DISSERTATION REPORT ON SUCCESS OF DELL & SUPPLY CHAIN MANAGEMENT SUBMITTED TO: SKYLINE BUSINESS SCHOOL, GURGAON SESSION 2007-2009

UNDERGUIDENCE OF: BY: Dr. PARUL AMANPREET SINGH L2S2 (510728606)

SUBMITTED MBA

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ACKNOWLEDGEMT

I would like to express my gratitude to all those who gave me the possibility to complete this project. I want to thank Mr Parvin Puri for giving me us project for our deesertation. I have furthermore to thank Dr. Parul for guiding at various stages on project. I am also thankful to Mr Varun Thakur (Engineer in Dell) for proving very useful information and helping to complete this report. I am thankful to my class mates for helping me many times in my report.

Thank you Amanpreet Singh

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EXECUTIVE SUMMARY As one of the world's leading direct computer systems companies and a premier supplier of technology for the Internet infrastructure, Dell's competitive advantage is its direct customer focus. Constant interaction with its customers online and via the telephone gives Dell the ability to understand unique computing needs that drive individual and enterprise productivity. Even though growth rates for the computer industry are expected to be less than previous years, Dell can still successfully operate, enjoying healthy sustainable profits. A main problem is a sagging US economy which Dell has no control over and a saturated PC market with lower profit margins from industry price wars. Dell should focus on being a “market taker”, instead of trying to be a market maker and capitalize on its ability to enter new markets and quickly dominate, as it did in the low-end server and workstation markets. It should pursue a multicontinental expansion of its middle and high end server products. Dell should also pursue the external data storage market through acquiring a leading company like the EMC Corporation. Having already captured a large share of the US market, Dell should try and increase its server, storage, and service segment penetration overseas to gain more international market share, particularly in China and Latin America. Studies might also be done on African and Russian markets as Dell has no physical presence in these regions. The only viable strategy in order to achieve Michael Dell’s goal to double Dell Computers’ current revenue to $60 billion by 2007 is to work on methods to improve sales in these 3 new areas. A combination of service, storage and server product growth across newly established international markets will help achieve this ambitious goal. While the US economy is in a recession, there is still plenty of room to grow outside its borders.

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CONTENTS

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INTRODUCTION........................................................................4 DELL’S COMPETITIVE ATVANTAGE...................................5 DELL’S IT TOOLS......................................................................8 DELL’S BUSINESS MODEL...................................................13 DELL’S IT INFRASTRUCTURE.............................................17 DELL’S SUCCESS FACTORS.................................................21 SUPPLY CHAIN MANAGEMENT OF DELL........................22 SWOT ANALYSIS....................................................................34 STRATEGIC OPTIONS............................................................37 RECOMMENDATIONS & IMPLEMENTATION .................39 REFERENCES...........................................................................44

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INTRODUCTION Dell was founded in 1983 by Michael Dell, an 18 year old college freshman from Texas who started out upgrading hard drives for IBM compatibles on nights and weekends. Within a year, his service business had grown to an incredible $6 million from performing computer upgrades for local area businesses and he dropped out of school to concentrate on the business. When Dell changed his strategy and started offering custom built-to-order machines, the business exploded, with $70 million in sales by the end of 1985. Evolving into an assembler company, Dell was able to exploit certain events occurring in the industry and swiftly adapted to meet market conditions. Five years later, total sales had grown to an unbelievable $500 million and Dell became nationally known as a supplier of state-of-the art desktop and portable computers. Dell continually achieved phenomenal records in sales and profit growth, eventually making it the most successful company ever in the PC industry, surpassing $25 billion in 2000. As one of the world's premier providers of computer products and services, Dell was the US market leader in its core products, the desktop and laptop markets by 2001.

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Inventory and labour are the highest liabilities of a firm. have it built by Dell in three days and have it delivered to the customer’s doorstep within one week. Dell is able to achieve superior profits in the industry because they are a knowledgeable user of information. Dell implements a Just-In-Time inventory system which operates on only 6 days of inventory. Since Dell only operates with 6 days worth of inventory. and web technologies. 1 computer systems company in the world.Analysis of Dell’s Competitive Advantage: Dell is officially the No. This allows Dell to free up cash flow to invest in other value adding activities. Dell uses their website www. Dell is able to achieve greater profit margins and increased profits because of their inventory system. Dell uses a JIT inventory system because Dell’s customers can only order computers directly through Dell itself.com to take customer’s orders. Michael Dell states that Dell is so successful because of “Knowledge Management”. cutting out other distribution channels entirely. and avoid holding on to obsolete technology. e-commerce. communication. Dell is able to sustain a competitive advantage over competitors in the computer industry because of an extremely efficient supply chain/distribution system. A customer can order their own custom computer. hiring people to track and maintain inventory. Dell defines that term by saying “physical assets are being replaced by intellectual assets. 6 |Page . e-business. convenience. and efficiency.Dell. internet. they are able to cut costs on warehousing. savings. Mr. Dell focuses on direct sales.” This relates to Dell’s inventory system. This allows for a deeper relationship with the customers whereby Dell can offer their customer’s better service.

“i2 streamlines the supply chain by providing component suppliers and Dell planners with global views of product demand and material requirements.” This allows Dell to change their manufacturing schedule every two hours to keep up with customer orders. and a greater range of available upgrades/options. Dell has also created their “Premier Page”. Syracuse University). and educational institutions (i. so employees can generate key reports based on accurate and timely data. They also use the internet to build better relationships with their suppliers. easier navigability. Not only does Dell use the internet to make the customer ordering process easier. Dell makes their website extremely consumer friendly to offer an easy order process to the customers. who respond with cost estimates and plan their production as a result (Solis).Dell’s use of the internet has revolutionized the company. Customer relationship management software keeps close tabs on the types of computers that customers are buying (Pizinger). this 7 |Page . Since the suppliers work with facts instead of forecasts. Dell uses solutions from i2 Supply Chain Management. It also provides real-time factory scheduling and inventory management. To achieve their supply chain superiority. and receive supplier deliveries on a true just-in-time basis (i2 supply chain management systems). their suppliers have to be very involved in the company to make sure superior service is met. pinpoint inventory on the factory floor. timely information. In order for Dell to work off of 6 days of inventory. This page was made for Dell’s larger accounts including corporations. the Government. supply chain systems pass those forecasts to suppliers. Dell’s suppliers have access to this accurate. After those forecasts are made. This webpage includes dynamic price upgrades.e. Dell uses state of the art production planning programs that forecast the quantities of components needed to build the computers.

By being involved in the customer buying process they are able to determine their customers’ needs. Dell utilizes technology to interpret information.allows them to reduce waste and improve efficiency. Once suppliers receive this information. Palm. they have gained superiority over their competitors. but more importantly. Advantages to Xerox were increased profits by offering the printers with the Dell computers. Their ecommerce internet infrastructure is so advanced and knowledgeable that by using it to determine trends and demands of their products. Dell’s e-commerce is a huge part of their competitive advantage. 8 |Page . This allows Dell to streamline production and have close relationships with their suppliers which results in getting timely deliveries in order to mass customize customer’s computers. made an agreement with Dell to offer an expanded line of handheld Palm products and accessories. Along with Palm. Xerox also partnered with Dell to take advantage of Dell’s e-commerce. Being involved in the decision making process is key to Dell’s success because they see directly what the customers want and determine their production schedule from that information. This agreement allowed Dell to drive momentum for the Palm operating system market (Dell: 2000. they are directed to deliver needed materials to a specific dock door for assembly for specific product manufacturing. Inc. Back in 2000. it allowed Dell to be involved in the customer buying process for printers. Dell achieves its competitive advantage over other firms in the industry by having superior supply chain management. Dell uses the Windows NT operating system and Intel-based servers for all of the i2 applications. April 17). Advantages to Dell include selling high quality printers along with their computers. Dell has set up strategic alliances with other companies to have their products sold on Dell’s direct selling distribution channel.

