SlideShare a Scribd company logo
1 of 41
Download to read offline
Dell Inc.: Changing the
Business Model(Mini Case)
Karolina Barańska Salmoon Bashir Giorgi Nadareishvili
Nino Tsintsadze Tako Azariashvili Ana Shilakadze
About Dell
DELL INC. was founded in 1984 by Michael Dell at age 19 while he
was a student living in a dormitory at the University of Texas. The
original name of the company was PC’s limited.
DELL TECHNOLOGS Net Sales or Revenues for the year 2016-2017
was 61.64B while the Gross profit in this year was 12.96B.
Objectives
The specification of the process map supports the quality of the products manufactured
and the flexibility of Dell towards its customers through sales representative or its
website that enables a range of variety of products for their customer to choose from.
Added more Quality to the products manufactured by Dell.
Made Dell a little more flexible to the demands of its customers.
Made Dell more dependable to its customers
Mission
Statement
"Dell's mission is to be the most successful computer company in the
world at delivering the best customer experience in markets we serve.
Dell Inc. listens to customers and delivers innovative technology and
services that give them the power to do more.
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
Current
Performance
Dell maintained its No. 2 share position in the global x86 server market
Dell Software registered double-digit revenue growth year-over-year
Dell grew PC shipments by nearly 10 percent year over year
Dell is ranked by Gartner No. 1 in Worldwide IT Services for Healthcare Providers
Dell delivers year-over-year growth across every region globally
With a market share of 15.9%, Dell was the third largest PC vendor in the world in the first quarter of 2017
after Lenovo and HP Inc.
Dell provides a classic example of how the principles of
strategic management have been used to translate an
innovative vision into a successful and sustainable
enterprise. Their vision statement basically tells the way
they do their business. They want to be successful in
the digital world for this they rely on latest technology.
Dell provides quality products to cater the needs of the
people. In intend to build good relationship with their
customers and suppliers
Strategic
Posture
Dell Inc.: Changing The Business Model
ISSUES
Rapidly changing market
Centralized structure
Positioning of the company
Transition between business models
Supply chain issues
Pros and Cons of direct sales
The main issues:
• The industry’s focus shifts from desktop PCs to mobile computing, software
and technology services – areas of relative weakness at Dell;
• Dell abandons its original business model based on direct sales and value
chain efficiencies have been abandoned;
• Cost reductions and competitive pricing led to fall in customer service
rating – previously a strength of the company.
The Dilemma:
Should Dell continue with its current strategy of
following the consumer market down in price and
adjusting its costs accordingly or, like IBM, should it
change its focus to more profitable business services,
or, like HP, should it try to do both?
External Environment Analysis
Dell Inc.: Changing The Business Model
External environment
PESTEL
Political–Legal
• Regional trade pacts provide access to other markets with great potential (O)
• Law regulations individual for every market (T)
• Unstable political situation in increasing parts of the world (T)
• Developing environmentalism – laws on pollution, energy usage and waste
management policies (T)
External environment
PESTEL
Economic
• Unstable, but recovering economy after crisis; demand is growing (O)
• Accelerating process of globalization (O)
• Changing economic ratios: inflation, currency fluctuation (T)
External environment
PESTEL
Socio-cultural
• Developing nations becomes better educated – need computers and accessories (O)
• Changing lifestyle – more people from different social groups need computers (O)
• Demographics – the age group of people who need computers is increasing (O)
• Consumer desires attractive, high-quality and technologically advanced appliances (O)
• Customers’ trends are changing very quickly. (O/T)
• More and more customers expect ecofriendly products (O/T)
External environment
PESTEL
Technological
• Computers and information technology increasingly important (O)
• Rapid technological improvements in PC industry (O)
• Outsourcing (O)
External environment
PESTEL
Environmental
• Energy and water availability (T)
• Visible climate change, natural catastrophes (T)
External environment
PESTEL
Political–Legal
•Regional trade pacts
provide access to
other markets with
great potential (O)
•Law regulations
individual for every
market (T)
• Unstable political
situation in increasing
parts of the world (T)
•Developing
environmentalism –
laws on pollution,
energy usage and
waste management
policies (T)
Economic
• Unstable, but
recovering
economy after
crisis; demand is
growing (O)
• Accelerating
process of
globalization (O)
• Changing
economic ratios:
inflation, currency
fluctuation (T)
Socio-cultural
•Developing nations
becomes better
educated – need
computers and
accessories (O)
•Changing lifestyle –
more people from
different social groups
need computers (O)
•Demographics – the
age group of people
who need computers is
increasing (O)
•Consumer desires
attractive, high-quality
and technologically
advanced appliances
(O)
•More and more
customers expect
ecofriendly products
(O/T)
•Customers’ trends are
changing very quickly.
(O/T)
Technological
• Computers and
information
technology
increasingly
important (O)
• Rapid
technological
improvements in
PC industry (O)
• Outsourcing (O)
Environmental
• Energy and water
availability (T)
• Visible climate
change, natural
catastrophes (T)
PORTER’SFIVE
FORCES
External environment - Porter’s Five Forces
Rivalry High
• Gateway, Acer,
Toshiba, and
Lenovo, HP, IBM,
Oracle have
competitive
advantages, big
resources &
global brand
awareness (T)
