STRATEGIC MANAGEMENT

CASE STUDY ON DELL COMPANY

$2.0B

Presented by: Imran Shinwari MBA (029)

OUTLINES of CASE STUDY History Vision statement Mission statement Organizational structure Internal factors Competitors Conclusion
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OBJECTIVES
History Vision statement Mission statement Strategy statement Financial analysis SPACE BCG IFE conclusion

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Mission Statement: To provide customers with superb value, high quality, relevant technology, customized systems, superior service and support, and products and services that are easy to purchase and use. Strategy Statement: To do business with its consumers one-onone, through the phone or internet.

In doing so, Dell will meet customer expectations of:

$2.0B

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

Leading technology Competitive pricing

Highest quality

MICHAEL DELL

Three Golden Rules of Dell: 1. Disdain Inventory 2. Always listen to the customer 3. Never sell indirect

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DELL Inc - TIMELINE

1983 1984 1983-1985-1986-The founder of Dell. The company he founded in 84 for $1,000. develop an interest in personal computers. with sales approaching $80,000 a month. Michael Dell starts business of pre-formatting IBM PC HDs on weekends $6 million sales, upgrading IBM compatibles for local businesses $70 million sales; focus on assembling own line of PCs

1988-1990-1996-1997--

Initial IPO $30 million

$500 million sales; with an extensive line of products Dell goes online; $1 million per day in online sales; $5.3B in annual sales Dell online sales at $3 million per day; 50% growth rate for 3rd consecutive year, $7.8B in total annual sales. Dell Computer was the largest retailer on the internet. $49.2B in sales.

1999-2005--

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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 industry As 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 28thlargest 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.

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DELL Brand-Names for Its product ranges

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

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

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DELLs SUCCESS

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Dells Global Presence

The Americas EMEA Asia Pacific China

Austin Texas

Limerick Ireland

Nashville Tennessee

Xiamen China

Eldorado do Sul

Brazil www.dell.com

Sales Offices in 43 countries Sales presence in 170 countries 6 Manufacturing Sites

Penang Malaysia

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Dells Competitive Advantage Dells Direct Business Model

Commitment to Open Standards

Order Velocity/Build to Order Supply Chain Optimisation Continuous Process Improvement

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Dells Direct Approach: A Fundamentally Different Model

Dell Direct Model

Suppliers

Customers
Ownership of the value chain

Competitor Model

Suppliers Outsourcing Competitor

Channel

Customers

Loss of control over product & information flow & customer relationships

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Benefits of Dell Direct Model

Better understand customer needs Customers receive exactly what they want: not standard solution Minimized inventory New technology delivered immediately

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Dell Growth
$55 $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0

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

Revenue $ Bn

Revenue

Mkt Shr

20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

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

(Annualized)
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Units Market Share %

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DELL Growth Highlights

Growth Highlights

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PROFITABILITY COMPARISON

Profitability

Dell

Hewlett-Packard

IBM

GATEWAY

APPLE

Gross Profit Margin Pre-Tax Profit Margin Net Profit Margin Return on Equity

17.50%

23.90%

41.40%

8%

27%

7.60%

5.40%

28.10%

-15%

4.66%

6.00%

4.10%

9.50%

-15%

3.3%

75.6%

9.6%

26.5%

Return on Assets Return on Invested Capital

14.9%

4.7%

8.2%

45.8%

7.4%

10.9%

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SWOT Analysis Dell

Strengths

Strong supplier relationship Lower unit cost Strong quicker reaction to customer wants and need Better reach at lower cost Strong customer retention and relationship Brand equity.
Weakness

Dependence on volume. Inventory

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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.

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INTERNAL FACTOR EVALUATION MATRIX

No.S 1 2 3 4 5 6 7 8 INTERNAL STRENGTH Production adaptability Financial ratio Product reliability Customer relationship Build to order Competitive price Leading technology Supply chain INTERNAL WEAKNESS 1 2 3 Little product diversification No business diversification On man show TOTAL WEIGHT .10 .10 .10 .10 .10 .10 .10 .10 WEIGHT .05 .10 .05 1.00 RATING 4 4 4 4 3 3 3 4 RATING 3 3 2 WEIGHTED SCORE .40 .40 .40 .40 .30 .30 .30 .40 WEIGHTED SCORE .15 .30 .10 3.50 19

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BOSTON CONSULTING GROUP MATRIX

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SPACE MATRIX
Factors determining competitive advantage Market share Product quality Product life cycle Product replacement cycle Competitions capacity utilization Technology know how Vertical integration innovation 0 Small Inferior Late Variable Low Low Low slow 27 1 2 3 3 4 5 5 1 6 Large Superior Early Fixed High High High fast

3 3
5 3 0 0 1 1 2 4 12 4 3 3 4 10 0 5 5 5 2 3 1 6

Factors determining Financial Strength Return on investment Leverage liquidity Liquidity Capital required verses capital available Cash flow Ease of exit from the market Risk involve in business Inventory turnover Economic of scale and enterprise www.dell.com

Low Imbalance imbalance High low difficult much slow Low 33

3
5 0 1 2 9 0 6 15 6

High Solid Solid Low High Easy Little Fast High

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Factors determining environment stability Technological changes Rate of inflation Demand variability Price range of competing products Barriers to entry into market Competitive pressure/rivalry Price elasticity of demand Pressure for substitute product Factors determining industry strength Growth potential Profit potential Financial stability Technology know-how Resource utilization Capital intensity Ease of entry into market Productivity, capacity, utilization Manufacturers barraging power

0 Many High Large Wide Few High Elastic High 17 Low Low Low Simple Inefficient Low Easy Low Low 45

1 2

5 5

6 Few Low Small Narrow Many Low Inelastic Low 6 High High High Complex Efficient High Difficult High High

1 1 5 0 0 0 0 2 1 2 2 3 3 3 0 4 4 4 10 0 5

5 5 6 3 6 6 6 10 24

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THANK YOU

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