Dell. through a company and into products. “Supply chain management shortens the cycle between the component.com makes it easier to do business for both parties and initiates customer relationships while providing a means for ongoing customer service. As a result. purchases can be made easily and efficiently. customized systems from the dell.Analysis of Dell’s IT Tools: Dell’s supply chain management success can be summed up in one idea. management allows Dell.com can help an individual consumer purchase a single notebook or can 9 |Page . Michael Chong states. Supply chain management is the effective and efficient movement of materials from suppliers. We are allowing them to almost touch each other. e-business Technology Manager of Dell Computer Corporation. ease in ordering and responsiveness to customers needs.com website. An important goal for Dell is to enable customers to process their own transactions. we have the ability to connect and understand what products will be required and when (ECommerce). their competitive advantage is easily distinguished. (E-commerce)” according to Michael Chong. Dell is known for their efficient and effective build-to-order This model allows customers around the globe to order Dell’s online supply As business model. the manufacturer and the end customer. No matter what you are purchasing. As Dell is known for their exceptional service.” This helps Dell to inform their suppliers what supplies are needed based solely on customer demand. which eventually is received by consumers. Dell’s internet presence through Dell. With a number of links focused primarily on certain groups and customers. “Because we work directly with customers. Dell.com can assist the customer in customizing and evaluating Dell’s offerings. suppliers and customers to work together. By involving the customer from the beginning of the ordering process. there is not an excess of supplies in warehouses that will decrease Dell’s efficiency.com is an important factor in Dell’s success. Dell.

It also provides real-time factory scheduling and inventory management so employees can generate key reports based on accurate and timely data. 2000). 2002).help larger companies purchase or lease products that will help them lower their costs. pinpointinventory on the factory floor and receive supplier deliveries on a true just-intime basis (Harrington.” Specifically. Dell has enhanced its supply chain by using i2 Supply Chain Management to plan orders and communicate with suppliers every two hours. “i2 SCM streamlines the supply chain by providing component suppliers and Dell planners with global views of product demand and material requirements. This results in Dell’s efficiency in manufacturing and delivering exactly what its customers want. “The returned equipment comes from companies upgrading systems but wishing to continue using Dell gear.” This system allows Dell to achieve a new 10 | P a g e . Dell possesses a competitive advantage in that they are currently the only hardware platform certified for rapid deployment of i2 Pronto solutions. notebook computers. printers and speakers online. scanners. i2 Solutions enable Dell to reduce costs. i2 solutions also enable customers to put Dell’s value chain to work in meeting company goals and attaining value (Jacobs. As a result. i2 Pronto is a rapidly deployed solution for factory planning and collaboration. lower total cost of ownership and establish a reliable. made it possible for customers to purchase refurbished Dell PCs. Time to deployment and overall cost of ownership can be achieved if i2 Pronto and/or i2 Solutions for Value Chain Management are utilized. replicable configurations. digital cameras. Dell can deliver customized. or from cancelled order (Kelsey. A new service. Dell’s own implementation of i2 SCM solutions is known as the “DSi2 system”. along with Dell servers and storage. 2003). reducing time to deploy and cost of ownership. stable operating environment. DSi2 runs on 120 Dell servers and manages more than 250 suppliers delivering more than 3500 parts. launched in the year 2000.

organizations are able to make decisions in a timely manner and 11 | P a g e . Global Supply Planning. It requires companies to push planning and execution toward real-time or near-real time. autoreplenishment of inventories. 2002). stock status and supplier commitments.” When Dell utilizes its i2 SCM strategy. This success proves that Dell has the best of both worlds. distribution. but it also has four primary i2 software modules: i2 Collaboration Planner Demand Fulfilment. content management and distribution with management. resource and capacity constraints (Harrington. 2002). implement those decisions for completion of the products. DVCM's net result is a fundamental change in the relationship between companies and their trading partners--a change that creates tremendous value for companies.manufacturing schedule every two hours which shows the latest customer orders. A competitive advantage is seen when a company. This link is known as DVCM (Dynamic Value Chain Management). links supply chain management with customer relationship management and supplier relationship management. Dell “can model and monitor their business in real-time. the supply chain of Dell not only runs on 120 Intel-based Dell servers running Microsoft Windows NT. multi-enterprise collaboration based on streamlined decision-making workflows across companies. 2002). design information sharing with strategic partners. After these are implemented. and analyze issues such as sourcing. Today. They achieve state-of-the-art performance at an economically attractive price. Factory Planner and Supply Chain Planner (Harrington.” Some of the capabilities of DVCM are collaborative demand planning with customers and suppliers. backlog numbers. “DVCM requires synchronized. such as Dell. their trading partners and their customers (Harrington.

Dell has reduced the number of suppliers they do business with. This website allows suppliers to follow their material as it as used throughout Dell’s operations.000 suppliers. review negotiated and forecasted cost reports. but today they only work with 100 suppliers. “Our competition has a hard time trying to manage that type of model because their inventory turns are fewer. Dell worked with more than 1. The Internet helps Dell to establish good relations with both their suppliers and their customers. As said by Michael Chong. Suppliers can log-on. Dell is able to use industry price declines to their advantage and deliver those savings on to the customers.’ The applications themselves are not replacing the business processes. That’s why the name ‘value chain. Dell purchases almost 90 percent of its direct material supplies online. Three years ago. According to Michael Chong.com. improve material management and enhance relationships with suppliers. and track their overall performances and progress.” By focusing on inventory control with their suppliers.” An efficient supplier network is important to Dell. The business processes are already defined and well ingrained. It is just making the business processes more efficient (E-Commerce). As a result of their successful Internet system. Supplier hubs located near their manufacturing plants are used to deliver supplies to the Dell plants when they are only a few hours old. Dell also uses supply chain management software to reduce inventories. check engineering change orders. They have more latent costs built into the components in terms of their inventory (E-Commerce). In order to increase efficiency between Dell and their suppliers. This also gives Dell a competitive advantage.dell.Another important role for Dell is the use of the Internet. This method began in mid-1999 when Dell introduced valuechain. “We are trying to draw more value out of our supplier relationship. This also helps Dell and their suppliers connect to 12 | P a g e . Not only does Dell’s use of the Internet allows customers to customize and purchase Dell products online. drop off invoices. the Internet also helps suppliers and Dell communicate and focus on improving their efficiency.

including a Web hosting initiative called DellHost (www. save money. which include software applications. Ariba’s solutions. CEO of Gen3 Partners. Gen3 Partners will provide a valuable service to Dell customers by helping them use the Internet to improve their business-tobusiness (B2B) capabilities and supply-chain processes. services and network access." Dell has recently introduced services to help customers conduct business over the Internet more efficiently.” Ariba. “Gen3 Partners will provide strategic business development and technology consulting services to help Dell’s largest corporate customers with headquarters in the United States leverage their existing assets to create. provides solutions that allow enterprises to manage efficiently the purchasing of all nonpayroll goods and services required to run their business. Gen3 Partners and Arthur Andersen decided to work with Dell in April. as established companies integrate the Internet into their businesses. which gives Dell an additional competitive advantage. in turn. “The next wave of Internet infrastructure will focus on `brick-to-click' opportunities. As a result of an alliance.dellhost.com) and the upcoming introduction of a small and mediumsized B2B marketplace in conjunction with Ariba (2000). are designed to provide corporations with technology and business process improvements to better manage their corporate spending and. architect and launch Internet-enabled enterprises (2000).share information about inventory and improve efficiency.” According to Jim Sims. 2000. Inc. 13 | P a g e .