Bargaining Power
of Buyers High
• Because there is
a lot of players in
the market (T)
Bargaining Power
of Suppliers
Moderate
• Dell has a large
number of
suppliers that
varies from
hardware,
software and
services
suppliers.
However,
because of just-
in-time approach
it’s very
dependent on
suppliers (T)
Threat of
Substitutes High
• Smartphones and
tablets (T)
Entry Barriers
High
• Entering this
market requires a
lot of resources. It
is hard to
compete with
existing
companies,
because they
operate on the
basis of economy
of scales and
brand awareness
(O)
Dell Inc.: Changing The Business Model
Internal Environment
Analysis
A. Corporate Structure
• Divisional Corporate Structure – Dell is the CEO (s)
• Centralized decision-making: major decisions made by Dell (also, he owned the
largest block of stock and continued to be the “Heart and Soul” of the firm (s/w);
B. Corporate Culture
• Company’s overall philosophy: high emphasis on customer support and
service(s).
• Company’s Main focus on manufacturing – Dell becomes the master of
engineering (s)
• Lack of R&D– Dell spent 1% of sales on R&D VS 5% typically invested by other
companies(w)
Note: Dell had Efficiency Business model
Internal
Environment
c. Corporate Resources
• Market posture: efforts focus on four global business units based on
customers: Large Enterprise, Public, Small & Medium Business, and
Consumer(s)
• Finance: a. Dell’s tock falls 42% since January 2007 (w)
b. Decrease in revenue, as well as, operational income (w)
c. Current and quick ratios look better than the industry average, as well as,
debt to equity ratio (s)
d. Financial leverage tends to decrease from 2009 to 2010 (s)
Internal
Environment
Financials
USD in Millions 2010 2009 2008 2007 2006 2005 2004
Revenue 52,902 61,101 61,133 57,420 55,788 49,121 41,444
Operating
income
2172 3190 3440 3070 4382 4206 3544
Net Income 1,433 2,478 2,947 2,583 3,602 3,018 2,645
Earnings per
share
0.73 1.25 1.31 1.14 1.47 1.18 1.01
Source: http://financials.morningstar.com/direct/ratios/r.html?t=XNAS%3ADELL&region=usa&culture=en-
US&productcode=MLE&cur
Financials - profitability
2010 2009 2008 2007 2006 2005 2004
Financial
leverage (av.)
5.97 6.2 7.38 5.92 5.6 3.58 3.08
Return on
equity %
28.91 61.9 73.1 61.09 67.31 47.68 47.43
Return on
invested capital
19.32 45.51 55.27 47.11 61.46 44.18 43.65
Source: http://financials.morningstar.com/direct/ratios/r.html?t=XNAS%3ADELL&region=usa&culture=en-
US&productcode=MLE&cur
Financials – Liquidity/Financial Health
Source: http://financials.morningstar.com/direct/ratios/r.html?t=XNAS%3ADELL&region=usa&culture=en-
US&productcode=MLE&cur
Dell Industry Dell Industry
2010 2010 2009 2009
Quick ratio 1.03 0.63 1.05 0.60
Debt/equity 0.61 0.42 0.44 0.46
Dell 2010 2009 2008 2007 2006 2005
Current ratio 1.28 1.36 1.07 1.12 1.11 1.2
c. Corporate Resources
• R&D: the company invests only 1% of its sales in R&D (w)
• Operations: a. Dell had its own assembly line in various countries,
including the US; though some operations, such as component production
and express shipping were outsourced (s) b. Dell became the master of
process engineering and supply chain management (s);
• Human resources: due to Dell’s retrenchment strategy, the company
cut 10,000 jobs since 2007 (even though there is no mentioning about
employee relationships, the drastic cuts might have caused dissatisfaction
of a lot of people) (unclear);
• Information System: Dell made a 3.6 billion purchase of a Perot
Systems, an IT service company; it allowed the company to expand into
higher-margin computing services (s).
Internal
Environment
VRIO Framework
1. Value: Does it provide customer value and
competitive advantage?
2. Rareness: Do no other competitors possess it?
3. Imitability: Is it costly for others to imitate?
4. Organization: Is the firm organized to exploit the
resource?
Analysis of strategic factors
Internal Factors (IFAS)ExternalFactors(EFAS)
TOWS
Strengths (S)
- Functional Structure (S)
- Centralized structure: major decisions made by Dell(s)
- Master of process engineering and supply chain management (s)
- Marketing: efforts focus on four global business units based on customers:
Large Enterprise, Public, Small & Medium Business, and Consumer(s)
- High emphasis on customer support and service(s)
- Its own assembly line in various countries, including the US(s)
- - Information System: Dell made a 3.6 billion purchase of a Perot Systems, an IT
service company; it allowed the company to expand into higher-margin computing
services (s).
Opportunities (O)
- Unstable, but recovering economy after crisis; demand is growing (O)
- Accelerating process of globalization (O)
- Computers and information technology increasingly important (O)
- Rapid technological improvements in PC industry (O)
- Outsourcing (O)
- Regional trade pacts (O)
- Tax exemptions for conducting business in special economic zones (O)
- Developing nations become better educated (O)
- Changing lifestyle (O)
- The age group of people who need computers is increasing (O)
- Consumer desires attractive, high-quality and technologically advanced
appliances (O)
- Customers’ trends are changing very quickly (O/T)
- More and more customers expect ecofriendly products (O/T)
SO Strategies
- Ability to respond quickly to changing environment
Own assembly lines - chance of producing whatever is required
Best engineering and supply chain - opportunity to quickly
produce new products
- Great contact with costumers - ability to receive information
regarding their wishes first on the market
Opportunity to develop new products for the changing market
by being first to receive information and quickly start
developing
- Special business units for each type of costumer - ability to
offer products and services required for each of them and
choose the most profitable markets
Internal Factors (IFAS)ExternalFactors(EFAS)
TOWS
Weaknesses (W)
- Centralized structure: One man show (w)
- Dependant on costumer views (w).
- Lack of R&D (W)
