DELL. INC (Complete Report on E-Business)
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The purpose of this report is to find out how Dell Inc. is coping up with the e-business strategies how they are marketing it and what theories they are using in practices. In this report we are ...

The purpose of this report is to find out how Dell Inc. is coping up with the e-business strategies how they are marketing it and what theories they are using in practices. In this report we are simply dealing with the impact of e-commerce and the payment methods what are their marketing strategy and how they are offering technical support to the consumer and the suppliers

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DELL. INC (Complete Report on E-Business) Document Transcript

  • 1. COMPUTER APPLICATIONS TO BUSINESS – II CAB - II PROJECT REPORT TITLE OF THE PROJECT Bachelors in Business Administration Department of Business Administration Project Advisor Muzammil Ahmad Khan Faculty Member IQRA University Submitted By: SYED SHARIQ PERVEZ 255 DEPARTMENT OF BUSINESS ADMINISTRATION IQRA UNIVERSITY FALL SEMESTER, DECEMBER 2012
  • 2. COMPUTER APPLICATIONS TO BUSINESS – II CAB - II DELL. INC
  • 3. P REFACE The purpose of this report is to find out how Dell Inc. is coping up with the e-business strategies how they are marketing it and what theories they are using in practices. In this report we are simply dealing with the impact of e-commerce and the payment methods what are their marketing strategy and how they are offering technical support to the consumer and the suppliers
  • 4. A CKNOWLEDGMENT Thank You, Mr. Muzammil Khan (the instructor of the course titled CAB II), who gave me the opportunity to present the knowledge, skills and practical know-how I learned in persuading this course. I have chosen to make a Project report on the Ecommerce system of DELL, Inc. The report as guided by the instructor would help me in understanding the Ecommerce system in a practical application. The can facilitate the any to know how the Operations and Managerial world is related to the IT applications and how the company like DELL is dealing with smart and updated technology to cope with the demand of their customers.
  • 5. Contents COMPUTER APPLICATIONS TO BUSINESS – II..............................................................................................1 Functions.....................................................................................................................................................9 Customer Support:....................................................................................................................................11 Impact of E-Commerce on Dell core process.............................................................................................11 Competitive Advantages............................................................................................................................12 Definable market.......................................................................................................................................14 Identifiable Revenue Model......................................................................................................................15 Dell Privacy security Policy ........................................................................................................................15 Privacy and Data Security..........................................................................................................................16 Internet Commerce...................................................................................................................................18 Customized Experience..............................................................................................................................19 Web Beacons.............................................................................................................................................19 Third-Party Sites........................................................................................................................................20 Children's Privacy (Age 12 and Under).......................................................................................................20 Other Web sites.........................................................................................................................................21 Payment Methods.....................................................................................................................................21 Marketing Mix Strategy.............................................................................................................................22 Product:.....................................................................................................................................................22 Place:.........................................................................................................................................................22 Price:..........................................................................................................................................................23 Promotion:.................................................................................................................................................23 Distribution Strategy ..............................................................................................................................24 Government Regulations...........................................................................................................................24 Entry Barriers.............................................................................................................................................24
  • 6. Target Markets..........................................................................................................................................25 Current Market..........................................................................................................................................25 Prospective Target Markets.......................................................................................................................26 Market Trends...........................................................................................................................................26 Competitor................................................................................................................................................27 Online technical services and technical support ....................................................................................28 SWOT Analysis...........................................................................................................................................28 Strengths:..................................................................................................................................................28 Weaknesses:..............................................................................................................................................28 Opportunities:...........................................................................................................................................29 Threats:......................................................................................................................................................29 Conclusion.................................................................................................................................................31 Executive summary:
  • 7. Dell, Inc. is a global information technology company, which designs, develops, manufactures and distributes computer systems. The company through its subsidiaries offers its customers a broad range of solutions and services delivered directly and through other distribution channels. It conducts its business activities through four global operating segments: Large Enterprise, Public, Small and Medium Business, and Consumer. The Large Enterprise segment focuses on delivering solutions and services through data center and cloud computing solutions to large global and national corporate customers. The Public segment focuses on broad range of information technology needs of educational institutions, government, health care, and law enforcement agency customers. The Small and Medium Business segment focuses on helping small and medium-sized businesses get the most out of their technology by offering products, services and solutions. The Consumer segment focuses on delivering what customers want from the total technology experience of entertainment, mobility, gaming and design. Dell was founded by Michael S. Dell in May 1984 and is headquartered in Round Rock, TX
  • 8. Computer Applications to Business-II Organizational Environment: Economic Factor For Dell to penetrate into this market it must oust the Legend brand PC which is already a big hit in China and therefore Dell has already built a factory in Xiamen, which is on the southeastern coast of China. Dell's facility inside of China is a major step into the Chinese market. With this factory in Xiamen, Dell can promote its next day delivery to 400 cities which is one of the company trademarks. (Roderick) And Dells China market share has grown from near zero in 1998, to 4.4%. (Roderick) Dell does not product and manufacture parts only, it searches and sets up long-term strategy to accommodate global customers. More business and more production facilities will be opened worldwide to adopt and globalization system and the global demand in the next decade. Long Term Objectives Dell is starting to take on new projects like focusing on markets globally. Dells objective is to take over 20% of the Asia market. The internet market has been expanding and exploding across the globe. Dell knows that the way to globalize the company successfully is through e-business. The greatest opportunities for future profits are in China. China has a huge computer market and is growing fast. The main computer company right now in China is the Beijing-based Legend computer. There are a lot of opportunities here for Dell because there is low penetration cost into the Chinese market, and is considered to be the third largest in the World. Despite relatively low penetration rates, China's $10 billion computer market is already the third largest in the world; within in a few years it is expected to past Japan and become second only to the U.S. (Roderick) The project that Dell is trying to take on is to advance into the Chinese market where they see a huge potential increasing their revenue greatly. Operating Environment Consumers view Dell as a quality brand at a good price. Some consumers find that Dell's competitors may be a little more expensive but still offer a quality brand the company plans to launch a sales campaign –"Dell on Ice" – that will offer 15% discounts on its Blade Centre Page No: 8
  • 9. Computer Applications to Business-II system and on its x440 top-end Intel server. (Shankland). Dell ranks high with customers because the company offers free technical support if needed. The purchasing process has changed for the consumers with Dell because all the ordering is done online which offers convenience to its customers and minimize inventory. The flow of materials from suppliers into Dell starts by the company putting in orders to factories that are based on two categories. These two categories are product type and geography. When putting in orders for product type Dell wants to select the right factory that specializes or deals with a certain product. Geographic orders mainly focus on the where the order is coming from to minimize the transportation expense. Michael Dell and his team have superb relationships with their suppliers; they maintain those superb relationships, by ensuring that the suppliers win every time Dell wins. (Rizzo) As a consequence, Dells suppliers are perfectly willing to keep a truck load of inventory at Dells loading dock. (Rizzo) Dell will go through some several changes in the next couple years to develop its system, improve customer service, reduce cost, and improve supplier control. Dell will lead the technology industry and be a good example to the competitors. More technology of software and hardware will be available in the next couple years with less cost. Remote Environment The internet market has been expanding and exploding across the globe. It has varied by market segment and already has been a big hit in the U.S. Dell knows that the way to globalize the company successfully is through e-business. Analysts agree that e-business is the most significant trigger to the achievement of economic globalization. Functions Dell Computer Corporation is one of the world’s largest computer systems organizations. They design, build and customize products and services to satisfy a range of customer requirements, from the server, storage and professional services needs of the largest global corporations, to those customers at home. They do business directly with customers, one at a time, and believe they do it better than anyone on the planet. Dell is considered an industry leader due to their large range of high quality products. Dell PowerEdge servers, Power Vault and Dell | EMC storage systems and Power Connect Page No: 9