” Dell’s initial success was due to its early use of the internet. Consumer to Business. With separate sites.” Dell’s early work with using the internet helped them get a jump on their competition while their competition was finding it difficult to conduct successful Business to Business operations online since “exchanges are still in their infancy and many haven't even gone live yet (Memishi. are different than the individuals who want to configure a single unit. who buy large quantities of computers. In the last couple of years. and it's been emulated with considerably less success by many of its competitors (Henricks. of course. 2001). and Consumer to Consumer.Analysis of Dell’s Business Model: The four markets within an industry are defined as Business to Business. “Dell's business model is no secret. Dell focuses on Business to Business and Business to Consumer commerce to satisfy their business and individual customers. generating savings that can range to millions of dollars annually for large 14 | P a g e . “Dell's direct-tothe-customer strategy presents a highly attractive cost advantage that's tough to ignore (Banham. 2003). Dell planned to “simplify the Internet procurement process for businesses and institutions of all sizes. Dell differentiates between classes of customers because the needs of their business customers. 2003).” Their direct interaction with their customers continues to be “a key driver in sales for the quarter (2000). Dell decided to split their operations into two different websites with separate B2B sites. Business to Consumer. Dell recognized the challenge of dealing with the business and individual customers as two distinct groups with different needs.” Matching customer ease of ordering and direct interaction through the internet proved successful because Dell believes that it is the customer that drives the business model. Dell has done a phenomenal job managing these two different types of consumers thus far.

“The result was that the company wound up with essentially no carrying costs for inventory while maintaining excellent turnaround on orders.” Dell’s 15 | P a g e . while Dell makes the computers to order. Dell is more efficient and therefore more profitable because it can buy its component parts based on the customer’s demand and not have to worry about building up its supply of inventory that may or may not be used. whereas one of its top competitors. this idea failed. 2002).” Successful businesses continue to monitor their industry and look for ways to improve to maintain or gain a competitive advantage.” “Dell is one of few firms left standing tall after the tech crash of the last two years…[and its] growth comes as it has won over the consumer market. Dell said the site failed to attract more than three suppliers (Schick. because it sold what it had on hand. IBM has to be good at forecasting what the customers will need. [but] Dell's performance would be impressive in any year.” Dell controls its inventory and costs by being a demand-pull company. This advantage is especially important in the economy today. is strictly a supply-push company and operates in a more traditional manner.” However. 1999). In fact. 2003). although Dell has “cited recent gains in customer requests for price quotes and larger order sizes and expects a steady year of sales (McWilliams. four months after it launched. and didn't have to pay suppliers for several weeks (Henricks. but is even more so now (Wasserman. there are some parts of IBM’s traditional business plan that has also proved successful.customers (1999).” Dell continues to use this successful formula to keep its competitive edge over its customers. “industry officials say that Dell could benefit from hiring IBM to support Dell's customers with computer services (Auerbach. 2001). collected from customers in an average of a few days. Although Dell has been successfully operating according to its business plan. and “Dell had to shut down its B2B site. IBM. 2004).

We often have that debate in-house. One of the most difficult tasks for retailers is managing your inventory based on your customer demand.success extends throughout the entire industry and causes companies like “Compaq. IBM. Dell is also “offering several flexible payment options to help make it easier to buy personal computers online” (Pellet. Dell has minimized this problem by matching finished products to orders received. With the spread of retail sales on the internet. Other companies have tried 16 | P a g e . Gateway. service and support answers. “That's a great question. while businesses can make use of special offerings and services through password-secured locations. “For Dell. Recently Michael Dell was faced with a related question. and Hewlett-Packard to grapple with a lose-lose dilemma: concede market share to Dell or lower prices at the expense of already-flagging profitability (Pellet. “Do you consider yourself more of a manufacturer or a retailer?” Dell’s innovative business plan left Dell to state. “e-tailers” have fallen into two basic groups. Dell’s initial success as a pure play company was evidenced by the fact that it “does more than $10 million daily in Internet sales (1998). pure play or bricks and clicks.” because customers can access the website for all types of purchasing. Dell is a pure play internet company and does not have any physical stores to sell its computers. And frankly. the Web is more than a sales vehicle (Thurm. however.” unsuccessfully to try these similar tactics. Individuals and businesses can check orders and obtain information.” Another advantage to being an e-tailor is the reduced time it takes to adjust your prices or modify your inventory. Pure play companies use only the internet to sell its products and do not have a physical store. 1998). 2001). Bricks-and clicks companies use their internet site in addition to maintaining one or more physical stores to sell their products. 2001).

and grows larger everyday. and those who will always think of us as a retailer. “the company is bringing to the market printers that can be more easily configured to work with its build-to-order PCs (Babcock.'s personal computers (Weiner. It was also extremely helpful for Dell when “AOL announced an agreement to have its Internet access and communications software distributed on Dell Computer Corp.” Constantly growing here in the US and continuing to grow all over the world it is no surprise that Dell reported revenues of $41.” Founder Michael Dell stated.” As a pure play company. 2000). Dell Computer Corporation is the world's leading direct computer systems company." While Dell claims “it is people who produce results (Cone. 1998). Three years ago Dell launched its “direct-sales model into India.” it is also the strategies. This year. Dell will find it much simpler and less costly to adjust their website for products and services in the future. 2004). serving medium-sized companies to some of the world's largest enterprises. and the teaming up with outside suppliers that produce mutually beneficial results. 17 | P a g e . The success of its business plan has resulted in "An increasing number of customers that have asked Dell to share its e-business expertise with them (Felice.” Felice continued to say that Dell's services portfolio now spans from e-support to e-consulting. 2000).there are those who will always consider us a manufacturer. The pure play also allows Dell to expand its product line more easily because of the ability to adjust the site and add new products.4 billion in 2003. 2000). organizational techniques.” because AOL is a leading pure play company. “This is our 13th direct sales launch in Asia and we continue to grow at more than 30 percent globally (Lallpai.