Opportunities (O)
- Unstable, but recovering economy after crisis; demand is growing (O)
- Accelerating process of globalization (O)
- Computers and information technology increasingly important (O)
- Rapid technological improvements in PC industry (O)
- Outsourcing (O)
- Regional trade pacts (O)
- Tax exemptions for conducting business in special economic zones
(O)
- Developing nations become better educated (O)
- Changing lifestyle (O)
- The age group of people who need computers is increasing (O)
- Consumer desires attractive, high-quality and technologically
advanced appliances (O)
- Customers’ trends are changing very quickly (O/T)
- More and more customers expect ecofriendly products (O/T)
WO Strategies
- Market is changing fast and requires new products, R&D
must become a priority to deal with this issue
- Dell must create a team of experts who will participate in
decision making and reduce threat of mistakes
- Costumers always demand low prices, but they also want
innovative products. Understand costumers rather than just
listen to them. Train direct sales reps in research to get the
right idea from costumers
- Announce the new product lines and services to get the
market excited and deal with the stock falling issue
Internal Factors (IFAS)ExternalFactors(EFAS)
TOWS
Strengths (S)
- Functional Structure (S)
- Centralized structure: major decisions made by Dell(s)
- High emphasis on customer support and service(s)
- Marketing: efforts focus on four global business units based on
customers: Large Enterprise, Public, Small & Medium Business, and
Consumer(s)
- Its own assembly line in various countries, including the US(s)
- Master of process engineering and supply chain management (s)
- Information System: Dell made a 3.6 billion purchase of a Perot
Systems, an IT service company; it allowed the company to expand
into higher-margin computing services (s).
Threats (T)
- Changing economic ratios: inflation, currency
fluctuation (T)
- Law regulations individual for every market (T)
- Unstable political situation in parts of the world (T)
- Developing environmentalism (T)
- Quickly changing trends (O/T)
- More and more customers expect ecofriendly products
(O/T)
- Visible climat change, Natural catastrophes (T)
ST Strategies
- Receive feedback from the costumer to be prepared for
upcoming changes on the market
- Quickly changing trends can be delt with better R&D
- Own assembly line and centrilized structure could be core
values in case of requiring quick response in rapidly changing
environment
- Dell is master of process engineering, which can be altered equally
professionally to respond to the new trends of environmentalism,
climate change and etc.
Internal Factors (IFAS)ExternalFactors(EFAS
TOWS
Weaknesses (W)
- Centralized structure: One man show (w)
- Dependant on costumer views (w).
- Lack of R&D (W)
- Finance – Dell’s stock falls 42% since January 2007 (w)
Threats (T)
- Changing economic ratios: inflation, currency fluctuation
(T)
- Law regulations individual for every market (T)
- Unstable political situation in parts of the world (T)
- Developing environmentalism (T)
- Quickly changing trends (O/T)
- More and more customers expect ecofriendly products
(O/T)
- Visible climat change, Natural catastrophes (T)
WT Strategies
- In case of quick changes for political reasons centralized
structure can react faster
- Financial review is required to free up money in order to
invest more in R&D, on the other hand ongoing operations
cannot be hulted to maintain position on the market
Strategic Alternatives and
Recommended Strategy
Growth through concentric diversification – Market requires new and innovative products
Dell can use its strengths to learn about costumers needs faster than its competitors and is in position to quickly offer new
products based on the feedback
This will require more investment in R&D and thus additional funds
Growth through horizontal diversification – Expanding to new less developed countries as Dell’s
outdated cheap products could be more interesting for them
Establishing itself on new markets; additional income
Unstable political environment in some countries, requiring new supply chains, additional marketing costs
Strategic Alternatives
Retrenchment through sell out/divestment – closing down less profitable product line Storage (4%)
Freeing up more money for R&D and additional marketing costs
Loosing a specific part of the market
R&D Strategy – Dell should produce more innovative products
This will respond to the market needs; Dell is in position to provide
Completely changing the current strategy; new additional costs
Strategic Alternatives
Recommended
Strategy
• Combination of Several Strategies
1
• Final goal - R&D Strategy, market requires new and
innovative products2
• Free up money for working on new projects
3
• Should remain in its field of expertise
4
• The company has to find new markets with more
interest in its products5
• Retrenchment through sell out/divestment; combination of
Growth through concentric and horizontal diversifications, in
order to finally arrive at the R&D Strategy.6
Implementation
Create a new department
for R&D and bring in
professional from outside,
but the same field:
- Dell was not concentrated
on R&D and might not have
a strong enough team
- New team should be
created to develop this part
of the company
1
Hire an international sales
manager:
- Dell needs someone to
lead entrance in different
markets
- Preferably someone with
the experience of dealing
with less developed
countries
2
Evaluation&
Control
New and stricter reporting
system:
- Monitor new people Dell
himself doesn’t know
- Control work in the
unaccustomed field
1
Strengthen HR
involvement and establish
new system of team
building and sharing of
corporate culture:
- New employees locally and
internationally, who are not
accustomed to corporate
culture
- New executives who, while
implementing new ideas,
must become part of the
company
2
Thanks for the Attention

