!'any *it% t%e !issin( 'roduct +or M9. activity) Due dili(ence is done +ro! +inancial 'ers'ective) 8ut, $rand evaluation is also an i!'ortant criteria +or due dili(ence t%at t%e co!'any needs to do $e+ore M9.) T%is is *%ere Dell *ent *ron() I t%in& Dell only +ocused on scale advanta(e *%en it decided to $uy .lien*are) It did not +ocus on dilution o+ $rand t%is ac/uisition *ould create) It *ill $e tric&y +or .lien*are to re(ain MSS in t%e (a!in( "# se(!ent)

ell$,omputer-$the$no-fuss$.,$sales$machine-$has$set$the$standard$for$a$successful$directdistri/ution$company.$0ut$ ell$is$now$reworking$its$/are-/ones$formula$in$an$attempt$to$ /ranch$out$from$the$.,$market$into$more$sophisticated-$and$profita/le-$computer$systems. 1ith$231.4$/illion$in$re5enues$and$486$of$the$&.#.$market$share$for$.,s-$ ell$is$de5ising$a$ strategy$to$take$on$the$likes$of$708$and$#un$8icrosystems$in$the$market$for$ser5ers$and$ other$higher-margin$/usiness$e9uipment.$ ell$is$also$planning$to$add$hand-held$de5ices$and$ printers-$long$:ewlett-.ackard;s$profit$dri5er-$to$its$product$line.$)nd-$for$the$first$time-$ ell$ has$said$it$will$/egin$to$work$with$retail$dealers. <ounded$/y$8ichael$ ell-$3=-$in$his$&ni5ersity$of$%exas$dorm$room-$the$company$is$the$ master$of$direct-deli5ery$in$the$computer$industry-$carrying$only$fi5e$to$se5en$days$of$ in5entory$at$any$time.$,ompetitors$ha5e$/een$catching$up$to$ ell-$/ut$their$cycles$are$still$ weeks$/ehind-$slowed$/y$their$dependency$on$retail$outlets.
Rea) M(+e A/(u*...
A+*icles Podcast! $utonomy:s (ichael Pynch on (eaning-based Computing
Enowledgee'harton

in*el, customer loyalty, corporate strategy,dell, direct model

$ligning the 6rganization with the (ar"et! 4ocusing on : he Customer:s otal A%perience:
Enowledgee'harton