These factors implemented into a concrete disaster recovery plan provide Dell and IBM with the confidence to scale and complex IT network. For instance. Altiris along with Dell OpenManage Client Administrator (OMCA) will provide “Direct integration of Altiris backup and recovery technology with Dell OMCA [which] helps ensure business continuity and helps provide additional cost savings for Dell customers through proactive IT management” (Dell selects Altiris. One main goal of any successful company is maintaining employee productivity. Another way Dell and IBM protect themselves from a potential system crash is through the use of the internet. therefore safely increasing employee productivity through the use of secure workforce systems. is the threat of a system failure. The PowerEdge 1300 has the ability to run dedicated server applications such as file and print. “With the PowerEdge 1300. This principal is profoundly important within the computer industry. Dell has introduced a highly reliable and manageable system that redefines server value” (New Servers.Analysis of IT Infrastructure: IT infrastructure and business-driven technology are extremely important to Dell. through the use of technology. A major concern for companies relying heavily on a productive workforce that makes extensive use of digital data. Recently Altiris Recovery Solution has been selected by Dell for integrated delivery of backup and disaster recovery. the underlying foundation to support the organization's operations and future growth. Dell and IBM both protect themselves from this potential problem with the use of specific intranets and backup/recovery systems. 2004). Michael Lambert said recently of Dell’s new business workgroup server. 2004). IT infrastructure provides. a system failure would result in a loss of valuable human resources and could decrease employee productivity. Internet/Intranet and e-mail. Since computer based companies do a majority of their internal and external business through the use of computers. 18 | P a g e Dell specifically does the majority of its .

which makes scalability a non-issue. The majority of Dell's business is done through the internet. Created for Dell by the firm that developed the popular "Ask Jeeves" Internet search engine. the application now handles more than 150. As was previously stated. DellHost was designed for small and medium sized businesses to increase their internet presence. Dell has increased its customer base. “By the end of 1999 Dell was chalking up $40 million a 19 | P a g e . Through a menu of many different system component options. By allowing businesses to use their software they are also expanding their global reach by having their customers increase their reliance on Dell products. Dell announced a new Web-hosting initiative and alliance. 2004). Dell and IBM both have managed to maintain high employee productivity consistently. One of the main ways in which they have managed to do this is to provide near unlimited availability to their IT infrastructure. This concept. 2004). is one of the major competitive advantages that Dell has created. This allows customers and suppliers to have a very intimate relationship from anywhere in the world. These factors give Dell a competitive advantage in its high scalability and flexibility. Through the use of the internet. the customer defines how their company is going to grow.business through the use of the internet. For example. 7 days a week. “forty percent of which are new to Dell” (Dell speeds web site hosting setup. the customer has a much greater say in what decisions the supplier makes. Dell and IBM both keep consumer information lines open 24 hours a day. the site's "Ask Dudley" feature “allows users to pose natural-language questions. Full time access is crucial to the support of the IT infrastructure by allowing knowledge workers ease in admission to the source regardless of varied schedule. They also all have an easily accessible online help services. Through DellHost.000 questions a week” (Dell courts customers online. known as global reach. this allows the customer to customize his/her product directly for their purposes.

or economic change. With today's fast-paced computer market. director of online support has said. innovation through customer feedback is key to the success of its products. even in the field of technical support. In addition. allowing our technicians to spend more time solving the more complex problems” (Dell courts customers online.accounting for 43% of the company's total revenue. This design saves untold amounts of money because it is ready to adapt to nearly any market. the reliance on the internet for its business practices allows Dell the luxury. function. Manish Mehta. 20 | P a g e . Also Dell's flatter organizational structure heightens the ability for many sources to have input into the future of the company as it deals with the evolving vision of what the market will call for. 2002). Enhancing decision making is also a critical factor in the sustained life of a computer company because technology is constantly changing. “The paradigm shift we'd like to see is fewer tech support phone calls. 2004). This displays Dell’s intense dedication to capacity planning and adaptation. the ease of integration would have to efficiently match the degree of demand as to manage its resources properly. Dell and IBM both have a high degree of integration when it comes to transferring data files from system to system effectively.S” (Dell courts customers online. Economic problems of late have spurred IBM to begin to adapt this organizational structure and lessen time needed to change direction. etc). It has been Dell’s vertical integration model that. “has kept the company afloat despite the industry downturn” (Schick. Today Internet sales alone would rank it among the 125 largest companies in the U. to easily redefine its image by nearly dismissing the time necessary to change the system (image. 2004). To stay competitive in today's computer market. business.day in online sales-. Dell and IBM also implement a great deal of capacity planning when determining what technology will be needed in future markets to stay competitive.

Increasing employee productivity. Perhaps the biggest advantage of the electronic catalog is the search functionality. The use of electronic catalogs gives a specific competitive advantage because it presents products to customers or partners all over the world. and enabling global reach are vital to the continued success of Dell and IBM in today's fast-paced technology driven environment. The customer has a much more powerful search capability.Dell and IBM both maintain very competitive business partnerships and alliances through the use of electronic catalogs. enhancing decision-making. 2004). A recent Dell customer reiterates this concept. making it easier for them to find the proper product. creating business partnerships and alliances. “Its information hierarchy is so clean that you can purchase an entire unit in 10 minutes” (Dell. Dell does nearly all of its business through the use of electronic catalog and IBM continues to increasingly rely on the business generated through them. 21 | P a g e .com. This is also a factor in Dell's and IBM's global reach enhancement. Another major advantage of online shopping is the speed in which customers can purchase their final product.

36 hour turnaround) and its customer service was exemplary for the industry. 22 | P a g e . Also. and cost accounting. inventory management. As a result of this ability. Dell was able to provide better service with a faster turnaround time.e. which helped in pricing. efficient (i.Dell consistently sensed market changes before they happened and was able to anticipate and identify product areas to maximize sustainable profits using its Direct Model.e. supplier loyalty was increased.Critical Success Factors • Supply Chain .A key component of Dell's supply chain management was having materials in close proximity to Dell factories. which comparatively was 20 to 70 days for its major competitors. leading to further economies of scale. By operating on a just-in-time basis. • Customer Efficiency – Dell constantly monitored the customer’s shifting preferences. Also by reducing the total vendor pool and choosing suppliers physically close to Dell’s factories. thereby creating a competitive advantage. which were always proactive and forward thinking. bar codes). Dell’s factory assembly process was highly organized (i. • Market Sensing . making sure it was a market leader quickly upon entering. systems were “burned in”) and extremely fast (i. A huge benefit of this supply chain solution is communicating with these hubs in real time to deliver the required materials.e. Dell could pick and choose which market they entered. Dell also had a superior ability to execute its plans and objectives. Dell had reduced its inventory to an all-time low of a 5 day supply. therefore suppliers are required to have inventory hubs near the manufacturing plants.

email and phone opportunities to make it easy for customers to contact Dell to answer questions they couldn’t answer by the above means. Dell’s can benefit from additional component sales. One method Dell uses is to provide easy access to support via their web site.Dell supply chain management Dell prides itself on their supply chain management system that enables them to increase their efficiency and effectiveness and keep their competitive edge in their industry. Dell has created a competitive advantage by using proficient technological resources that enable Dell to communicate with their customers who can customize their own pc systems. Dell uses advanced information technology to connect themselves to their customers and increase customer communication. This gets the customer involved and cuts costs for Dell salesmen salaries at the same time. Their website allows customers to find answers to common problems without Dell’s “people” assistance and therefore helps to decrease Dells payroll costs. communication and retention. without direct sales pressure from a salesperson. Keeping customers involved with Dell through chat groups and users groups. 23 | P a g e . they were awarded with the Shoppers' Choice for the Best of 2003 Service and Support Site in Computer Shopper Magazine in February 2004 (Dell Support). Dell’s SCM System allows customers to place their own orders. Dell also works to establish good customer service. Dell’s SCM system also allows customers to configure their own pc systems with whatever options they want. With an extensive website. As one measure of Dell’s success. When customers can review all of the potential options at heir own pace. There are also chat. This again involves the customer and forces them to look through all the available options where they might add components that they might not have thought of adding originally. can result in customer retention for future systems or components sales from satisfied customers.