  • 10. Computer Applications to Business-II switches are superior building blocks for enterprise computing. Dell Precision workstations, OptiPlex desktops and Latitude notebooks meet the wide-ranging needs of businesses and organizations. Individuals and small-businesses benefit from the high-performance and value of Dimension desktops and Inspiron notebooks. Dell also offers printers, projectors, Axim handhelds and other complementary products. And they support them all with a broad range of services designed to help customers simplify complex computing. In short, Dell is focused on delivering maximum performance with standards-based solutions while ensuring the right mix of cost effective solutions with value at every level. Dell is not just interested in low prices, but also in high-performance and solid reliability. Competitive Analysis: The competitors to Dell are as follows: Hewlett-Packard, IBM, and Sun Microsystems (Hoovers). HP and IBM pose the biggest threat in competition. Dell's sales overview has increased each year except for 2001 to 2004. In 2001 the annual sales in millions were $31,888 and a major increase in sales in 2004 at $41,444.0. (Hoovers). In terms of Entry Barriers, Dells direct to consumers sales approach has increased their sales each year and they will soon be among their top competitors. Because of this approach, Dell has entered into this highly competitive market in a unique way. The biggest entry barrier that Dell has to face when entering into the technology industry is having customers gain the trust of company over the more popular veteran computer companies. Nevertheless many of competing companies use a range of different suppliers. Competitor Sun Microsystems annual sales are lower than Dell's. They offer an online service where customers can order servers, and personal computers. They differ from the rest of the organizations is that they do not use the Microsoft operating system which is a weakness compared to the rest. Sun does not see Dell as a major competitor, in obvious place of Dell; they see Microsoft as a major competitor along with Hewlett-Packard and IBM. This being said, Dell is performing in the right direction and sales are increasing dramatically overtime as mentioned above, and the competition exist between the companies and that what makes Dell unique. The increase in sales between 2001 and 2004 proves the success for the organization. Page No: 10
  • 11. Computer Applications to Business-II Customer Support: Dell has created many features and services online to help the customer see the whole purchasing process clearly. The premise of Dell’s business is selling directly to customers – customers tell Dell exactly what they want and Dell provides them with the goods directly. As well as being able to customize the product, customers can track the progress of the order as it is produced and delivered. This can help the customer see the stages of the process and likely delivery times. Customers can create and view their service records online. This includes product support, shipment and delivery dates. Each purchase comes with a service tag code, which can track the model bought and its service requirements. This allows Dell customer service representatives to quickly and efficiently handle requests. This level of 24 hour customer service and fast response time helps Dell build strong customer relations, which of course is crucial for the company in its understanding of customer needs. It is also a very cost-effective way of providing sales and support – cost savings which can be passed on in the form of better prices to customers. Success depends greatly on the efficient management of the website. The customer must have a convenient experience when shopping online and have faith that Dell will successfully complete the order and safeguard financial details. Customers need to be comfortable using paperless transactions without face-to-face contact. It is crucial that customers consider purchasing online as an alternative to the traditional method of going into a retailer and buying a product off-the-shelf. Dell is focused on enhancing its image and relationships, not only with customers, but also with employees and the wider community. To do this, the website is also used as a communication tool for news, press releases and general information to help customers, employees, the media and prospective employees find out more about the company. Impact of E-Commerce on Dell core process When internet technology arrived, Dell was quick to set up the ecommerce processes that would enable it to also sell directly online to customers. Selling online allows the whole process to be automated and more efficient. Since 1996 when Dell opened its website www.dell.com for ecommerce, the company has had huge sales success. By 1997 the company recorded $1 million in online sales. By 2000 the company’s internet sales had reached $50 million a day! If we go Page No: 11
  • 12. Computer Applications to Business-II back to our example above, the customer, Liam, would go to Dell’s Irish website www.dell.ie to buy his notebook computer. The full product range is online with detailed information to help him make his decision. He simply follows the easy, automatic instructions that come up on screen. These allow him to customize the computer he wants with the features he needs. He can increase, say, his hard disk space and see the difference that increase makes to the overall price. Then he has given a variety of options on how to pay, either directly online or, via a customer service operator. There is even an automated leasing option available through a financing arrangement that Dell has here with Permanent TSB. Liam’s order is then passed automatically through to the production department at Dell's factory in Limerick where it will be manufactured to his specification, tested and shipped out to him. All of the systems relating to the sale are done through e-commerce: order placement, order tracking, payment processing, inspection, testing and delivery. Similarly, internally at Dell, the whole purchase and procurement of materials is automated between Dell and its suppliers. At www.valuechain.dell.com, Dell shares information with its suppliers on a range of topics, including product quality and inventory. The crucial benefit is the total automation of the whole process, which not only makes it faster and more efficient, but also much more cost effective, especially given the volume of business involved. Dell’s global website receives more than 1 billion page requests per quarter at 80 country sites in 28 languages and 26 currencies. Dell’s approach to e-commerce simulates the benefits of faceto-face contact between the buyer and the seller. This ensures that staff can be focused on delivering a quality product and providing excellent customer service and support. Competitive Advantages During the heyday of the technology boom throughout the 1990’s many companies experienced enormous success for a few years, however without creating a solid internal framework many of these companies did not survive. An exception to that business trend is Dell, which was able to address its problems associated with rapid growth, and build itself into a lasting profitable company. Dell was able to create this lasting profitability with three essential ingredients: 1. “Virtual Integration” 2. Real value customer service features 3. Tailoring Manufacturing to customer needs. Page No: 12