he &mmigration Debate! &ts &mpact on 'or"ers, 'ages and Amployers


Enowledgee'harton

[(ore results for! in*el\

>#o$far-$no/ody$has$/een$a/le$to$match$ ell-?$says$*erard$,achon-$professor$of$operations$ and$information$management$at$1harton.$$1ith$computer$prices$declining-$,achon$adds-$ ell;s$9uick$turnaround$gi5es$it$an$added$ad5antage$o5er$competitors. ell-$head9uartered$in$'ound$'ock-$%x.-$reported$second-9uarter$re5enues$of$28.@A$/illion$ and$earnings$of$2B01$million.$'e5enues$were$up$116$o5er$the$same$9uarter$a$year$ago.$ %hese$figures-$howe5er-$can;t$disguise$the$.,$market;s$generally$unhealthy$outlook.$>%he$ /asic$pro/lem$is$the$desktop$.,$/usiness$is$strategically$a$terri/le$/usiness-?$says a5id$ ,roson-$professor$of$operations$and$information$management. 1hile$the$industry$showed$signs$of$re5i5al$in$the$first$9uarter$of$4004-$it$lost$ground$again$in$ the$second$9uarter.$1orldwide$.,$shipments$in$the$second$9uarter$of$4004$declined$0.A6$ from$the$same$period$last$year-$according$to$preliminary$results$from$ ata9uest$7nc.-$a$unit$of$ *artner-$7nc.$$7n$the$&.#.-$.,$shipments$reached$10.A$million$units-$a$0.86$decline$from$the$ pre5ious$year. C%he$market$undou/tedly$saw$the$effects$of$in5entory$o5erhang$from$the$first$9uarter-$/ut$at$ the$same$time$we$ha5e$yet$to$see$any$significant$return$to$corporate$/uying-$and$in$the$ consumer$market$/uying$appears$to$ha5e$fallen$/ack$further$in$some$regions-C$notes$,harles$ #mulders-$5ice$president$of$*artner$ ata9uest;s$,omputing$.latforms$1orldwide$group. %he$second$9uarter-$for$the$first$time-$also$laid$out$a$new$competiti5e$landscape$for$ ell-$ following$the$merger$of$:ewlett-.ackard$and$,ompa9.$:ewlett-.ackard$mo5ed$into$first$ place$in$the$worldwide$rankings-$/ut$Dust$0.A$percentage$points$higher$than$ ell.$:owe5er-$ the$merged$companies;$com/ined$shipments$were$down$1A.16$from$a$year$ago$while$ ell$ grew$136.$7n$the$&.#.$:ewlett-.ackard$has$an$186$share$of$the$.,$market. >%he$pro/lem$with$.,s$is$that$they$are$a$commodity.$+ou$can;t$make$money$selling$ computers$for-$what$is$it$now-$2B99E?$says$8orris$,ohen-$professor$of$operations$and$ information$management$and$co-director$of$the$<ishman- a5idson$,enter$for$#er5ice$and$ Fperations$8anagement.$>%here$hasn;t$/een$a$killer$app$in$a$few$years$so$if$you$stick$to$.,s$ you;re$selling$a$commodity$with$a$shrinking$price$and$a$shrinking$margin.$&nless$there;s$ some$technological$push-$it;s$like$selling$refrigerators.? %o$cope-$,ohen$adds-$ ell$is$looking$to$di5ersify$its$products$and$mo5e$into$more$profita/le$ areas-$including$ser5ers-$communication$switches$and$other$sophisticated$/usiness$systems.$ >%hey$ha5e$definitely$set$a$standard$for$what$you$call$the$direct$model.$(ow$they$are$looking$ at$their$next$generation$of$systems$de5elopment$and$trying$to$extend$and$enhance$their$ model$throughout$the$full$5alue-chain$and$supply-chain$network.? 0ut$ ell$is$not$operating$in$a$5acuum.$7t$faces$a$com/ined$:ewlett-.ackard$with$its$own$clout$ in$the$.,$market$and$with$suppliers.$>%o$some$extent$that;s$why$ ell$wants$to$do$things$like$ printers$/ecause$they$don;t$ha5e$that$and$:.-,ompa9$does-?$says$,ohen.$> ell$is$up$

against$a$more$di5ersified$competitor$that$has$some$5ery$profita/le$lines$of$/usiness$that$ they$don;t$ha5e.$Fne$approach$would$/e$to$match$them.? ell$has$already$experienced$some$success$in$higher-end$/usinesses$including$ser5ers-$/ut$ that$market$demands$sophisticated$customer$ser5ice.$)ccording$to$,ohen-$> ell$is$trying$to$ introduce$a$certain$degree$of$differentiation$in$the$9uality$of$ser5ice$they$pro5ide$to$their$ customers$right$now.$%hey$already$offer$a$completely$differentiated$product$/ecause$it$is$ made$to$order.$%he$next$challenge$is$to$allow$the$customer$to$also$specify$the$speed$in$terms$ of$the$channel$of$distri/ution$and$different$types$of$deli5ery$options$G$$on$a$per$order$/asis.$ %hat;s$the$kind$of$challenge$they;re$working$on$now.? <urthermore-$while$ ell$has$enDoyed$a$strong$reputation$for$consumer$ser5ice-$that$ reputation$has$recently$taken$a$hit.$>1hen$they$saw$the$market$in$4000$starting$to$soften-$ they$were$fast$to$cut$/ack$on$la/or-?$says$,achon.$>%hey$do$a$lot$of$outsourcing$of$customer$ ser5ice$and$some$of$the$ser5ice$hasn;t$really$/een$as$good$as$it$should$ha5e$/een.$0ut$7$ dou/t$that;s$going$to$/e$something$they$can;t$fix$o5er$time.? espite$its$low-margin$strategy-$ ell$has$in5ested$in$/rand$de5elopment-$with$tele5ision$ads$ featuring$its$impish$ ell$ ude$proclaiming:$>+ou;re$getting$a$ ell.?$0ut$,roson$says$that$may$ ha5e$its$limits.$>%he$only$way$to$differentiate$from$the$competition$is$/randing-$/ut$constant$ ad5ertising$is$expensi5e$and$re9uires$cash$outflow-?$he$notes.$>,onsumers$are$more$ sophisticated$a/out$the$fact$that$they$are$/uying$H7ntel$7nside;$and$not$ ell$outside.? <inally-$ ell$is$e5en$mo5ing$away$from$its$signature$direct-distri/ution$model.$7n$)ugust$the$ company$announced$it$would-$for$the$first$time-$work$with$computer$dealers$to$sell$so-called$ 1hite$0ox$systems$Iun/randed$indi5idually$customiJed$.,s$sold$in$retail$storesK.$%his$ market$makes$up$more$than$306$of$the$nation;s$.,$sales.$ ell$has$said$it$is$looking$for$ modest$re5enues$of$2380$million$from$this$line$of$/usiness$in$the$first$year. 1hile$ ell$will$sacrifice$some$of$its$margins$to$middlemen$dealers-$the$strategy$is$not$likely$to$ canni/aliJe$its$direct-$7nternet-/ased$/usiness-$suggests$,achon.$)nd$while$ ell$may$/e$ entrenched$in$a$slow-growing$commodity$/usiness-$it$has$profited$as$a$financial$company-$ ,roson$adds.$>Fne$thing$people$don;t$know$a/out$ ell$is$that$its$.,$/usiness$has$really$not$ /een$all$that$profita/le$in$the$late$1990s.$ ell$made$a$lot$of$money$with$purely$financial$ transactions-$selling$put$options$/ased$on$the$pu/lic$perception$that$its$stock$was$going$to$go$ up.$%hey$ha5e$earned$hundreds$of$millions$of$dollars$through$financial$transactions$which$ had$nothing$to$do$with$.,s.?$,ohen$points$to$another$of$ ell;s$financial$strategies:$0ecause$ the$company$doesn;t$need$to$pay$its$suppliers$for$30$days-$its$tight$in5entory$allows$it$to$hold$ cash$longer$than$its$competitors. 0ut$company$earnings$are$dependent$on$share-price$growth-$adds$,roson.$>7t;s$like$any$ deri5ati5e$transaction.$)s$soon$as$one$little$thing$goes$wrong-$the$pro/lems$pile$on$each$ other.? )ccording$to$him-$ ell;s$recent$strategy$announcements$signal$that$the$company$is$grasping$ for$new$direction.$>7$think$they$are$searching$for$a$more$profita/le$strategy.$%his$symptom$of$ floundering$around$when$one$strategy$isn;t$working$is$a$common$sign$of$trou/le.$%hey$are$in$ a$situation$now$where$if$they$want$to$grow$they$ha5e$to$do$something$new.?