two recent surveys have shown that they have not been as successful in the area they pride themselves in the most.Dell has created a web site that provides extensive information choices for its customers. Although Dell continues to win market share and turn out record quarterly profits. Dell shows that it understands each customer group’s specialized needs and saves the customer time by looking only at the products and services that would interest them. customer service. Education & Healthcare. 2) Small Business. that “Service & Support” is repeated in each of the customer group sites. Education & Healthcare” group. Dell also shows their high priority to customer satisfaction by devoting a specific section of their home page to “Customer Service & Support”. To make it as easy as possible for its customers. 1) Home & Home Office. (Dell’s Website Flowchart I made illustrates this perfectly. By organizing their site this way. Statistically. 3) Medium and Large Business and 4) Government. the results are not catastrophic. Dell makes it possible for the customer to do a significant amount of research on their own. By personalizing the customer’s search. you will notice from the flowchart exhibit. Dell has divided their home page into a number of major customer groups.) Within each group. The March 2004 issue of Consumer Reports.com). In a report that rated the satisfaction of PC buyers. a customer can find specific products and services that would apply to their business type. Even though there is a separate “Service & Support” group. The website contains a great deal of information that will address their personal needs and answer most of their questions. Dell’s customer support and service area is much more extensive than its competition . 24 | P a g e In comparison to other companies. (Dell. Dell's scores have declined in recent months. but it is still an issue that Dell needs to address and improve in. “Service & Support” can also be found under each of the specific industry groups in the “Government.

Although it still managed to top competing brands Hewlett-Packard and Compaq. IBM outscored Dell in the fourth quarter of 2003 based on product design/features and long-term durability. issued a report on support satisfaction among corporate buyers and has indicated that Dell's satisfaction ratings have slipped to 80. including their overall satisfaction with a company's support service.100 consumers. marked by similarly equipped machines and price 25 | P a g e . and assigns each one a weighted score for a total of 100 possible points. According to the TBR report. Although Dell has maintained its strong leadership position in the fourth quarter of 2003. From polling customers that have switched from Dell to IBM. differences of more than four points in the survey were meaningful. Technology Business Research (TBR). from scoring a 74 in December 2001 and a 65 in September 2002 (Spooner. Although Dell still topped rivals HP and IBM in the TBR survey.98. A score of 80 would mean that respondents were very satisfied. TBR questions buyers on eight aspects of support. As a result of these polls. who gave Dell 62 points out of a possible 100 for its support on desktop PCs. 2004). Dell is aware that the PC business is becoming increasingly commoditized. HP scoring 54 and Compaq 51.4 in the third quarter of 2003. customers stated that their reasons for changing companies were product performance. its score was the lowest seen since the research firm began tracking Dell's satisfaction levels in the first quarter of 2001. Dell's overall tech support scores for desktop PCs have dropped substantially since 2001. published in June 2003. Dell is working toward reversing the declining customer satisfaction trend and to return to the industry leader in the area of customer service. Dell needs to address their customer loyalty and keep customers from changing companies. pricing and support. while 60 is described as fairly well satisfied. According to the report.included a survey of 4. Dell's rating represented a decline from a score of 64 which was given in the magazine's last desktop support survey. down from 83. Industry advisory firm.

and recent strong market share gains in France. delivery time. “These results. desktops and notebook PCs. Consumers in France also believe that Dell offers the best long-term durability of hardware. One way to stand out from the crowd is to appeal to existing and new customers by offering better service and support than competitors (4Q03).erosion. 26 | P a g e . constantly drive value up and prices down. ease of set-up.” Dell has also done exceptionally well in Germany as indicated by TBR on June 17. Dell’s satisfaction and loyalty ratings were significantly higher than other vendors across most categories in the notebook segment. General Manager of France for Dell. According to the TBR president. spare parts availability and hardware reliability and performance. Dell was praised for their areas in pricing and value. 1 server vendor. and focus on providing a great customer experience. This study also illustrated Dell’s ability to anticipate and meet customer expectations. 1 ranked desktop and notebook vendor in France and is tied No. Customer service and overall value were the leading factors that made the Dell the top vendor according to German IT directors. In the desktop segment. Although Dell is criticized in some fields by US consumers. giving customers plenty of reason to continue choosing Dell (Customer Satisfaction in France). pricing and value. In the notebook PC segment. 1 ranked vendor in Germany across all three segments of Intel-based servers. The Germany Customer Satisfaction Study determined that Dell is the No. 2003. Dell is excelling in other countries. that the France Customer Satisfaction Study determined Dell is the No. By cutting out the middleman. show this is starting to pay off. Dell believes it has established a closer relationship with its customers. TBR has reported on September 17. 2003. ease of doing business and repair times. Dell’s competitive strengths included delivery time and model availability. According to Thierry Labbe. We will however.

Dell Computer ranks highest in customer satisfaction and was cited particularly in its strength in usability. This study has shown that the strength of Dell is due to their product attractiveness and low operating cost. ability to solve problems. Dell ranks highest in customer satisfaction. and introduction/maintenance cost. 27 | P a g e . “In Germany. was ranked higher than IBM Japan. The Dell SCM system must handle an enormous number of transactions and pieces of information.000 points.D. hardware processing speed. according to the J. in drawing comparisons across several brands.” In the Asian market. the salesperson’s knowledge and skills. whom received a 739 (J. Based on this study. Dell which scored a score 766 out of a possible 1. TBR finds it all the more impressive that these customers. In order of importance. Power). performance and cost. BOMs listing component part numbers are created for manufacturing facilities to build assemblies and subassemblies for Dell products. usability. Dell also received a high score for areas such as frequency of breakdown and problem occurrence. Power Asia Pacific 2002 Japan Server Satisfaction Study. hardware expandability. and cost. these factors are: hardware reliability. The study identifies six factors that drive overall customer satisfaction.Dave Mack. performance. tend to rate Dell on a higher plane than their other brands (Customer Satisfaction in Germany). and over 2 million bills of materials (BOMs) per year.D. where IT customers tend to purchase from multiple vendors. and includes multiple core components necessary to keep operations running smoothly: • Configuration management: The configuration management component manages over 1 million Dell part numbers per year across approximately 200 product families.

invoices. analysis. and receipts. and views). The Old Solution – Proprietary Unix-based Servers The previous Dell SCM system used Sun E6000-Class UNIX-based servers running the Sun Solaris 8 OS and Sun Cluster 2. and approximately 500 user interfaces. the Oracle Database application for SCM consists of approximately 3. tables.• Procurement: The procurement component manages nearly 1. five internally developed Web-based applications. triggers. negotiated terms. including payments to Dell suppliers.000 suppliers worldwide. Dell uses an automated application that includes workflow approvals and vendor communication and enables services such as defective part replacement. along with the corresponding 3 million messages transmitted to different systems for reporting. This SCM system is supported by six PowerEdge 2650 application servers.000 database objects (functions. the SCM system also runs several other batch process jobs to aggregate data each week. These batch jobs run weekly. month. and quarterly. To streamline the procurement process. • Cost: The cost component runs mostly in batch mode to calculate the costs to Dell for all BOMs. and contact information. location. The primary and secondary 28 | P a g e .000 items per day. packages. monthly. • Inventory: The inventory component manages more than 3 million inventory movements daily from stock rooms to factory floors across all Dell sites. more than 50 system-to-system integrations.2 . and factory scheduling. In addition to these order-related transactions. • Accounts payable: The accounts payable component handles approximately 15. or quarter. approximately 125 batch jobs.8 million purchase order lines per year from more than 5. with each job aggregating total material costs. Vendor information includes vendor ID number. procedures. In the North America region.