More Related Content

What's hot

Dell case study (management)
Dell case study (management)Dell case study (management)
Dell case study (management)Vineeth Kamisetty
 
ADVANCED STRATEGIC MANAGEMENT - Matching Dell Case
ADVANCED STRATEGIC MANAGEMENT - Matching Dell CaseADVANCED STRATEGIC MANAGEMENT - Matching Dell Case
ADVANCED STRATEGIC MANAGEMENT - Matching Dell CaseEdna Gacheru
 
Marketing mix of dell and apple
Marketing mix of dell and appleMarketing mix of dell and apple
Marketing mix of dell and appleMalko29
 
Dell strategic management
Dell strategic managementDell strategic management
Dell strategic managementFarooq Omar
 
Dell Company Presentation
Dell Company PresentationDell Company Presentation
Dell Company PresentationDeepankar Nath
 
Case study dell inc
Case study dell incCase study dell inc
Case study dell incYihsuan LEE
 
Dell marketing strategy @gd
Dell marketing strategy @gdDell marketing strategy @gd
Dell marketing strategy @gdGaurav Dakhore
 
Dell Computer's Marketing Strategy
Dell Computer's Marketing StrategyDell Computer's Marketing Strategy
Dell Computer's Marketing StrategyChip Browne
 
Apple inc. Strategic Case Analysis Presentation
Apple inc. Strategic Case Analysis PresentationApple inc. Strategic Case Analysis Presentation
Apple inc. Strategic Case Analysis PresentationMahy Helal
 
Dell case study aaaa
Dell case study aaaaDell case study aaaa
Dell case study aaaaAlaa Hameed
 
Dell direct marketing
Dell direct marketingDell direct marketing
Dell direct marketingGourav j rao
 
PESTLE Analysis for Starbucks - By Jimit Patel
PESTLE Analysis for Starbucks - By Jimit PatelPESTLE Analysis for Starbucks - By Jimit Patel
PESTLE Analysis for Starbucks - By Jimit PatelJimitPatel53
 

What's hot (20)

Dell case study (management)
Dell case study (management)Dell case study (management)
Dell case study (management)
 
Dell Presentation
Dell PresentationDell Presentation
Dell Presentation
 
ADVANCED STRATEGIC MANAGEMENT - Matching Dell Case
ADVANCED STRATEGIC MANAGEMENT - Matching Dell CaseADVANCED STRATEGIC MANAGEMENT - Matching Dell Case
ADVANCED STRATEGIC MANAGEMENT - Matching Dell Case
 
Marketing mix of dell and apple
Marketing mix of dell and appleMarketing mix of dell and apple
Marketing mix of dell and apple
 
Dell strategic management
Dell strategic managementDell strategic management
Dell strategic management
 
Dell Company Presentation
Dell Company PresentationDell Company Presentation
Dell Company Presentation
 
Case study dell inc
Case study dell incCase study dell inc
Case study dell inc
 
Dell company
Dell companyDell company
Dell company
 
Dell presentation
Dell presentationDell presentation
Dell presentation
 
Dell marketing strategy @gd
Dell marketing strategy @gdDell marketing strategy @gd
Dell marketing strategy @gd
 
Dell Computer's Marketing Strategy
Dell Computer's Marketing StrategyDell Computer's Marketing Strategy
Dell Computer's Marketing Strategy
 
Apple inc. Strategic Case Analysis Presentation
Apple inc. Strategic Case Analysis PresentationApple inc. Strategic Case Analysis Presentation
Apple inc. Strategic Case Analysis Presentation
 
Dell ppt
Dell pptDell ppt
Dell ppt
 
Dell case study aaaa
Dell case study aaaaDell case study aaaa
Dell case study aaaa
 
Dell direct marketing
Dell direct marketingDell direct marketing
Dell direct marketing
 
Cola wars between Cocacola and Pepsi
Cola wars between Cocacola and PepsiCola wars between Cocacola and Pepsi
Cola wars between Cocacola and Pepsi
 
PESTLE Analysis for Starbucks - By Jimit Patel
PESTLE Analysis for Starbucks - By Jimit PatelPESTLE Analysis for Starbucks - By Jimit Patel
PESTLE Analysis for Starbucks - By Jimit Patel
 
Dell presentation
Dell presentationDell presentation
Dell presentation
 
Poters 5 force - Dell
Poters 5 force - DellPoters 5 force - Dell
Poters 5 force - Dell
 
Dell Analysis
Dell AnalysisDell Analysis
Dell Analysis
 

Viewers also liked

Añadiendo Valor a la Cadena Logistica
Añadiendo Valor a la Cadena LogisticaAñadiendo Valor a la Cadena Logistica
Añadiendo Valor a la Cadena LogisticaErick Candanedo
 
Implications of financial reforms suggested in union budget 2017 18 on person...
Implications of financial reforms suggested in union budget 2017 18 on person...Implications of financial reforms suggested in union budget 2017 18 on person...
Implications of financial reforms suggested in union budget 2017 18 on person...Parth Mehta
 
Spare parts: turning your supply chain into a competitive advantage
Spare parts: turning your supply chain into a competitive advantageSpare parts: turning your supply chain into a competitive advantage
Spare parts: turning your supply chain into a competitive advantageJean-Francois Mathieu
 
Dell PC & Laptop's Supply Chain Management
Dell PC & Laptop's Supply Chain ManagementDell PC & Laptop's Supply Chain Management
Dell PC & Laptop's Supply Chain ManagementFPT Univesity
 
Supply chain management at United Parcel Service
Supply chain management at United Parcel ServiceSupply chain management at United Parcel Service
Supply chain management at United Parcel ServiceParth Mehta
 
Paquete TecnolóGico Dell
Paquete TecnolóGico DellPaquete TecnolóGico Dell
Paquete TecnolóGico DellLia Nakid
 
United parcel service inc presentation
United parcel service inc presentationUnited parcel service inc presentation
United parcel service inc presentationKumar Parteek Thakur
 
La Nueva Logistica - UPS
La Nueva Logistica - UPSLa Nueva Logistica - UPS
La Nueva Logistica - UPSCADEXCO
 
DHL eCommerce - International Product Portfolio
DHL eCommerce - International Product PortfolioDHL eCommerce - International Product Portfolio
DHL eCommerce - International Product PortfolioIan Butters
 
Outsourcing logístico
Outsourcing logísticoOutsourcing logístico
Outsourcing logísticoZoralia
 
UPS case study analysis
UPS case study analysisUPS case study analysis
UPS case study analysisr-dilara
 

Viewers also liked (16)

Añadiendo Valor a la Cadena Logistica
Añadiendo Valor a la Cadena LogisticaAñadiendo Valor a la Cadena Logistica
Añadiendo Valor a la Cadena Logistica
 
Supply chain of Dell
Supply chain of DellSupply chain of Dell
Supply chain of Dell
 
Implications of financial reforms suggested in union budget 2017 18 on person...
Implications of financial reforms suggested in union budget 2017 18 on person...Implications of financial reforms suggested in union budget 2017 18 on person...
Implications of financial reforms suggested in union budget 2017 18 on person...
 
