DELL : Analysis

Presented By : S18 : Atul Bansal, N15 : Ashok Khiwal N66 : Saurabh Kachru, N72 : Sujit Kumar MBA(PT)-2012, FMS

Dell : Company Details

Founded in 1984 by Michael Dell Concept : By selling computer systems directly to customers, one can best understand their needs and efficiently provide the most effective computing solutions to meet those needs. Corporate headquarters : Round Rock, Texas, USA Manage business in four operating segments: Americas Commercial; Europe, Middle East and Africa ( EMEA ) Commercial; Asia Pacific-Japan ( APJ ) Commercial; and Global Consumer. Employees : End of Fiscal 10 96,000 employees 36.5k US, 57.5k outside US rouhly 2k temp.

Business Strategy
Direct relationships with customers. Continue to expand global presence and further diversifying the revenue streams. Constant Focus on higher margin products, services, and solutions to increase overall profitability. Focus on improving competitiveness by reducing overall costs. In May 2008, announced a $3 billion cost reduction initiative, which included both cost of goods sold and operating expenses. In the fourth quarter of Fiscal 2009, increased cost-reduction target to $4 billion by the end of Fiscal 2011. Growth Strategy reaching new customers through new distribution partners, value added resellers and distributors and targeted acquisitions.

Product Categories
notebooks, desktop PCs, software and peripherals, servers and networking products, services storage search, services, and 3G originations. virtualization solutions IT-as-a-Service solution : remote and lifecycle management, e-mail backup, and software license management, among other services. system software

Products
Mobility / Desktop PCs XPSTM and AlienwareTM line - gaming systems. Studio line - powerful multimedia elements. InspironTM line - high performance, stylish , affordable package. 3G enabled Mini - a light, highly mobile : Inspiron line. LatitudeTM line / OptiplexTM - to help business / government / institutional customers manage their TCO through managed product lifecycles , performance, security, and communications. VostroTM line - to customize technology, services, and expertise to suit the specific needs of small businesses. Dell PrecisionTM line of mobile workstations for professional users

Products
Software. Wide range of third-Party software products, 2009 : launched the Dell Download Store Peripherals. Printers and displays and software titles, televisions, notebook accessories, networking and wireless products, digital cameras, power adapters, scanners, and other products. The M109s on-the-go projector : First pocket projector (2008) Won the prestigious CES Innovations 2009 award. Storage : Advanced storage solutions : SAN, NAS, Direct-Attached storage, disk and tape backup systems and removable disk backup. Dell PowerVaultTM, Dell EqualLogicTM , and Dell|EMC storage sys.

Services
Infrastructure Consulting Services Deployment Services Asset Recovery and Recycling Services Training Service Support Services Managed Services Financial Services (US)

Sales and Marketing

Sales : Directly to customer through dedicated sales representatives, telephone based sales, online at www.dell.com and indirect sales channels. Customers : large corporate, government, healthcare and education accounts, SMBs and individual consumers. Region based S&M resources divided among customer groups. No single customer accounted for more than 10% of their consolidated net revenue during any of the last three fiscal years. Customers may offer suggestions for current and future Dell products, services, and operations on an interactive portion of their website called Dell IdeaStorm .

Sales and Marketing

Large business & Institutional Customers Field Sales Force Dedicated Account Teams (system engineers and consultants) Tailored Solutions & Customer Feedback Multinational Customers Single points of contact/accountability Global Account Specialist Special Global Pricing Global Service/Support Programs SMBs Advertising : television, internet, print media, mailing/emailing direct marketing publications. Indirect Sales Channel Outside US through selected partners In US : Third party solution providers, system integrators and resellers Retail : More than 56,000 retail locations worldwide e.g ., BestBuy, Staples, Walmart, Carrefour etc

Online

Advertising

Community Building
Education Youth connect Volunteering

Giving

Social innovation

S&M : Green Initiatives

Green products Recycling

Sustainable packaging

Responsible operations

Revenue

Revenue

Dell Services

Services Revenue Composition

New Dell Services

Acquisitions

Global Strengths

2009-10
SALES
Grew consulting force by 250% Increased sales specialists 50% Compensation plans revised to focus on profitable solutions