All Oracle RAC nodes 29 | P a g e . each with four Intel® Xeon® processors. The Oracle RAC 10g architecture includes built-in high-availability features. The environment includes a primary cluster and two disaster recovery clusters. who would then have to reconnect to the newly active server. enabling the database to fail over to the passive node if the active one failed. To make the system highly available. the Oracle Database version was outdated and unsupported. and because it did not support Oracle RAC. The failover disconnected all users. The multi-node Oracle RAC architecture can also provide higher I/O throughput than the previous system because of the increased number of available interfaces. the current system allows Dell IT to easily add servers to the clusters to handle increased workloads. with many of the batch processes taking a long time to complete—the end-ofquarter batch process job. In addition. Dell decided to migrate to a cost effective.servers. Arrays running the EMC® Symmetrix® platform provided disk storage. Instead. managed the production database on Oracle Database 8. Dell IT could not add capacity by horizontal scaling. To continue using this system would have required a large investment in upgrading these large.6. industry standards–based platform. the performance of the proprietary system was becoming a concern. The failover was initiated when the passive node no longer detected a heartbeat signal from the active node. The disaster recovery server had 12 processors at 336 MHz and 6 GB of memory. expensive servers. each with 16 processors at 336 MHz and 11 GB of memory. could take up to 31 hours. Dell IT used Sun Cluster to cluster the primary and secondary servers in an active/passive configuration connected to shared disk storage. Current system: Oracle RAC on Dell PowerEdge servers By 2005. for example. replacing the Sun servers with Oracle RAC 10g clusters of Dell PowerEdge 6650 servers. While the previous system could not scale beyond one physical server.0.

Dell IT also uses several other programs to provide key backup. The combination of Data Guard and SRDF provides both fast and secure data replication. users do not have to reconnect. as they did in the previous system. which allows the database to stay in sync and helps prevent physical corruptions from being copied to the disaster recovery database. archive logs are backed up hourly to enable Dell IT to recover the database to a specific point in time if necessary. This method is fast but does not guard against data corruption. One of the disaster recovery clusters uses Oracle Data Guard software. Dell IT can also back up the database from the disaster recovery site rather than taxing the primary nodes. Two full (hot) backups are made to tape weekly through the EMC NetWorker™ interface. Because this failover is seamless and transparent to users. and the other uses EMC Symmetrix Remote Data Facility (SRDF®) software. and administration capabilities: • Oracle Recovery Manager: Dell IT uses this program to back up the primary database and archive logs. The first cluster uses the Data Guard Broker component to ship logs in real time from the primary site to the disaster recovery site and apply them. load balancing. the users and connections can fail over to the other nodes or instances. The second cluster uses SRDF to ship changed blocks at the storage level in real time from the primary site to the disaster recovery site. if any of these experience problems. Dell IT can have three nodes handle online users and three nodes handle batch processing. • Oracle Database 10g Services: This software provides load balancing for each cluster—for example. • Oracle Grid Control: This software provides monitoring and management capabilities and helps simplify many day-to-day database administration tasks.and instances share the same physical database. it also allows administrators to set thresholds for different events to create trouble tickets through the problem management 30 | P a g e .

scalable supply chain management: Supply chain management is essential to Dell operations around the world. with both factory operations and internal systems dependent on SCM systems to provide real-time information about key business functions. and provided a clear path for future growth. Standardizing on cost-effective Oracle RAC 10g clusters of powerEdge servers with Dell/EMC storage. while the time for the entire end-of-quarter jobs processing decreased from 31 hours to 23 hours. with similar processes for deployment.system. and backup. By moving the systems to Dell servers when it did. Running these systems on Oracle RAC 10g clusters of industry standard Dell Power Edge servers enables Dell IT to scale them efficiently and cost-effectively to handle increased workloads. The most significant time savings occurred in the data extraction for all material movements transactions. Dell was labelled as a “mail order company”. helped Dell IT deploy the systems globally in just eight months. Cost-effective. which dropped from almost 5 hours to just 35 minutes for an 88 percent improvement. Channels – Dell used its Direct Model approach when entering major markets. Dell IT has implemented these clusters at multiple locations around the world. but less than 5% of sales actually came from 31 | P a g e . Dell IT has implemented these clusters at multiple locations around the world. Performance increases: Dell engineers measured database performance for both the previous and current SCM systems. disaster recovery. but for smaller markets it operated through its distributors. enhanced performance. Dell IT avoided significant additional expenditures for proprietary UNIX-based servers.

entry into retail channels was not successful in broadening its penetration of the consumer market because customers no longer had the option to custom configure their machines .4 billion. international market share was half of what it was in the states. Sales infrastructure – Orders for the factories came in from 2 different sources. Industry. but unfortunately. 32 | P a g e . and within 3 years. By 2000.85 billion dollars) coming from outside of the US. Dell also sold servers through its direct sales force to larger relationship clients and through telephone and online channels to smaller business clients using a threetiered architectural system. Consumers and small business customers responded to print ads calling toll free numbers. It entered the workstation market in 1997 and by 2000 was the worldwide market leader. It also had plants in Ireland. there was a significant decrease in demand.Dell entered the server market in 1996. cutting out the middle man. Malaysia. with 50% of sales going to large corporate accounts and the other 50% of sales going to medium and small businesses. Dell had 2 US plants to service the North American market in Texas and Tennessee. Dell generated $7. Brazil and China to support its global business. with 25% ($1. but surprisingly. Most sales were to business customers through its direct sales force.a previous leverage for Dell). while Dell’s inside sales representatives placed orders for their large corporate customers. servers accounted for 12% of its sales. Computers were shipped directly to the customer. The industry had recently just gone through a hyper expansionary phase with 30% growth rates in 1999-2000. (Dell briefly altered this direct approach by selling computers in CompUSA and Sam’s Club in 1992. but gross profit margins overall have dropped from 50% to 25% in the last decade. With the US computer industry pretty well saturated with 53% of homes already owning PC’s coupled with consumer fears of a recession.individual consumers.

Dell understood the different needs of its large corporate. and the attractive pricing resulting from the ‘direct model’. and governmental customers and attempted to optimize its 7. IBM. Dell’s four main types of customers were differentiated through the buying process as primarily relationship (consumers with ongoing purchases) or transactional customers.500 worldwide sales and support reps for each particular segment. small business. EMEA. 33 | P a g e . (consumers making 1 purchase at a time) broken down into the following segments. Dell had overtaken them. the economic downturn of 2000 resulted in predictions of desktop and laptop revenues decreasing by 10% from the previous year. and HP. Compaq. dealing directly with the manufacturer. New products are coming out all the time. Dell also had created 3 regions outside of the US: Americas International. Dell’s main competitors were Apple. In order to do this.Customers valued Dell’s uniqueness of: offering the ability to easily customize their PC’s. Compaq had been the market leader in desktops and portables in 1997. Gateway. Dell segmented its customer base into 9 US geographical regions.Therefore. but by 2001. but the “Others’ segment had the most percentage of vendors market share at 34%. Competitors – The computer industry is fragmented. and APCC. the competition is brutal. Customer Analysis . Many of these companies could not continue making profits operating in Dell’s “low-margin sweet spot” as the gross margins of the industry consistently kept dropping. and customers are changeable.