Spare parts: turning your supply chain into a competitive advantage
Spare parts: turning your supply chain into a competitive advantageSpare parts: turning your supply chain into a competitive advantage
Spare parts: turning your supply chain into a competitive advantage
 
Dell PC & Laptop's Supply Chain Management
Dell PC & Laptop's Supply Chain ManagementDell PC & Laptop's Supply Chain Management
Dell PC & Laptop's Supply Chain Management
 
Modelo de Negocio UPS
Modelo de Negocio UPSModelo de Negocio UPS
Modelo de Negocio UPS
 
Supply chain management at United Parcel Service
Supply chain management at United Parcel ServiceSupply chain management at United Parcel Service
Supply chain management at United Parcel Service
 
Paquete TecnolóGico Dell
Paquete TecnolóGico DellPaquete TecnolóGico Dell
Paquete TecnolóGico Dell
 
United parcel service inc presentation
United parcel service inc presentationUnited parcel service inc presentation
United parcel service inc presentation
 
La Nueva Logistica - UPS
La Nueva Logistica - UPSLa Nueva Logistica - UPS
La Nueva Logistica - UPS
 
Modelo de Negocio UPS
Modelo de Negocio UPSModelo de Negocio UPS
Modelo de Negocio UPS
 
DHL eCommerce - International Product Portfolio
DHL eCommerce - International Product PortfolioDHL eCommerce - International Product Portfolio
DHL eCommerce - International Product Portfolio
 
Outsourcing logístico
Outsourcing logísticoOutsourcing logístico
Outsourcing logístico
 
UPS SCS Case Study
UPS SCS Case StudyUPS SCS Case Study
UPS SCS Case Study
 
UPS case study analysis
UPS case study analysisUPS case study analysis
UPS case study analysis
 
United Parcel Service
United Parcel ServiceUnited Parcel Service
United Parcel Service
 

Similar to Dell Inc.: Changing The Business Model

242269855 dell-case-study
242269855 dell-case-study242269855 dell-case-study
242269855 dell-case-studyhomeworkping4
 
Global project
Global projectGlobal project
Global projectcomsats
 
Dell Case Presentation.pptx
Dell Case Presentation.pptxDell Case Presentation.pptx
Dell Case Presentation.pptxUtshoSaha1
 
Dell inc [compatibility mode]
Dell inc [compatibility mode]Dell inc [compatibility mode]
Dell inc [compatibility mode]Karthik Rajagopal
 
Planning and Control Assignment related to Dell Inc
Planning and Control Assignment related to Dell IncPlanning and Control Assignment related to Dell Inc
Planning and Control Assignment related to Dell IncMaha H
 
The Essay Is About The Pros And Cons Of Various Economic...
The Essay Is About The Pros And Cons Of Various Economic...The Essay Is About The Pros And Cons Of Various Economic...
The Essay Is About The Pros And Cons Of Various Economic...Susan Tullis
 
DELL project
DELL projectDELL project
DELL projectKIMEP
 
Dell
DellDell
DellBala
 
Case Study On Oracle (2000)
Case Study On Oracle (2000)Case Study On Oracle (2000)
Case Study On Oracle (2000)Roula Samra
 
Dell incorporate
Dell incorporateDell incorporate
Dell incorporateshakir27
 
Marketing strategy of dell
Marketing strategy of dellMarketing strategy of dell
Marketing strategy of dellNaveed Ul
 
Dell in china.ppt
Dell in china.pptDell in china.ppt
Dell in china.pptWentao He
 

Similar to Dell Inc.: Changing The Business Model (20)

242269855 dell-case-study
242269855 dell-case-study242269855 dell-case-study
242269855 dell-case-study
 
The dell model
The dell modelThe dell model
The dell model
 
Global project
Global projectGlobal project
Global project
 
Dell manendra
Dell manendraDell manendra
Dell manendra
 
Dell manendra
Dell manendraDell manendra
Dell manendra
 
Dell Case Presentation.pptx
Dell Case Presentation.pptxDell Case Presentation.pptx
Dell Case Presentation.pptx
 
Dell inc [compatibility mode]
Dell inc [compatibility mode]Dell inc [compatibility mode]
Dell inc [compatibility mode]
 
Dell Inc
Dell IncDell Inc
Dell Inc
 
Planning and Control Assignment related to Dell Inc
Planning and Control Assignment related to Dell IncPlanning and Control Assignment related to Dell Inc
Planning and Control Assignment related to Dell Inc
 
Apple Inc.
Apple Inc.Apple Inc.
Apple Inc.
 
The Essay Is About The Pros And Cons Of Various Economic...
The Essay Is About The Pros And Cons Of Various Economic...The Essay Is About The Pros And Cons Of Various Economic...
The Essay Is About The Pros And Cons Of Various Economic...
 
DELL project
DELL projectDELL project
DELL project
 
Dell
DellDell
Dell
 
Case Study On Oracle (2000)
Case Study On Oracle (2000)Case Study On Oracle (2000)
Case Study On Oracle (2000)
 
sm ppt
 sm ppt sm ppt
sm ppt
 
12030141116 dell incc
12030141116 dell incc12030141116 dell incc
12030141116 dell incc
 
Dell incorporate
Dell incorporateDell incorporate
Dell incorporate
 
Samsung
SamsungSamsung
Samsung
 
Marketing strategy of dell
Marketing strategy of dellMarketing strategy of dell
Marketing strategy of dell
 
Dell in china.ppt
Dell in china.pptDell in china.ppt
Dell in china.ppt
 

Recently uploaded

Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfAnhNguyen97152
 
R2B What is Red2Blue Session 1 Deck.pptx
R2B What is Red2Blue Session 1 Deck.pptxR2B What is Red2Blue Session 1 Deck.pptx
R2B What is Red2Blue Session 1 Deck.pptxkirsten544048
 