SOLUTIONS
$100M+ investment in new solution development Business Ready and Reference Architecture Solution Training focus

2009-10
MARKETING
Efficient Enterprise Solutions Message Social Media and community Intiatives

Acquisitions and Alliances

Added 15000 Equalogic customers Perot Acquisition pipeline $6Bn Acquisition Boomi (cloud computing) New Alliance Strategy => 2011 : SecureWorks (in progress)

DELL : INDIA
2006 -> 2010 : #1Laptops, #2 overall PC Team (Local Brand -> Local Market) Mfg Plant ( $30m investment : 1m units/yr ] Customization
Direct Business Model xxx Launched Retail Stores; introduced Direct model within retail, order delivered within 5-7 days. No channel partners xxx Channel Partners (Tier II/III cities)

DELL : INDIA
SERVICES
Sep 2009 ($3.9 bn cash) Perot Systems Perot : 50% employees (21k) in India Approx. 90 new projects since acquisition Target : $20-50m projects Max Healthcare : Rs. 90 crore contract

++ Cross Selling Entering Mobile Handset Mkt (Smartphones)

SWOT ANALYSIS
S
Strengths
World s 2nd largest PC maker. Direct to customer business model. Low operating cost. No retailers and wholesalers involved. Each Dell system is built to order to meet each customer s expectations. Inventory turnover period is as low as 6 days. Low inventory carrying costs. Information and CRM used intensely for data retention of potential customers.

Weaknesses
Computer maker and not the computer manufacturer, unable to switch supply. Not attracting the college student segment of the market. Sales revenue from educational institutions merely 5% of the total. Each system is custom-built as per customer specifications, this might take days to finish.

Opportunities
Diversify by introducing many new products to its range. Market penetration in education and government markets. Partnership or acquiring of suppliers. Physical presence in the market for supporting, troubleshooting and customer support services. Server market.

Threats
Competitive rivalry. Price difference among brands is not much. Other companies offering systems at low cost. Dell s low cost direct model is challenged. Customers may opt for other brands as price difference is low. Dell s customized systems take some time before delivered to the customer.

PORTER s ANALYSIS
Bargaining Power of Customers (HIGH) Bargaining Power of Suppliers PCs of all brands contain the same (HIGH) components or the same type of Limited number of suppliers for components. key components. Dell products are reliable and Two major suppliers monopolized: customer service is outstanding. This Microsoft Intel Intensity of Competition (HIGH) creates certain brand royalty. All offer same basic product. If the prices are raised too high, Must compete on price. customers will not hesitate to switch. Decreasing profits. Low product differentiation. Threat of Substitutes (MODERATE) Numerous PC sellers offering the same specifics and functions that Dell offers. Since company offers customization, the customer has the option of choosing parts which is a unique combination. Other companies do not offer this. Threat of New Entrants (MODERATE) Capital investment for independent stores is low. Low product differentiation. Brand name may be a barrier to entry. No legal or governmental barriers.

ANSOFF MATRIX
Existing Products Market Penetration Existing Markets Retail initiatives (Dell tied up with Tata Croma and Staple stores). Dell opened exclusive stores in India (Delhi and Coimbatore) New Products Product Development Mid range server growth. PDA and Smart phones.

Diversification Market Development New Markets New markets like Brazil, Russia, China. Dell Streak. Services. Acquisitions (Perot Systems, Boomi).

Recommendations
Continue with Acquisitions. This will lead to increased market share and economies of scale. Dell should add retailers and wholesalers as part of their distribution for fulfilling immediate orders. Target new International Markets Target new segments and enter new markets with existing products. The Potential benefits of international expansion are increased market share, revenues, profit, and buyer awareness. Diversify in terms of new products and existing and new services. Improve customer service and support. Improve its customer service representatives selection process, ensuring they are easily understood and well trained. To strengthen Dell s customization position, the firm must offer increased configuration choices through the establishment of additional supplier relationships. This will allow Dell to offer additional choices for its customers while maintaining production efficiencies.

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