$2.0B

Presented by:• Imran Shinwari

MBA (029)

“ “ CASE STUDY ON DELL COMPANY ” CASE STUDY ON DELL COMPANY ”

STRATEGIC MANAGEMENT

www.dell.com 2

OUTLINES of CASE STUDY

HistoryVision statementMission statementOrganizational structureInternal factorsCompetitorsConclusion

www.dell.com 3

OBJECTIVES

HistoryVision statement Mission statement Strategy statementFinancial analysisSPACEBCGIFEconclusion

$2.0B

In doing so, Dell will meet customer expectations of:

• Highest quality • Leading technology • Competitive pricing

• Individual and company accountability • Best-in-class service and support • Flexible customization capability • Superior corporate citizenship

• Financial stability

Mission Statement: “To provide customers with superb value, Mission Statement: “To provide customers with superb value, high quality, relevant technology, customized systems, superior high quality, relevant technology, customized systems, superior service and support, and products and services that are easy to service and support, and products and services that are easy to

purchase and use.”purchase and use.”Strategy Statement: “To do business with its consumers one-on-Strategy Statement: “To do business with its consumers one-on-

one, through the phone or internet.”one, through the phone or internet.”

www.dell.com 5

MICHAEL DELL

Three Golden Rules of Dell:1.Disdain Inventory2.Always listen to the customer3.Never sell indirect

www.dell.com 6

DELL Inc - TIMELINE

The founder of Dell. The company he founded in ’84 for $1,000.1983 develop an interest in personal computers.1984 with sales approaching $80,000 a month.

1983-- Michael Dell starts business of pre-formatting IBM PC HD’s on weekends1985-- $6 million sales, upgrading IBM compatibles for local businesses1986-- $70 million sales; focus on assembling own line of PC’s

1988-- Initial IPO $30 million

1990-- $500 million sales; with an extensive line of products

1996-- Dell goes online; $1 million per day in online sales; $5.3B in annual sales1997-- Dell online sales at $3 million per day; 50% growth rate for 3rd consecutive year, $7.8B in total annual sales.

1999-- Dell Computer was the largest retailer on the internet.

2005-- $49.2B in sales.

www.dell.com 7

Dell Computer Corporation

A Fortune 200 company in just 14 years Dell is the World's largest PC maker having Build To Order model.No 1 in profitability for the computer systems industryAs of 2006 it employs more than 63,700 people. Customers in 170+ countries.For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard).According to the Forbes 50 2005 list, Dell ranks as the 28th-largest company in the United States by revenue.In 2006, Fortune magazine ranked Dell as No. 8 on its annual list of the most-admired companies in the United States. Major competitors are IBM, APPLE, HP.

www.dell.com 8

DELL Brand-Names for Its product ranges

OptiPlex: Office desktop computer systems Dimension: Consumer Desktop computer systems Latitude: Commercially-focused laptopsInspiron: Consumer laptopsPrecision: Workstation systems and high-performance laptopsPowerEdge: Larger corporate serversPowerVault: Direct-attach and some network-attached storage (NAS) Dell EMC: Storage area networks XPS: Enthusiast/high-performance systems Axim: PDAs utilizing Microsoft's Windows Mobile Dell On Call: Extended support services

Dell Digital Jukebox (DJ) MP3 Players (discontinued, August 18 2006) Dell monitors LCD/plasma TVs and projectors: HDTV and monitor use

www.dell.com 9

DELL’s SUCCESS

www.dell.com 10

Dell’s Global Presence

The AmericasThe Americas EMEAEMEA Asia PacificAsia Pacific ChinaChina

Sales Offices in 43 countries Sales presence in 170 countries

6 Manufacturing Sites

XiamenChina

PenangMalaysia

LimerickIreland

AustinTexas

NashvilleTennessee

Eldorado do Sul Brazil

www.dell.com 11

Dell’s Competitive Advantage

Dell’s Direct Business Model

Commitment to Open Standards

Order Velocity/Build to Order

Supply Chain Optimisation

Continuous Process Improvement

www.dell.com 12

Dell’s Direct Approach:A Fundamentally Different Model

SuppliersSuppliersSuppliersSuppliers CustomersCustomers CustomersCustomers

Dell Direct Model

SuppliersSuppliersSuppliersSuppliers CustomersCustomersCustomersCustomers

Competitor Model

CompetitorCompetitorCompetitorCompetitor ChannelChannelChannelChannelOutsourcingOutsourcingOutsourcingOutsourcing

