Group A9
Coman FullardAlexius FreundRaman Karol
Dhirapat KulophasAdriano Prates Marcus Wyss
DELL
Strategic Management 30-03-2004
Introduction
CEO: Michael DellTeenage EntrepreneurCollege DropoutMulti-Millionaire
World’s Number 1 PC maker
Direct Sales Model
Standards based designs
Corporate Darwinism
Almost no R&D
JIT manufacturing
Cost conscious
Products & Services
EnterpriseServers
Workstations Peripherals
Laptops &Notebooks
NetworkingProducts
DesktopSystems
•Managed Services
•Professional Services (consulting)
•Deployment
•Technical Support / Warranty
•Training / Certification
GOLDGOLD
SILVERSILVER
The Industry
Potential Entrants
Rivalry Within Industry
Substitutes
BuyersSuppliers
•Economies of scale•High Capital investment•Low Product Differentiation
•Absolute Cost Advantage
•Concentrated Supplier Market
•Few Suppliers / Key Components
•Important inputs
•Concentrated Market•High global growth rate•Low Differentiation
•High Bargaining Power•Access to Information•Low Switching Costs
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Business Model
Suppliers PC Makers Distrib. Resellers Customer
Suppliers DELL Customer
Traditional Model:
DELL Direct Model:
The 4 P’s
Product
•Build-to-order•Mass Customisation•Segmented service levels•High quality/cost effective
Price
•Lowest-cost producer•Changes Daily•Flexibility•Essentially self-financing
Place
•Fast, efficient distribution•Internet, phone, catalogue based sales
•Distributors in some markets
Promotion
•Relationship business•SME: direct mail/online•Consumer: editorials, word-of-mouth, print advertising
SWOT - I
Strengths Weaknesses
• Unique Business Model
• Mass Customization
• Customer Contact
• Customer Loyalty
• Unique Management Style
• Standards Based Technology
• Limitations of Business Model
• Over-reliance on CEO
• Thrift
• Low Corporate Morale
• No R&D
SWOT - II
Opportunities Threats
• Product Extension
• Splintered US Market
• International Expansion
• Vast Customer Base
• Increased service based opportunities
• Replication of business model by competitors
• Limitations of suppliers
• Decreasing profitability of the market
• Low morale talent flees
Recommendations
• Grow the US consumer business
• International expansion
• Leverage current corporate customers to enter developing markets.
• Grow the European business by targeting the corporate segment.
• Explore domestic acquisition possibilities
• Expand the expert services offered
• Move in to the mid level servers.
• Maintain “Corporate Darwinism” & continuous improvement approach to operations.
• Nurture Company morale to retain talent
brand building aggressive pricing strategies
cooperation with the local players
Update
• 2001: Internal survey reveals very poor worker morale
• Enter Mobile phone market but fail & exit
• Expand storage offering with EMC
• 2002: Enter printer business
• 2003: Enter consumer electronics
• Revenue reaches $35 billion
• Net Earnings of $2.12 billion
• 15% of market
• 2004: Agreement with Fuji-Xerox
• Michael Dell resigns but leaves vision intact
The Tao of Michael Dell
• Hire ahead of the curve
• Segment the CEO
• Build a company of owners
• Stay allergic to hierarchy
• Mobilise people around a single business goal
• Develop products from the customers viewpoint
• Target a customer of one
• Add value “beyond the box”
• Align complementary strengths for success
• Flip the demand/supply equation
• Play judo with the competition