federal government. state & local government • Small/Medium Businesses (Relationship = 30%): Preferred account division. enterprise. Business systems division • Consumer Business (Transactional = 10%): knowledgeable buyers.Global: Primarily relationship and transactional. 34 | P a g e . then broken down into 3 core areas: Relationship Business. education. Small/Medium Businesses. large corporate accounts. and Consumer Business • US Market (Relationship = 60%): Business-global. Dell has combined and implemented a multi-segment target marketing strategy with 90% of its business being relationship based.

and outsourcing their shipping. Dell had the lowest operating cost in the industry at 11. With only a 5% global market share. It also had weak international market share in 2002 (Western Europe =3rd.) It can develop itself into the premier Internet partner for customers around the world by heavily targeting sales to first-time PC buyers and introducing new product categories and services. Dell can easily increase business revenues from international growth. entering the workstation market late and signing unsuccessful retail agreements all brought losses to the company. 35 | P a g e . Opportunity – Dell can further capitalize on the remaining build-out of the Internet infrastructure and increase market share in the external storage market (i.SWOT Analysis Strength – By offering superior telephone customer services such as Premier Access.5%. In addition. It had a unique ability to predict which new high margin technology product could be driven to scale w/lower priced products driven by its direct model. Dell set the industry standard for customer service/relations resulting in satisfied customers and less downtime (Dell resolved 72% of problems remotely. which was twice the industry average.e. making it hard to copy.) Weakness – Dell was late getting into the Latin American market (5th place in overall market share). resulting in lost sales. jumping into the laptop market too soon. Asia/Pacific = 7th. Japan = 8th. and 5th place in the rest of the world. SAN/DAS were expected to take 2/3rds of the market by 2005) and participate more in the midrange and high-end server markets (2000 saw a 7% worldwide increase from 1999. Dell doesn’t have robust products to support mission critical environments and is shut-out of big enterprise storage accounts. which was continuously improving.

build to order manufacturing.Michael Dell portrays his company as “the good guy”. changing and finding ways to master its environment. More Powerful. While the growth of the Internet should produce more demand for servers and storage. and build it into the company’s DNA. Dell consistently implements its startup mindset of “build-to-order computers” (referred to as the direct model approach) from the very beginning of the development and production process. affected by the rapid pace of technology and the bursting Dot. as opposed to just responding to it. the Robin Hood of the computer industry offering more for less.” For every new product or service it introduces to the market. Customized and Cheaper. Positioning. Dell has been able to take flexibility and speed.com Economy. In addition. Its’ direct model approach evolves for every new product and service achieving delivery of high quality PC’s in a very cost efficient manner. faster. Dell is a continuous-growth model. and customized customer service. which led to high quality and more powerful computing power. one of continuous improvement. Dell’s business was unique in that it was able to consistently make significant profits in low margin product areas. Current Strategy “High Quality. Dell had a reputation for “effectively entering product markets where core proprietary elements had become standardized and 36 | P a g e . those markets will test Dell in areas that haven't been its strong points: sophisticated product engineering and labor-intensive services. Their mantra is “better. cheaper” using brand name components. Faster. constantly adapting.Threat – Computer industry consumers have traditionally been notoriously fickle in their buying habits and trends.

By 2001.undercutting existing players based on price. (Dell does not use any retailers or wholesalers to sell their products. fast and efficient business model.On-line model. mail-order. and awards Place . laptops. Promotion . reviews. and auxiliary services. customer service. targeting. special training and certifications. In addition. word-of-mouth. with superior customer value with virtual integration. and positioning and can be summarized as a low-cost. Target Market – Dell’s main focus is on large corporations with secondary efforts on small and medium sized businesses. but with minimal effort.Direct from Dell: On-line. storage devices. Dell’s strategies do match the company’s 4 P’s. Products .” Dell’s strategy was to choose the best in class providers (like Intel and Microsoft) for each component and leveraging their scale investment in R&D. telephone.) In conclusion. sales reps. These low prices are the result of multi-level leveraging and from achieving economies of scale.Dell currently has 6 main products: PC’s. workstations.When Dell decides to enter a particular market. Dell mainly focuses on the segments that are already knowledgeable about computers. STRATEGIC OPTIONS 37 | P a g e . catalogues. direct mail order. Dell had become the US market leader in Wintel server sales. Premier Pages. Pricing . they also target the global consumer directly. it consistently uses the Direct Model approach. editorials. pricing their product below that of their competitors.

Pursuing this growth option could result in increased market share and higher profits due to the higher selling prices and markups of these units. 2000 service revenues accounted for over 37% of $2 billion in total revenues. Increased post sale costs are also a concern. Product Development – • Pursue Mid-Range Server Growth. lower profits. This option contains increased risk and high initial start-up costs. but had no presence in the mid-range server market. By 2001. no matter what turn technology took. “If it isn’t broke don’t fix it”. Dell’s R&D budgets are well below that of its primary competitors. However. • Pursue Associated Services Growth – within the US. 38 | P a g e . as server sales don’t just stop upon delivery. serviceability. resulting in declining market share. able to stand the test of time and market uncertainty. but could be risky if technology suddenly changes. they require continued service regarding reliability. and the possibility of the competition advancing while Dell stays stagnant. Dell can capture new markets and increase sales and awareness. This option is not a proactive approach and could prove to be risky. • Increase product line: By introducing new products like a PDA. availability. This business unit was becoming an increasingly important part of Dell’s portfolio with longevity. Dell was the market leader in entry level servers. so Dell could just ride it out and hope to hang onto the market share it currently has.Market Penetration – Maintain status Quo and continue to do more of the same. and manageability. Many people believe the recession will end soon.

The product chosen for expansion should be a commodity where the demand is already in place and the country must also value on-time delivery. and longer ROI must be taken into consideration as well as limits on foreign ownership and tariff barriers. the successful Dell Model might not work everywhere. Diversification Merger and Acquisitions: By 2000. In addition. However. The Potential benefits of international expansion are increased market share. but cons are higher costs and the need to re-train employees to learn Dell’s culture and mission. terrorism. revenues. meaning now might be the perfect time to buy the company at a significant discount. leveraging EMC’s expertise and experience. RECOMMENDATIONS & IMPLEMENTATION 39 | P a g e . cultural barriers.New International Market Development – Target new segments and enter new markets with existing products. EMC’s stock price had fallen over 800% in 2001. profit. Due to the sagging economy. and buyer awareness. political systems. The Pros include increased market share and economies of scale. Dell can effectively enter the external storage and software market previously untapped. By acquiring an innovative leading company like the EMC corporation. the external storage market was growing at 23% per year.

With the growth of quality competition. Dell should consider expanding into peripheral product markets that would compliment their computer sales. Even in the US. The additional suppliers should not result in any significant cost to Dell and Dell might be able to negotiate better component costs from new suppliers. even with Dell’s current success.After analyzing Dell’s IT and their competitive advantage as a result of their advanced and successful IT. 1) Dell should consider selectively adding other vendors to its supply chain management system. Dell may need to consider to selectively adding additional suppliers to their supply chain management system. it was challenging to come up with recommendations to help them achieve more success in an industry that they already prosper in. 40 | P a g e . it is crucial for Dell to keep its competitive advantage by offering new technology products and services. This might include specially designed systems for specific industries (architects. Dell’s margin of leadership has declined. Due to the increase in Dell’s global sales. In order achieve this goal. Dell has lost some domestic market share and has more potential overseas. where they are ranked high against their Dell can send out competitors. in-depth customer satisfaction surveys should be used in markets where they trail their competition. However. By going directly to the consumers. It also makes consumers feel that Dell truly cares about how they feel about their products and service. It is important for Dell to advertise and get their products noticed in international markets. Although Dell does well in its markets overseas. we realize that in an ever-changing technology industry. 3) Invest more in Research and Development. they can get feedback from sources they care most about. questionnaires to previous consumers to see how they can improve. there is always room for improvement. New suppliers would want to participate in this exchange because they would be seen doing business with a leading technology company 2) Use “Customer Surveys” to gain market share.