  • 13. Computer Applications to Business-II In 1993 Dell reached a point where it had grown too large, without making the necessary internal improvements to stay profitable. Dell reached a “Eureka” moment in 1993 when its cash flow sank to $20 million, net income was negative $40 million, and its market share had shrunk considerably. By bringing in several seasoned managers to focus on specific aspects of the business Michael Dell hoped that Dell could become a synchronized, efficient, and profitable business again. These improvements lead to Michael Dells breakthrough concept of “virtual integration,” which goes a step further than traditional integration by connecting the right parts together in the business. From this concept three key integrations formed: 1. A symbiotic relationship between Dell and its suppliers; 2. Customers linked directly to manufacturer; and 3. End user was linked to proper customer service assistance. Each one of these measures enabled costs cuts; quicker deliver time, and a more reliable finished product. For instance, with this new symbiotic relationship with its suppliers allowed Dell to trim the number of suppliers it used from 204 to 47 in their Austin facility between 1995 and 1998? These integrations caused the number of days a PC sat in inventory from 32 days to 7 days. By customizing orders the customer received a product tailored to their desires while Dell saved money and time on manufacturing. Tailoring manufacturing to a customer's specific needs allowed Dell to integrate production schedules with sales flows, assemble all parts of the PC on site, and install the specific software that the customer requested. These manufacturing interactions sped up the final products completion time to thirty-six hours. The swiftness of the manufacturing process added value to the customer by quickening the delivery time. As well suppliers wanted to do business with Dell because there inventory levels rarely piled up. The advantages in this chain of integrations added value to the customer’s product, while also adding value to Dell as a corporation. Dell's corporate value made it one of the best investments in the 1990’s. Dell did something else other PC companies were not doing; strategically targeting only the customers they wanted. By defining their customer as a ‘knowledgeable PC user’ Dell made their task of providing a PC easier. Their customers did not need to go to a retail store to gain knowledge about their product. This enabled the ‘Direct Model’ for purchasing PC’s to work. Dell further expanded its ability to meet customer needs by classify customers into specific categories. Customers were categorized into Relationship buyers, large businesses and institutions, and Transaction buyers, small business and home PC users. The Relational buyers Page No: 13
  • 14. Computer Applications to Business-II made up a significantly larger portion of Dell’s business but also had different needs than Transaction buyers. Every relational buyer was assigned a representative who guided the business and institution through each stage of the buying experience. By integrating both Relational and Transaction buyers into their business system repeat purchases were quick and easy, purchasing history could be consulted, and follow up customer service was able to be more effective. Dell’s business structure of “virtual integration” allowed it to excel in an incredibly competitive industry. It's competitiveness in the industry resulted from a highly efficient business model that sought out every opportunity to work more productively without compromising the quality of their product. Production efficiency lowered cost which in turn provided Dell with larger profit margins. As Porters Five Forces demonstrates, when bargaining power of buyers is high, the potential for price battles increases. Dell combated failing into the trap of a price battle by making a PC that was a better product than the competitors, yet near their competitor’s price. There costs were able to stay competitive while delivering an exceptional product because their business kept internal costs low, thus showing the effectiveness of “virtual integration.” Like Honda, Dell was able to provide a technologically superior product at a reasonable price. As well, Dell was able to evade a price war because its customers were aware of the technological value in a Dell PC. Definable market The computer market has various products which can basically be classified into software and hardware categories where each are sub-divided into various product segments. It is clear that Dell is focused on the computer hardware market where it started with the desktop personal computer as its initial product segment. Further product segments such as notebooks, servers and computer peripherals have been added to its marketing mix as revenue increased. In addition, Dell has partnered with major corporations such as Microsoft to ensure their products are equipped with the latest software as per customers' needs. Page No: 14
  • 15. Computer Applications to Business-II Dell mainly uses customer segmentation in its market strategy along with the product segmentation where it is targeting several market segments and designing separate products or offers for them. On one hand, geographically, Dell has segmented the market into the US/Americas, EMEA and Asia Pacific-Japan where each area has different pricing and marketing strategies. On the other hand, demographically, there is no age, gender or race bias but income, occupation and education play a role in deciding the customer needs and hence the product offer. It is also worth noting that from a behavioural view, Dell focuses on the benefits sought by consumers such as low price and good quality and service. It also carefully selects customers with relatively predictable purchasing patterns and low service costs, allowing itself an opportunity to develop a core competence in targeting and keeping a specific database for target customers. Identifiable Revenue Model Through sales they generate revenue. Dell Privacy security Policy Dell respects your privacy. Across our business, around the world, we will only collect, store and use your personal information for defined purposes. We use your information to support and enhance our relationship with you, for example, to process your purchase, provide service and support, and share product, service and company news and offerings with you. We do not sell Page No: 15
  • 16. Computer Applications to Business-II your personal information. We only share your personal data outside the Dell family of companies with your consent, as required by law or to protect Dell, its customers, or the public, or with companies that help Dell fulfill its obligations with you, and then only with partners who share Dell's commitment to protecting your privacy and data. At any time you may contact Dell with any privacy questions or concerns you may have. You also may ask at any time to see the personal data you have given us and request correction or deletion. We strive to protect the security of your personal data by use of appropriate measures and processes. Privacy and Data Security At Dell, your right to privacy and data security is a primary concern. That's why, when you visit dell.com, we help you maintain control over your personal data on the Internet. Below are the guidelines we use for protecting the information you provide us during a visit to our Internet site or when you use our online support offerings such as support.dell.com or support applications loaded on your computer. Please refer to your warranty statement or Dell's Return Policy for policies that apply to information contained on hard drives returned to Dell. Other Dell and Dell co-branded sites may operate under their own privacy and security policies. Visit http://www.nclnet.org/technology/essentials/ to learn more about how to protect your privacy on the Internet through a consumer education campaign called Online E-ssentials, developed by Dell in partnership with the National Consumers League. Dell is a proud participant in the BBB OnLine® Privacy Program. The BBB OnLine Privacy Program is backed by an organization noted for its expertise and experience in conducting successful national self-regulation programs--the Council of Better Business Bureaus. The mission of BBB Online is to promote trust and confidence on the Internet by advocating ethical online business practices Dell only asks for specific types of personal information In a few areas on our Web site and online customer support tools, we ask you to provide information that will enable us to enhance your site visit, to assist you with purchase and Page No: 16
