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Epgp(one year) 2009-10_it strategy_groupassignment_case-dell_final

Epgp(one year) 2009-10_it strategy_groupassignment_case-dell_final






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    Epgp(one year) 2009-10_it strategy_groupassignment_case-dell_final Epgp(one year) 2009-10_it strategy_groupassignment_case-dell_final Presentation Transcript

    • Case: Dell Computer – Using E-commerce to Support the Virtual Company
      Alok Joshi - 2009EPGP003
      Kapil Wadhwa - 2009EPGP013
      Mohammed Jaipuri - 2009EPGP016
      Prateek Narula - 2009EPGP024
      Rajendra Inani -2009EPGP027
      Prof. S. Ramanathan EPGP 2009-10
      IT StrategyIIM, Indore
    • Topics
      • Background and Overview
      • Business Strategy
      • Organization of Business Activities
      • Internet and E-commerce
      • Future Strategy for Growth
    • Dell – Background and Overview
      • Founded by Michael Dell – 1984
      • Youngest CEO in the World
      • Included in Forbes 500 list – 1992
      • Forbes 2010 Rank – 38, Revenue $53 Billion, Profit $1.4 Billion
      • Number one PC seller in US – 1999 (No. 2 in the world)
      • Adopted internet selling model – 1996
      • Inventory turnover – 60 times a year
      • Competitors – Compaq, IBM, HP
    • Dell – Background and Overview (contd.)
      • Design, develop, manufacture, market, sell, and support a wide range of products and services
      • Customized to individual customer requirements
      • Products and Services
      • Enterprise solutions: include servers, storage, and related services, software and peripherals
      • Client categories: include mobility, desktop products, and also related services, software and peripherals
    • Dell – Background and Overview (contd.)
      • Broad range of configurable IT and business services, including infrastructure technology, consulting and applications, and business process services
      • Customer financial services for business and consumer customers in the U.S.
    • Business Strategy - Direct sales – Build to order
      • No build up of expensive inventory
      • No inventory in channel to lose its value before sale
      • New product can be introduced without waiting for old inventory clearance
      • 60 times inventory turnover vis-à-vis 12-15 times for most vendors
      • Negative cash conversion cycle
    • Business Strategy – Direct Customer Relationship
      • Detailed customer data (Name / equipment / duration of relationship)
      • Information can be used for add-on Product and services – Replacement and product upgrade
      • Customer calls Dell – PC Outsourcer – Full life cycle management
    • Business Strategy – Dell E-Commerce Company
      • First web site – 1994 – ahead of competitors – selling online (Dell.com)
      • No channel conflict – resellers / distributors
      • Build to order – Opportunity to customer to configure products online
      • By 2000 - $ 50 Million a day web enabled sale
      • Internet to coordinate entire value network – Suppliers / Logistic Providers/Distributors of third party products, SI, Service providers
      • Tight information linkage between Dell and its customers
    • Business Strategy -E – Works Strategy
      • Dell know internet and could help its customers achieve similar success
      • Dell taps a high growth market and improve its margin without adding workforce
      • Information infrastructure sales force through service and s/w providers
      • Actual labor incentive consulting done by partners
    • Business Strategy -Dell Core competencies
      • Selling hardware – Services does make money
      • High margin items – Large servers, Storage devices for e-commerce, commodity desktops and laptops
      • Three core operating systems – Windows , Linux, Novell)
      • R&D investments - enhance capabilities of sever line
      • Sticking to Intel Hardware Platform
    • Business Strategy -Dell Ventures
      • $700 million investment in 50 internet companies
      • Broadband, Wireless communication, B2B, B2C, ASPs, Server and Storage infrastructure, Internet content and e-consulting
      • Access to new technology without expanding its own R&D
      • Financial gains on company going public
    • Business Strategy -Large corporate
      • Own sales force directly deal with CIO / Top executives
      • Competitive prices
      • High level of support
      • Focus of selling without distraction of offering a full line of H/W and Services
      • Cut down on unwanted services by established player
      • Extranet based Premier Pages (later Premier Dell.com)