) or additional hardware for specific markets (gamers. It is important that Dell keeps their service of DellDirect efficient by avoiding mistakes and making sure that purchases online are correct. Dell can make money by charging for this additional service. This section can include these systems at lower prices because they would be final sales on pre-configured systems. Dell should enhance its online ordering system with customer confirmation before manufacturing starts.doctors. This would help reduce costs of production if there are incorrect orders and it will also help increase consumer satisfaction. This will also help Dell keep its revenues high by not experiencing extra costs because of items that were not sold. Dell can start a clearance area on their website. If there are cancelled orders or completed orders that don’t get paid for.) It is also important for Dell to watch its competitors and see what new products and techniques they introduce. Therefore. In addition to pre-made systems. 5) Reduce errors in Dell’s direct Internet ordering system and create a “Clearance” area on its website. 41 | P a g e If they place a section on their website titled. 4) Dell could offer online data back-up capabilities. . etc. they can always retrieve their data from Dell who has their information backed up offsite on their system. For consumers. music lovers. Dell also has a built-in customer list based on the sales that they make for computer systems. Since all purchases can be done on the Internet. (This might be the result of Dell’s unsuccessful mediation through its order resolution policy. By keeping their data saved at another location that is maintained by Dell. Another way to increase revenue is to offer existing customers (business and individual consumers) back-up capabilities on Dell’s own servers. This process will have advantages for both consumers and Dell. if something happens to their plants and computer systems. Dell can offer discontinued items (older models of components). especially businesses. it is easy for consumers to click a wrong button when customizing their products. that remain in Dell’s inventory. etc.

“Clearance Products. 2003). 7) Increase Company recognition through a national advertising campaign.” they will appeal to customers who want to buy a computer at a cheaper price and do not have a strong preference on what features the product has. the company spokesman. These ads would probably be most effective for the small business and individual user markets. Like many companies. Since successful customer support and communications are crucial to Dell’s success. Therefore this recommendation is a win-win situation for both Dell and the customer. as well as commercial. In order to keep the name Dell out in the market. Dell has taken advantage of the cheaper labour in other countries by routing most of its technical support calls from the US to headquarters in India. This may include ads on the Internet. As a result of prior experience with Indian support staff. In addition to more people. 6) Enhance customer support services. The only problem with this was that “Corporate customers were telling us they didn’t like the level of support they were getting. and in the normal course of business. it is important that Dell keeps enough well-trained people on the phones and on the Internet for customer support. they need to either train Indian support staff more effectively so they can take advantage of the cheaper labour in India or keep support staff here in the US. magazine and newspaper ads. it may be helpful for Dell to consider a national advertising campaign to increase Dell’s visibility. they should review their service support training and quality control procedures. Based on the results of some surveys that say that Dell might be losing customers because of actual or perceived decrease in support. This is an area where possible over-staffing might be worth the additional costs. Dell succeeded increasing its brand 42 | P a g e .” according to Jon Weisbatt. Dell should do a cost-benefit analysis to determine whether they should invest in more people who can answer technical questions & support customers with their problems and needs. we made some adjustments (Brewin.

as well as Dell servers. or have a mixture of servers from different vendors. Meanwhile. This allows Dell to widen its customer base by appealing to customers that don't have Dell servers. Dell should ramp its efforts in three non-core areas as key for future growth: servers. particularly in the enterprise market. With comprehensive support for multiple platforms. Dell can also offer customers a storage solution that 43 | P a g e . global corporations with enterprise-class requirements. the company can leverage its expertise in customer support to keep those clients. external storage and services. Once Dell has used its lowest price strategy to increase its installed base of clients in hardware sales. The company needs to create a greater presence among enterprise and service-provider customers. Server/Storage/Service Growth The booming PC market seems to have bottomed out. Therefore. with little signs of improvement due to market saturation.name recognition once before with its “Dell guy” campaign. It can leverage its ties to Microsoft. it still lags behind other server vendors in total shipments and sales. Positive signs have come mainly in the form of limited PC replacement programs at some large companies and sales of notebook PCs. and even overtake some competitors in others. Even though Dell has already made some impressive progress in server and storage developments. it can carry on with its aggressive price-cutting strategy for all of its products. This move will make its high-end storage products work with IBM. Hewlett-Packard and Compaq Computer Windows servers. This will only help Dell get its good name out there for all people to see. Intel and other prestige component vendors to focus on providing Windows-based storage and server products. Dell can quickly grow its storage business by providing simplified and standardized storage solutions to customers ranging from small businesses to large. Hopefully. Any future PC market recovery will most likely be tied to an improvement in the economy. recognize and eventually result in purchasing Dell products. these moves will allow them to gain traction in some markets.

China in Asia. but Dell's deliberate and measured steps to expand beyond its PC roots could result in additional good news in the future. such as migrating from Unix-based servers to new ones based on Linux can be offered and combined with Dell's hardware. While Dell continues to partner with third-party services firms in some areas. which will vary from country to country. it needs to consider entering the markets that are key to the region. this expansionary growth will place extensive demands on Dell’s information infrastructure needed to support such global operations. However. For example. it should also bulk up on its own services capabilities so it can provide customers with more complete services offerings. and Brazil in South America. New services. An expansion of the services group should also be pursued based on customer needs. A total of $2 billion to $3 billion in service revenue can be achieved if this strategy is correctly implemented. Germany in Europe. Dell's threepronged growth strategy by no means guarantees a sure-fire path to future profitability. Dell should realize that it would need to expand its services capability significantly in order to be taken seriously by some global enterprise and service-provider customers. To be successful in these new markets. Dell can also implement a fixed-price approach to services that will boost its presence in that market. Keeping these 44 | P a g e .leverages their existing Windows server investments. while scaling to accommodate their growing data requirements. International Expansion As Dell looks at expanding into international markets. Dell must update its websites in the particular languages and modify the accounting systems to handle the specific currencies. Dell needs to carefully study these types of key markets and implement its Direct Model only after it understands how these regions economically and politically function.

The global market is huge and virtually untapped and Dell is in a great position to take advantage of this market. and partners will be a gigantic task requiring the latest technology. Asia is a virtually untapped market and is expected to grow rapidly in the next few years. References 45 | P a g e . increasing the demand for instant information. Dell should look for ways to optimize these facilities and budget some advertising towards attracting enterprise and big businesses in that region. Anyone who wants a Dell must order it through the mail. eliminating all the middlemen in the normal distribution line. suppliers. drastically increasing its revenues. or over the phone. it may be able to dominate the Asian market.7% hold on a market with over 19. Dell just takes the order and ships the computers via one of its many shippers.9 billion units. Dell currently has two manufacturing plants and four technical support offices in the Asia area. Dell’s most important strategic advantage is the ability to sell direct from Dell. which is a perfect method for doing international business.new employees in touch with one another and with customers. Dell should focus on dominating the Asian market where they only have a 3. online. especially with the use of the Internet and its advanced online capabilities. If Dell can capture a few large clients in China.

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