  • 17. Computer Applications to Business-II technical support issues or to follow up with you after your visit. It is completely optional for you to participate. For example, we request information from you when you: 1. Register on dell.com 2. Request a quote 3. Place an order 4. Provide feedback in an online survey 5. Participate in a sweepstakes or other promotional offer 6. Request e-mail notification of your order status (called "Order Watch") 7. Subscribe to a newsletter or a mailing list 8. Request assistance from our "Product Advisor" 9. Fill out a support request Information we may request includes your name, e-mail address, phone number, address, type of business, credit card details, customer preference information, customer number and service tag number, as well as other similar personal information. Should you choose to apply for credit through our financial service providers, we may also ask for your social security number and other information to process your credit request. If we ever ask for significantly different information we will inform you. Dell only uses your personal information for specific purposes The information you provide will be kept confidential and used to support your customer relationship with Dell. Among other things, we want to help you quickly find information on dell.com and alert you to product upgrades, special offers, updated information and other new products and services from Dell. Agents or contractors of Dell who have access to your personal information and prospect information are required to keep the information confidential and not use it for any other purpose than to carry out the services they are performing for Dell. Dell may enhance or merge your information collected at its site with data from third parties for purposes of marketing products or services to you. Page No: 17
  • 18. Computer Applications to Business-II In addition, Dell may be required to disclose personal information in connection with law enforcement, fraud prevention, regulation, and other legal action or if Dell reasonably believes it is necessary to do so to protect Dell, its customers, or the public. You can opt-out of Dell's marketing list at any time Periodically, we may send you information about our various products and services, or other products and services we feel may be of interest to you. Only Dell (or agents working on behalf of Dell and under confidentiality agreements) will send you these direct mailings. If you do not want to be included on Dell's marketing list, simply tell us when you give us your personal information. Or, at any time you can easily opt-out of Dell's marketing list or update your information by clicking here. Dell will not disclose your personal information to any outside organization for its use in marketing without your consent Information regarding you (such as name, address and phone number) or your order and the products you purchase will not be given or sold to any outside organization for its use in marketing or solicitation without your consent. Your information may be shared with agents or contractors of Dell for the purpose of performing services for Dell. Internet Commerce The online store at dell.com is designed to give you options concerning the privacy of your credit card information, name, address, e-mail and any other information you provide us. Dell is committed to data security with respect to information collected on our site. We offer the industry standard security measures available through your browser called SSL encryption, (please see Dell's Store Security page for details on these security measures). If at any time you would like to make a purchase, but do not want to provide your credit card information online, you may contact a sales representative over the telephone. Simply call 1-800-WWW-DELL. It Page No: 18
  • 19. Computer Applications to Business-II has always been a Dell practice to contact customers in the event of a potential problem with your purchase or any normal business communication regarding your purchase. Customized Experience We use technology to help us deliver customized visitor experiences. At Dell, we primarily use "cookies" to help us determine which service and support information is appropriate to your machine and to maintain your shopping experience in our online store. Our use of this technology does not mean that we automatically know any information about you. We might be able to ascertain what type of computer you are using, but beyond that, our use of cookies is designed only to provide you with a better experience when using www.dell.com. Dell has no desire or intent to infringe on your privacy while using the dell.com site. For more information about our use of cookies, please click here. Web Beacons We, or third parties acting on our behalf, may use web beacons on our site, in our e-mails, in our advertisements on other sites, or in our advertisements in others' e-mails. A web beacon is an electronic image that can be used to recognize a cookie on your computer when you view a web page or e-mail. Web beacons help us measure the effectiveness of our site and our advertising in various ways, for example, by counting the number of individuals who visit our site from a particular advertisement or make a purchase from our site after viewing a particular advertisement as well as by telling us when a web page is viewed and providing a description of the page where the web beacon is placed. Web beacons also help us measure the effectiveness of our e-mail campaigns, for example, by counting the number of individuals who open or act upon an e-mail message, determining when an e-mail message is opened and determining how many times an e-mail is forwarded. The information we collect may include some limited personal information, and web beacons allow us to recognize users by accessing Dell cookies. We may also combine the information that we collect through web beacons with other personal information we have collected from Page No: 19