Monthly Social Media Update March 2024 - Luan.pptx
Monthly Social Media Update March 2024 - Luan.pptxMonthly Social Media Update March 2024 - Luan.pptx
Monthly Social Media Update March 2024 - Luan.pptxAndy Lambert
 
Live-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry WebinarLive-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry WebinarNathanielSchmuck
 
The Importance of entrepreneurial storytelling
The Importance of entrepreneurial storytellingThe Importance of entrepreneurial storytelling
The Importance of entrepreneurial storytellingP&CO
 
Top VB.NET Development Company for Custom Solutions
Top VB.NET Development Company for Custom SolutionsTop VB.NET Development Company for Custom Solutions
Top VB.NET Development Company for Custom SolutionsSynapseIndia
 
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 Building Your Personal Brand on LinkedIn - Expert Planet-  2024 Building Your Personal Brand on LinkedIn - Expert Planet-  2024
Building Your Personal Brand on LinkedIn - Expert Planet- 2024Stephan Koning
 
Cracking the Employee Empowerment Code.pptx
Cracking the Employee Empowerment Code.pptxCracking the Employee Empowerment Code.pptx
Cracking the Employee Empowerment Code.pptxWorkforce Group
 
Trend Marketing 2024_Inisago_RosalinaOmega
Trend Marketing 2024_Inisago_RosalinaOmegaTrend Marketing 2024_Inisago_RosalinaOmega
Trend Marketing 2024_Inisago_RosalinaOmegaRosalinaOmega
 
Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Winbusinessin
 
Entrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizationsEntrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizationsP&CO
 
How Solar Energy Benefits Hospitals.
How  Solar  Energy  Benefits  Hospitals.How  Solar  Energy  Benefits  Hospitals.
How Solar Energy Benefits Hospitals.Contendre Solar
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.mcshagufta46
 
Personal Brand Exploration Presentation.
Personal Brand Exploration Presentation.Personal Brand Exploration Presentation.
Personal Brand Exploration Presentation.cleomatise
 
ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...
ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...
ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...ISONIKELtd
 
Laboy Rolon RIcardo MBBS 2024-06 Presentation
Laboy Rolon RIcardo MBBS 2024-06 PresentationLaboy Rolon RIcardo MBBS 2024-06 Presentation
Laboy Rolon RIcardo MBBS 2024-06 Presentationrickylaboy2005
 
Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...
Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...
Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...mwangimwangi222
 
Western Copper and Gold Corporate Presentation March 2024
Western Copper and Gold Corporate Presentation March 2024Western Copper and Gold Corporate Presentation March 2024
Western Copper and Gold Corporate Presentation March 2024PaceCreativeGroup
 
Virat Special Steel Product Brochure.pdf
Virat Special Steel Product Brochure.pdfVirat Special Steel Product Brochure.pdf
Virat Special Steel Product Brochure.pdfVIRAT Special Steel
 

Recently uploaded (20)

Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdfGraham and Doddsville - Issue 1 - Winter 2006 (1).pdf
Graham and Doddsville - Issue 1 - Winter 2006 (1).pdf
 
R2B What is Red2Blue Session 1 Deck.pptx
R2B What is Red2Blue Session 1 Deck.pptxR2B What is Red2Blue Session 1 Deck.pptx
R2B What is Red2Blue Session 1 Deck.pptx
 
Monthly Social Media Update March 2024 - Luan.pptx
Monthly Social Media Update March 2024 - Luan.pptxMonthly Social Media Update March 2024 - Luan.pptx
Monthly Social Media Update March 2024 - Luan.pptx
 
Live-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry WebinarLive-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry Webinar
 
The Importance of entrepreneurial storytelling
The Importance of entrepreneurial storytellingThe Importance of entrepreneurial storytelling
The Importance of entrepreneurial storytelling
 
Top VB.NET Development Company for Custom Solutions
Top VB.NET Development Company for Custom SolutionsTop VB.NET Development Company for Custom Solutions
Top VB.NET Development Company for Custom Solutions
 
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 Building Your Personal Brand on LinkedIn - Expert Planet-  2024 Building Your Personal Brand on LinkedIn - Expert Planet-  2024
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 
Cracking the Employee Empowerment Code.pptx
Cracking the Employee Empowerment Code.pptxCracking the Employee Empowerment Code.pptx
Cracking the Employee Empowerment Code.pptx
 
Trend Marketing 2024_Inisago_RosalinaOmega
Trend Marketing 2024_Inisago_RosalinaOmegaTrend Marketing 2024_Inisago_RosalinaOmega
Trend Marketing 2024_Inisago_RosalinaOmega
 
Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024Ethical stalking by Mark Williams. UpliftLive 2024
Ethical stalking by Mark Williams. UpliftLive 2024
 
Entrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizationsEntrepreneurship & organisations: influences and organizations
Entrepreneurship & organisations: influences and organizations
 
CRAFTING WELLNESS: INSIDE THE TRADIES’ JOURNEY
CRAFTING WELLNESS: INSIDE THE TRADIES’ JOURNEYCRAFTING WELLNESS: INSIDE THE TRADIES’ JOURNEY
CRAFTING WELLNESS: INSIDE THE TRADIES’ JOURNEY
 
How Solar Energy Benefits Hospitals.
How  Solar  Energy  Benefits  Hospitals.How  Solar  Energy  Benefits  Hospitals.
How Solar Energy Benefits Hospitals.
 
A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.A flour, rice and Suji company in Jhang.
A flour, rice and Suji company in Jhang.
 
Personal Brand Exploration Presentation.
Personal Brand Exploration Presentation.Personal Brand Exploration Presentation.
Personal Brand Exploration Presentation.
 
ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...
ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...
ISONIKE Ltd Accreditation for the Conformity Assessment and Certification of ...
 