    • Business Strategy -Dell’s success over its competitors
      • Virtual corporation - Directly to customers - being in center of all communication
      • Customer focus, Supplier partnerships, Mass customization, JIT
      • Innovation – Use of IT to coordinate across company boundaries – efficiency - effectiveness
      • Blur traditional boundaries in the value chain
      • Complex web of relationship – not doing things by himself
      • Only assembly - Standard parts and components manufactured by others
    • Organization of Business Activities
      • Internal Organization
      • Organized along geographic lines
      • Decentralized decision making in individual geographies
      • Customer Segments
      • Relationship customers
      • Home and small business
      • Public Sector
    • Organization of Business Activities
      • Product Development & Marketing
      • Product line similar across different geographies
      • Local customization-language, power sources etc
      • Worked with recognized partners like MS, Intel etc
      • Offered wide range of third party softwares and accessories
      • One third Dell’s employees bas is in sales/marketing
      • credit for sale of PC’s to sales person
      • Customers choose the configuration of there PC’s
    • Suppliers
      Final Customer
      Organization of Business Activities
      • Manufacturing and Logistics
      • Manufacturing by regions
      • Build to order manufacturing ~one week turnaround
      • Suppliers close to the plants
      • In some cases the suppliers is in the plant itself
      • Sophisticated IT system and electronic linkage with suppliers for coordination and control
    • Leveraging E-Commerce
      • Dell was much less mature compare to IBM and HP at time when Internet took off
      • Direct Business Model
      • Internet Orders
      • Phone Calls
      • Mass catalog mailings
      • Value Proposition
      • Easy Ordering process
      • Customization & Flexibility
      • Latest Technology
      • Easy access after sales support
      • Personalized service attracted B2B customers
    • The Dell Value Chain
      • Close Relations with Customers & Suppliers
      • Elimination of Bull Whip Effect & Early to Market
      • Collection of Payments and Negative Working Capital
      • Assemble / Made to Order & Faster Inventory Turn-over
      • Reduced Costs => Competitive Pricing
      • Solid Information management & Internal Alignment
    • Embracing the Internet
      In its Supply Chain:
      • Partners access to Order information
      • Close co-ordination between IT and Dell Online
      • High Supply Chain Visibility allows Partners to plan based upon demand
      • Outsourcing services through system integration with service partners
      • Improved Customer Reach
      • Online Ordering & Self Service Tools
      • Paper-less transactions
      • IT Management Tool
      • e.g. B2B premier pages
      • Outsourcing on-site services through system integration with service partners
    • Dells IT and Ecommerce Applications
      Logistics Company
      Systems Integrators
      Tech Docs
      I2 msgs
      Third Party HW and SW suppliers
      Repair and Support Services
    • Performance
    • Dell’s failures to Leverage E-commerce
      • Failure to convert E-Marketplace into a success due to lack of customer interest and vendors
      • Lack of integration between IT and Dell Online tools
      - No Global Structure
      - Chaos
      - Loss of business
      • Not able to push online sales in China and India
      - Lesser Usage of Credit Cards
      - lesser usage of Internet in semi-urban areas
      - Problems of Distribution Coverage
      • Touch and Feel of the product for Indian Customers
    • Future Strategy for Growth
      • Increased Usage of E-Commerce in Developing Countries
      - Education Sessions to Institutional/Corporate Customers
      - Schemes/Discounts on Online bookings
      • Value added services - Usage of Business Analytics
      - Study the nature of purchase from Existing database
      - Design the value offerings based on spending pattern
    • Future Strategy for Growth ( Contd..)
      • Better Usage of Knowledge Sharing tools
      - Sharing of Best Practices and Support solutions
      - Driving Innovation for offerings to new Markets
      • Partner network for Geographical Expansion
      - Better delivery and distribution in new markets
      - Onsite support
      • Region specific Customizations
      - Opening of stores for touch and feel experience
      - Presence of local sales, customer service and support teams
    • Questions?