  • 20. Computer Applications to Business-II you. We use all of this information to better tailor our marketing to you and may use this information for other purposes, such as to enable a shopping cart, customize content on our website and internal research purposes. We do not allow third parties to place their own web beacons on our site or in our advertisements. We will not share any personal information collected through web beacons with any third party, except for service providers who act on our behalf and who are contractually prohibited from any other use or disclosure of the information. You can make some web beacons unusable by rejecting cookies. Third-Party Sites Please be aware that other web sites that may be accessed through our site may collect personally identifiable information about you. The information practices of those third-party web sites linked to Dell.com are not covered by this privacy statement. We generally use the "" symbol to mark links that go to third-party sites. You are solely responsible for maintaining the secrecy of your passwords or any account information. Please be careful and responsible whenever you're online. If you post personal information online that is accessible to the public, you may receive unsolicited messages from other parties in return. While we strive to protect your personal information, Dell cannot ensure or warrant the security of any information you transmit to us, and you do so at your own risk. Children's Privacy (Age 12 and Under) Dell takes children's privacy seriously. Page No: 20
  • 21. Computer Applications to Business-II Dell does not seek to collect personal information about children through its Web site. Dell does not condition a child's participation in an activity on the disclosure of more personal information than is reasonably necessary to participate in the activity. If we become aware that a person submitting personal information to us through any part of our Web site is a child, we delete the information as soon as we discover it and do not use it for any purpose, nor do we disclose it to third parties. Since we do not seek to collect any personal information about children, and we delete any information collected inadvertently as soon as we discover that a child has submitted it, we typically retain no information about children that could be reviewed or deleted. If a parent requests review or deletion of information about their child before we have discovered and deleted the information, then we will of course honor that request. Other Web sites Dell's Web site contains links to other Web sites that are not operated by Dell. Dell is not responsible for the privacy practices of the Web sites that it does not operate. Some parts of the Web site are animated using various downloadable applications, such as Macromedia's Shockwave/Flash. We also make video available through RealNetwork's Media-Player, and use the video hosting services of Broadcast.com. Futures-Careers, Macromedia, RealNetworks, and Broadcast.com operate under their own privacy and security policies, and the way they may collect and use information can be Payment Methods • Credit/debit card • Pay with PayPal Page No: 21
  • 22. Computer Applications to Business-II • Pay with dell business credit • Gift card Marketing Mix Strategy Product: Dell offers its customers a wide range of computer systems workstations, servers, desktop computers and notebook computers as well as storage products and solutions. Dell also extended their selection by adding computer hardware peripherals, computer software as well as support services. Never the less, Dell does not manufacture the components of its final products, but instead it relies on a number of trusted suppliers who have convenient warehouse facilities within 15 minutes of Dell's production centres. Analysts at Data monitor and Valanium associates have been critical about this approach and considered Dell's dependence on third party suppliers as a major threat to its long term success, however Kraemer and Tuckwell have praised this cost effective approach and its positive impact on Dell's pricing strategies. Place: The place or distribution channel is one of Dell's distinct advantages in their marketing mix. This is because Dell uses a direct channel model where it sells its products directly to the customer without need for a distributor or a middle man. Though it initially started with selling products over the phone using a toll free number that customers can call free of charge, they were the first to adopt advanced technology and use the internet as a direct channel to sell its products. The direct channel model enabled Dell to reduce costs and minimise inventories and so it has been able to pass these savings to customers in the form of lower prices. Page No: 22
  • 23. Computer Applications to Business-II Price: Price is the amount of money charged for a product or service, or the sum of the values consumers exchange for the benefits of having or using the product or service. (Kotler et al., Principles of marketing, fifth European edition, p. 639, Pearson 2008) In this case Dell provides high quality computer systems at the lowest price to match the customer's expectation of value for money. It is also able to supply products at low price by cutting out all costs of manufacturing parts as well as costs associated with retailers and distributors. As pricing remains a major factor in the customer's buying decision, Dell uses the internet to get a reasonably accurate idea of the market's supply and demand, hence reflecting on its price changes and promotions. Promotion: Promotion is the most important component of the four P's so it is crucial to understand and be able to promote a product. Here it can be seen how Dell uses many different promotional methods to market their products, such as advertising on television, on the internet, in magazines and newspapers as well as direct mail ad campaigns. It even uses sponsorships in professional sports as well as product placements in films and television in the marketing techniques. Perreault et al suggest that direct sales channels and direct customer relationship approach has enabled Dell to fully understand its customer's requirements and preferences as well as to maintain its competitive edge. (Perreault et al, Essentials of marketing, 12th edition, 2009) Page No: 23
  • 24. Computer Applications to Business-II It is clear from the above details that Dell's current marketing mix is one of the main factors that contribute to its competitive advantage. The way the company is able to use its marketing strategy should allow the company to leverage its competitive advantage in its core market segments. However, Dell should take advantage of the market opportunities that could potentially increase the business revenue and strengthen its market position. These opportunities will require changes in the market strategy in order to fulfil the market demands, hence increasing profits and market share. These suggested changes are further elaborated in the following section. Distribution Strategy Direct modes in compressed product production lines, supplemented by online purchase at great development of its direct sales model. Government Regulations Our business is subject to regulation by various federal and state governmental agencies. Such regulation includes the radio frequency emission regulatory activities of the U.S. Federal Communications Commission; the anti-trust regulatory activities of the U.S. Federal Trade Commission, the U.S. Department of Justice, and the European Union; the consumer protection laws and financial services regulations of the U.S. Federal Trade Commission and various state governmental agencies; the export regulatory activities of the U.S. Department of Commerce and the U.S. Department of Treasury; the import regulatory activities of U.S. Customs and Border Protection; the product safety regulatory activities of the U.S. Consumer Product Safety Commission; the investor protection and capital markets regulatory activities of the Securities and Exchange Commission; and the environmental, employment and labor, and other regulatory activities of a variety of governmental authorities in each of the countries in which we conduct business. We were not assessed any material environmental fines, nor did we have any material environmental remediation or other environmental costs, during Fiscal 2010. Entry Barriers Entry barriers are unique for each industry and situation, and can change over time. Most barriers stem from irreversible resource commitments you must make in order to enter a market. For example, if the existing businesses have well-established brand names and fully differentiated Page No: 24