Laboy Rolon RIcardo MBBS 2024-06 Presentation
Laboy Rolon RIcardo MBBS 2024-06 PresentationLaboy Rolon RIcardo MBBS 2024-06 Presentation
Laboy Rolon RIcardo MBBS 2024-06 Presentation
 
Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...
Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...
Solution Manual for Exploring Strategy Text And Cases 12th Edition Gerry John...
 
Western Copper and Gold Corporate Presentation March 2024
Western Copper and Gold Corporate Presentation March 2024Western Copper and Gold Corporate Presentation March 2024
Western Copper and Gold Corporate Presentation March 2024
 
Virat Special Steel Product Brochure.pdf
Virat Special Steel Product Brochure.pdfVirat Special Steel Product Brochure.pdf
Virat Special Steel Product Brochure.pdf
 

Dell Inc.: Changing The Business Model

  • 1. Dell Inc.: Changing the Business Model(Mini Case) Karolina Barańska Salmoon Bashir Giorgi Nadareishvili Nino Tsintsadze Tako Azariashvili Ana Shilakadze
  • 2. About Dell DELL INC. was founded in 1984 by Michael Dell at age 19 while he was a student living in a dormitory at the University of Texas. The original name of the company was PC’s limited. DELL TECHNOLOGS Net Sales or Revenues for the year 2016-2017 was 61.64B while the Gross profit in this year was 12.96B.
  • 3. Objectives The specification of the process map supports the quality of the products manufactured and the flexibility of Dell towards its customers through sales representative or its website that enables a range of variety of products for their customer to choose from. Added more Quality to the products manufactured by Dell. Made Dell a little more flexible to the demands of its customers. Made Dell more dependable to its customers
  • 4. Mission Statement "Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. Dell Inc. listens to customers and delivers innovative technology and services that give them the power to do more. 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
  • 5. Current Performance Dell maintained its No. 2 share position in the global x86 server market Dell Software registered double-digit revenue growth year-over-year Dell grew PC shipments by nearly 10 percent year over year Dell is ranked by Gartner No. 1 in Worldwide IT Services for Healthcare Providers Dell delivers year-over-year growth across every region globally With a market share of 15.9%, Dell was the third largest PC vendor in the world in the first quarter of 2017 after Lenovo and HP Inc.
  • 6. Dell provides a classic example of how the principles of strategic management have been used to translate an innovative vision into a successful and sustainable enterprise. Their vision statement basically tells the way they do their business. They want to be successful in the digital world for this they rely on latest technology. Dell provides quality products to cater the needs of the people. In intend to build good relationship with their customers and suppliers Strategic Posture
  • 8. ISSUES Rapidly changing market Centralized structure Positioning of the company Transition between business models Supply chain issues Pros and Cons of direct sales
  • 9. The main issues: • The industry’s focus shifts from desktop PCs to mobile computing, software and technology services – areas of relative weakness at Dell; • Dell abandons its original business model based on direct sales and value chain efficiencies have been abandoned; • Cost reductions and competitive pricing led to fall in customer service rating – previously a strength of the company.
  • 10. The Dilemma: Should Dell continue with its current strategy of following the consumer market down in price and adjusting its costs accordingly or, like IBM, should it change its focus to more profitable business services, or, like HP, should it try to do both?
  • 13. External environment PESTEL Political–Legal • Regional trade pacts provide access to other markets with great potential (O) • Law regulations individual for every market (T) • Unstable political situation in increasing parts of the world (T) • Developing environmentalism – laws on pollution, energy usage and waste management policies (T)
  • 14. External environment PESTEL Economic • Unstable, but recovering economy after crisis; demand is growing (O) • Accelerating process of globalization (O) • Changing economic ratios: inflation, currency fluctuation (T)
  • 15. External environment PESTEL Socio-cultural • Developing nations becomes better educated – need computers and accessories (O) • Changing lifestyle – more people from different social groups need computers (O) • Demographics – the age group of people who need computers is increasing (O) • Consumer desires attractive, high-quality and technologically advanced appliances (O) • Customers’ trends are changing very quickly. (O/T) • More and more customers expect ecofriendly products (O/T)
  • 16. External environment PESTEL Technological • Computers and information technology increasingly important (O) • Rapid technological improvements in PC industry (O) • Outsourcing (O)
  • 17. External environment PESTEL Environmental • Energy and water availability (T) • Visible climate change, natural catastrophes (T)
  • 18. External environment PESTEL Political–Legal •Regional trade pacts provide access to other markets with great potential (O) •Law regulations individual for every market (T) • Unstable political situation in increasing parts of the world (T) •Developing environmentalism – laws on pollution, energy usage and waste management policies (T) Economic • Unstable, but recovering economy after crisis; demand is growing (O) • Accelerating process of globalization (O) • Changing economic ratios: inflation, currency fluctuation (T) Socio-cultural •Developing nations becomes better educated – need computers and accessories (O) •Changing lifestyle – more people from different social groups need computers (O) •Demographics – the age group of people who need computers is increasing (O) •Consumer desires attractive, high-quality and technologically advanced appliances (O) •More and more customers expect ecofriendly products (O/T) •Customers’ trends are changing very quickly. (O/T) Technological • Computers and information technology increasingly important (O) • Rapid technological improvements in PC industry (O) • Outsourcing (O) Environmental • Energy and water availability (T) • Visible climate change, natural catastrophes (T)