Ownership of the value chain

Loss of control over product &information flow & customer relationships

www.dell.com 13

Benefits of Dell Direct Model

Better understand customer needsCustomers receive exactly what they want: not standard solutionMinimized inventoryNew technology delivered immediately

www.dell.com 14(Annualized)

Dell GrowthDell Growth

$0$5

$10$15$20$25$30$35$40$45$50$55

FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05

Rev

enu

e $

Bn

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Un

its

Mar

ket

Sh

are

%

Revenue Mkt Shr

FY05 revenue of $49.2 billion Market Share FY05 = 17.8 %

Source: IDC All Form Factors

www.dell.com 15

DELL Growth Highlights                              

Growth Highlights

                                                                                                                   

                                                         

www.dell.com 16

PROFITABILITY COMPARISON

Profitability Dell Hewlett-Packard IBM GATEWAY APPLE

Gross Profit Margin

17.50% 23.90% 41.40% 8% 27%

Pre-Tax Profit Margin

7.60% 5.40% 28.10% -15% 4.66%

Net Profit Margin 6.00% 4.10% 9.50% -15% 3.3%

Return on Equity 75.6% 9.6% 26.5%

Return on Assets 14.9% 4.7% 8.2%

Return on Invested Capital

45.8% 7.4% 10.9%

www.dell.com 17

SWOT Analysis Dell

Strengths

Strong supplier relationshipLower unit costStrong quicker reaction to customer wants and needBetter reach at lower costStrong customer retention and relationshipBrand equity.

Weakness

Dependence on volume.Inventory

www.dell.com 18

Opportunities

International growth.Pricing flexibility.Computer moving towards commodity status.Rapidly changing technology leading to upgrade.

Threats

Regional competition.Changes in technology.Prolong economic downturn.Reliance on supplier.Commodity pricing.

www.dell.com 19

INTERNAL FACTOR EVALUATION MATRIX

No.S INTERNAL STRENGTH WEIGHT RATING WEIGHTED SCORE

1 Production adaptability .10 4 .40

2 Financial ratio .10 4 .40

3 Product reliability .10 4 .40

4 Customer relationship .10 4 .40

5 Build to order .10 3 .30

6 Competitive price .10 3 .30

7 Leading technology .10 3 .30

8 Supply chain .10 4 .40

INTERNAL WEAKNESS WEIGHT RATING WEIGHTED SCORE

1 Little product diversification

.05 3 .15

2 No business diversification .10 3 .30

3 On man show .05 2 .10

TOTAL 1.00 3.50

www.dell.com 20

BOSTON CONSULTING GROUP MATRIX

www.dell.com 21

SPACE MATRIXFactors determining competitive advantage 0 1 2 3 4 5 6

Market share Small 3 LargeProduct quality Inferior 5 Superior

Product life cycle Late 1 EarlyProduct replacement cycle Variable 3 FixedCompetitions capacity utilization Low 3 HighTechnology know how Low 5 HighVertical integration Low 3 Highinnovation slow 4 fast

27 0 1 12 4 10 0

Factors determining Financial Strength 0 1 2 3 4 5 6Return on investment Low 3 HighLeverage liquidity Imbalance 5 SolidLiquidity imbalance 5 SolidCapital required verses capital available

High 2 Low

Cash flow low 3 HighEase of exit from the market difficult 1 EasyRisk involve in business much 3 LittleInventory turnover slow 5 Fast Economic of scale and enterprise Low 6 High

33 0 1 2 9 0 15

6

www.dell.com 22

Factors determining environment stability 0 1 2 3 4 5 6

Technological changes Many 2 FewRate of inflation High 5 Low

Demand variability Large 1 SmallPrice range of competing products Wide 1 NarrowBarriers to entry into market Few 5 ManyCompetitive pressure/rivalry High 0 LowPrice elasticity of demand Elastic 0 InelasticPressure for substitute product High 3 Low

17 0 2 2 3 0 10 0

Factors determining industry strength 0 1 2 3 4 5 6

Growth potential Low 4 High

Profit potential Low 4 High

Financial stability Low 5 HighTechnology know-how Simple 5 Complex

Resource utilization Inefficient 6 EfficientCapital intensity Low 3 HighEase of entry into market Easy 6 DifficultProductivity, capacity, utilization Low 6 High

Manufacturers barraging power Low 6 High45 0 0 0 3 8 10 24

www.dell.com 23

www.dell.com 24

THANK YOU