  • 25. Computer Applications to Business-II products, as a potential market entrant you will need to undertake an expensive marketing campaign to introduce your products. Barriers to entry are usually higher for companies involved in manufacturing than for companies that provide a service because there is often a significant expense in setting up a production facility. Another type of entry barrier is regulatory. To produce organic food there is a three-year wait before land may be certified. During the waiting period, producers must raise the crop as organic, but may not market it as organic until the threeyear “cleansing process” of the land is completedOvercoming barriers to entry may involve expending significant resources over an extended period of time. Industries based on patentable technology may require an especially long-term commitment, with years of research and testing, before products can be introduced and compete. Target Markets Current Market Dell currently has a number of computers that target 2 particular markets. 1. Large- to Mid-Size Business – 36 to 50 year old – White males – Upper-Middle to Upper Class 2. Consumers, Students, Small Home Office – 18 to 35 year old – White males – Middle Class The corporation markets certain brand names to different consumer segments. It Typically sells the Optiplex, Latitude, and Precision names to mid and large business Customers, where the company's advertising emphasizes long life cycle, reliability and Service ability. The Dimension, Inspiron, and XPS brands have an orientation towards consumers, Students, and small home office environments, emphasizing value, performance and Expandability (large focus in this consumer base). Page No: 25
  • 26. Computer Applications to Business-II Dell recently reintroduced the Dell XPS brand to target the lucrative gaming Market. Dell XPS desktop systems use blue rather than the black cases found on newer Dell PCs. Prospective Target Markets Our team will refocus the advertising and marketing to target 2 particular markets. 1. Women 2. Minorities (particularly African-Americans, Latinos, and Asians) Both in: • Large to Mid-Size Business – 36 to 50 year old – Upper-Middle to Upper Class • Consumers, Students, Small Home Office – 18 to 35 year old – Middle Class We will stay in the same demographics for the business and consumer class as Dell is currently pursuing. The only difference is that we will replace the "white male" in each category with women and/or minorities. The reasoning behind this is that women are becoming equal decision makers in the home and in business and minorities tend to show brand loyalty. Since the components of Dell computers are similar to other PC manufacturers (because the components rarely vary that drastically across manufacturers) Dell needs to build the current customer base and maintain a strong customer loyalty. Market Trends The market for laptop computers has distinguished itself as one of the fastest growing segments of the computer industry. Throughout its growth and development, this market, like many others, has changed a great deal as a result of customer demands. In an effort to cater to these demands, companies like Dell look to market trends to aid in the development of new products. In its most recent stages, the laptop market has been specifically influenced by number trends. Page No: 26
  • 27. Computer Applications to Business-II Generally, the overall market for PC's is being influenced by many of these trends. One in particular, however, is affecting the market more than any other. Simply , customers are becoming more educated about their purchases. Computers are being sold less to first-time buyers, and much more to consumers who have purchased personal computers at least once before (Matching Dell, page 4). As an increasing number of customers become more knowledgeable about computers, other trends are beginning to take shape. As a result of this consumer education, buyers want increased customization of personal computers. The growing amount of knowledge among consumers is creating the ability for buyers to distinguish their own personal needs in a computer from a standardized product. This, in turn, affects trends that are specific to the laptop market. The laptop market is growing at a faster rate than desktop computers. This trend is being driven by global integration and advances in communication technology. Customers are living more mobile, communicative lives, and their computers must have similar characteristics that make such activity not only possible, but also efficient and easy. When it comes specifically to the product, customers are demanding increased portability and durability from laptop computers. Driven by this new mobile lifestyle, customers want a product that will be easy to move and difficult to harm or damage. This may include making it smaller, lighter, and perhaps sturdier than previous models. In addition to demanding more from the physical features of laptop computers, customers need greater performance capabilities. Consumers need their computers to operate at higher speeds, work with more memory, and to be easier to navigate than ever before. Computer users depend more and more on their laptops to organize their lives and to hold vital information, and as a result companies must work to provide them with the best technology available. Competitor Dell's name rings from the desktop to the data center. The world's #3 supplier of PCs (behind #1 HP and China-based #2 Lenovo), the company provides a broad range of technology products for the consumer, education, enterprise, and government sectors. In addition to its line of desktop and notebook PCs, Dell offers network servers, data storage systems, printers, Ethernet switches, and peripherals, such as displays and projectors. It also markets third-party software and Page No: 27