%he$choices-$he$says-$are$difficult.$#ticking$with$the$low-end$.,$/usiness$dooms$ ell$to$tight$ margins$fore5er.$0ut$mo5ing$more$into$high-end$products-$such$as$ser5ers-$puts$ ell$in$a$ market$glutted$with$competitors$struggling$with$o5ercapacity$following$the$7nternet$/ust.$>%he$ high-end$market$is$promising$/ut$temporarily$awful.$%he$low-end$is$permanently$awful.$+ou$ don;t$get$a$lot$of$/enefit$/y$a5oiding$the$/lood$/ath$in$the$high-end-$then$going$into$the$ scorched$earth$of$the$low-end.? ,roson$suggests$that$the$company$pull$/ack-$focus$on$maintaining$customer$loyalty$and$ >figure$out$what$the$/usiness$would$look$like$if$it$turned$into$a$cash$cow$rather$than$ floundering$around$looking$for$high$growth.$%hat$might$/e$unaccepta/le$to$management$ L/ecauseM$it$looks$like$gi5ing$up-$/ut$you$can$do$a$lot$worse$than$that.? 8eanwhile-$in$the$leadership$area-$8ichael$ ell-$who$owns$146$of$the$stock-$remains$5ery$ much$in5ol5ed$in$the$company;s$future.$>%he$rule$is$that$you$get$rid$of$the$founder$fairly$soon$ in$the$course$of$a$company;s$de5elopment-?$says$,ohen.$>7t;s$5ery$rare$to$see$a$founder$ remain$in$an$important$role.$:e$or$she$usually$has$the$maDor$idea$and$can;t$execute.$+ou;5e$ got$to$gi5e$8ichael$ ell$creditN$he;s$/eaten$the$odds.? ,ohen$suggests$that$ ell;s$newest$ideas$may$create$a$dangerous$lack$of$focus.$>%here;s$ always$that$risk-$/ut$they$also$ha5e$a$strategic$risk$in$Dust$staying$still.$%hey$can$afford$to$try$ this.? ell;s$main$worry$is$the$unknown-$,achon$adds.$>%he$/iggest$risk$to$ ell$is$that$the$whole$ concept$of$a$.,$could$change.$1hat$happens$if$people$/uy$/oxes$that$hook$up$to$their$%Os-$ or$there$is$some$radical$technological$shift.$%hat;s$pro/a/ly$their$grea