  • 28. Computer Applications to Business-II hardware. The company's services unit provides asset recovery, financing, infrastructure consulting, support, systems integration, and training, as well as hosted IT services. Dell generates more than half of its revenue outside of the US. Online technical services and technical support Dell companies provide online services and technical support is very broad, users answer questions, the escalation on Windows, software upgrades informed, and so on. A wide range of services not only to increase the intrinsic value of their products, can also be user satisfaction, and enhance the competitiveness of our products. SWOT Analysis Strengths: Some of Dell’s internal strengths that contribute to their success are the ability to act quickly, customize, sell direct, and innovate. Dell has become the master of customization in the technology industry. They are able to give all the power to the consumer, in regards to building a PC, they are essentially a manufacturer for the consumer and will build any PC in the configuration that is requested. Along with customization, directly selling to the consumer is a large aspect of Dell’s strength in the computer industry. This direct selling has also assisted in Dell growing to be a mammoth force in the industry through their low cost leadership. Another strength that has helped Dell grow to a large company is their ability to act quickly in a rapidly changing industry. Dell is able to implement the latest technology into their product due to the strong relationships it has with its suppliers. Lastly, Dell has internal strength through their ability to innovate. Recently, Dell has introduced new product lines such as printers, cameras, PDA’s and more. This innovation is what helps Dell gain a large portion of the market share. Weaknesses: Page No: 28
  • 29. Computer Applications to Business-II Even though Dell does have strengths that have brought them up from the bowels of the technology industry, they are still prone to weaknesses and faults just as the other firms in the industry are. One weakness is that Dell has no proprietary technology, which means that Dell is basically just like all the other computer building firms in the industry. Dell is not creating something based on technology that is exclusively theirs, but on technology that all the other firms in the industry have as well. This is a weakness because it could allow other firms to come into their territory of low-cost leader and simply mimic their operations. Another weakness that is identified in Dell’s operations is their high dependency on component suppliers. This is seen as a weakness because if the supplier does not meet expectations then the operations of a firm will suffer. Although this is one aspect of why Dell has become a low cost leader, it is not necessarily a good aspect because the supplier can always flex some power by negotiating higher prices or holding shipments. Opportunities: One very prosperous opportunity that Dell has is the expanded markets of Europe, China, and India. Because of the large amount of technology that is concentrated in these markets, Dell could use it to gain more market share over its competitors. Although these markets have already been penetrated, Dell could still flourish with its low-cost leadership. Another opportunity for Dell Computer Corporation would be growth in the business, education, and government markets. These markets are growing at an exponential rate and Dell has been able to claim some of this market share. For example, California State University San Marcos exclusively purchases computers on an educational contract that the California State University System has with Dell Computers. This contract allows CSUSM to purchase on a discounted basis, which may seem as if it is taking profits away from Dell, and maybe so, but Dell is also gaining through in-direct advertising. Thousands of students attend Cal State Universities and many others work at them. The exposure that Dell is getting through these contracts is phenomenal and is only aiding in their growth. Threats: Page No: 29
  • 30. Computer Applications to Business-II One major threat that Dell has in their external environment is competition. The threat of entry into the low-cost leading segment of the industry is very high. When looking at the basics of what Dell is doing with their operations, it is not something that cannot be mimicked, herein lays the threat. Because it is a basic strategy that many can copy, the threat that another company will do something similar is high, especially after the success that Dell has had. Another threat that Dell faces is overall instability in foreign markets. Because Dell is beginning to penetrate the foreign markets and those markets are becoming a large source of growth, the activities in those foreign countries can present problems for Dell. For example, currency instability as well as political instability in foreign countries could result in negative earnings for a given period, or even worse, it could force Dell out of that market. Lastly, a threat in the home external environment of Dell is the U.S. Government, which could pose tariffs on imports as well as exports. This could drive up the cost of importing raw materials and also exporting the final product to its foreign markets. Page No: 30
  • 31. Computer Applications to Business-II Conclusion Dell has grown rapidly to become one of the top three vendors in the PC industry, and has seen an extra ordinary increase in share price and market valuation. While many other PC companies have been unable to handle the demands of time-based competition, Dell has continued to thrive in such an environment. The key to Dell’s success has been its direct sales and build-to-order business model. This model is simple in concept but highly complex in its execution, especially under conditions of rapid growth and change. Dell has continually rented and extended its business model while striking a balance between control and edibility. Dell’s use of IT plays a vital role in the implementation of its business model. The company has used IT to coordinate its build-to-order processes from order taking through procurement, logistics, production, service, and support. Doing so has enabled it to reduce inventory, speed up logistics and product cycles, understand user markets, and offer additional services to customers. It also has used IT to achieve virtual integration with suppliers and strategic partners by real-time information sharing. The company has extended its reach to millions of potential customers at low marginal cost through its use of the Internet. The resentments and extensions have been made possible by the development of a novel IT structure that is expandable, and still adequately integrated to support key corporate functions. Decisions about IT at Dell are subject to the demands of the larger business strategy. IT is a key element of many business strategies, from using the Internet as a marketing channel to giving suppliers a direct link to Dell’s information systems to being a model for other enterprises to follow. In fact, Dell’s use of its own PC-based technology to run much of its own business is a valuable marketing tool to show customers the capabilities of its product line. It is very difficult to separate the impacts of investments in IT from other factors such as changes in business processes, effective use of human resources, and general acceptance of the direct model by users. Still, a close examination of Dell’s operations makes it clear that IT is fundamental to the functioning of the direct model, and that IT has been a key element in the continued extension of that model. Page No: 31
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