  • 20. External environment - Porter’s Five Forces Rivalry High • Gateway, Acer, Toshiba, and Lenovo, HP, IBM, Oracle have competitive advantages, big resources & global brand awareness (T) Bargaining Power of Buyers High • Because there is a lot of players in the market (T) Bargaining Power of Suppliers Moderate • Dell has a large number of suppliers that varies from hardware, software and services suppliers. However, because of just- in-time approach it’s very dependent on suppliers (T) Threat of Substitutes High • Smartphones and tablets (T) Entry Barriers High • Entering this market requires a lot of resources. It is hard to compete with existing companies, because they operate on the basis of economy of scales and brand awareness (O)
  • 23. A. Corporate Structure • Divisional Corporate Structure – Dell is the CEO (s) • Centralized decision-making: major decisions made by Dell (also, he owned the largest block of stock and continued to be the “Heart and Soul” of the firm (s/w); B. Corporate Culture • Company’s overall philosophy: high emphasis on customer support and service(s). • Company’s Main focus on manufacturing – Dell becomes the master of engineering (s) • Lack of R&D– Dell spent 1% of sales on R&D VS 5% typically invested by other companies(w) Note: Dell had Efficiency Business model Internal Environment
  • 24. c. Corporate Resources • Market posture: efforts focus on four global business units based on customers: Large Enterprise, Public, Small & Medium Business, and Consumer(s) • Finance: a. Dell’s tock falls 42% since January 2007 (w) b. Decrease in revenue, as well as, operational income (w) c. Current and quick ratios look better than the industry average, as well as, debt to equity ratio (s) d. Financial leverage tends to decrease from 2009 to 2010 (s) Internal Environment
  • 25. Financials USD in Millions 2010 2009 2008 2007 2006 2005 2004 Revenue 52,902 61,101 61,133 57,420 55,788 49,121 41,444 Operating income 2172 3190 3440 3070 4382 4206 3544 Net Income 1,433 2,478 2,947 2,583 3,602 3,018 2,645 Earnings per share 0.73 1.25 1.31 1.14 1.47 1.18 1.01 Source: http://financials.morningstar.com/direct/ratios/r.html?t=XNAS%3ADELL&region=usa&culture=en- US&productcode=MLE&cur
  • 26. Financials - profitability 2010 2009 2008 2007 2006 2005 2004 Financial leverage (av.) 5.97 6.2 7.38 5.92 5.6 3.58 3.08 Return on equity % 28.91 61.9 73.1 61.09 67.31 47.68 47.43 Return on invested capital 19.32 45.51 55.27 47.11 61.46 44.18 43.65 Source: http://financials.morningstar.com/direct/ratios/r.html?t=XNAS%3ADELL&region=usa&culture=en- US&productcode=MLE&cur
  • 27. Financials – Liquidity/Financial Health Source: http://financials.morningstar.com/direct/ratios/r.html?t=XNAS%3ADELL&region=usa&culture=en- US&productcode=MLE&cur Dell Industry Dell Industry 2010 2010 2009 2009 Quick ratio 1.03 0.63 1.05 0.60 Debt/equity 0.61 0.42 0.44 0.46 Dell 2010 2009 2008 2007 2006 2005 Current ratio 1.28 1.36 1.07 1.12 1.11 1.2
  • 28. c. Corporate Resources • R&D: the company invests only 1% of its sales in R&D (w) • Operations: a. Dell had its own assembly line in various countries, including the US; though some operations, such as component production and express shipping were outsourced (s) b. Dell became the master of process engineering and supply chain management (s); • Human resources: due to Dell’s retrenchment strategy, the company cut 10,000 jobs since 2007 (even though there is no mentioning about employee relationships, the drastic cuts might have caused dissatisfaction of a lot of people) (unclear); • Information System: Dell made a 3.6 billion purchase of a Perot Systems, an IT service company; it allowed the company to expand into higher-margin computing services (s). Internal Environment
  • 29. VRIO Framework 1. Value: Does it provide customer value and competitive advantage? 2. Rareness: Do no other competitors possess it? 3. Imitability: Is it costly for others to imitate? 4. Organization: Is the firm organized to exploit the resource?
  • 31. Internal Factors (IFAS)ExternalFactors(EFAS) TOWS Strengths (S) - Functional Structure (S) - Centralized structure: major decisions made by Dell(s) - Master of process engineering and supply chain management (s) - Marketing: efforts focus on four global business units based on customers: Large Enterprise, Public, Small & Medium Business, and Consumer(s) - High emphasis on customer support and service(s) - Its own assembly line in various countries, including the US(s) - - Information System: Dell made a 3.6 billion purchase of a Perot Systems, an IT service company; it allowed the company to expand into higher-margin computing services (s). Opportunities (O) - Unstable, but recovering economy after crisis; demand is growing (O) - Accelerating process of globalization (O) - Computers and information technology increasingly important (O) - Rapid technological improvements in PC industry (O) - Outsourcing (O) - Regional trade pacts (O) - Tax exemptions for conducting business in special economic zones (O) - Developing nations become better educated (O) - Changing lifestyle (O) - The age group of people who need computers is increasing (O) - Consumer desires attractive, high-quality and technologically advanced appliances (O) - Customers’ trends are changing very quickly (O/T) - More and more customers expect ecofriendly products (O/T) SO Strategies - Ability to respond quickly to changing environment Own assembly lines - chance of producing whatever is required Best engineering and supply chain - opportunity to quickly produce new products - Great contact with costumers - ability to receive information regarding their wishes first on the market Opportunity to develop new products for the changing market by being first to receive information and quickly start developing - Special business units for each type of costumer - ability to offer products and services required for each of them and choose the most profitable markets
  • 32. Internal Factors (IFAS)ExternalFactors(EFAS) TOWS Weaknesses (W) - Centralized structure: One man show (w) - Dependant on costumer views (w). - Lack of R&D (W) Opportunities (O) - Unstable, but recovering economy after crisis; demand is growing (O) - Accelerating process of globalization (O) - Computers and information technology increasingly important (O) - Rapid technological improvements in PC industry (O) - Outsourcing (O) - Regional trade pacts (O) - Tax exemptions for conducting business in special economic zones (O) - Developing nations become better educated (O) - Changing lifestyle (O) - The age group of people who need computers is increasing (O) - Consumer desires attractive, high-quality and technologically advanced appliances (O) - Customers’ trends are changing very quickly (O/T) - More and more customers expect ecofriendly products (O/T) WO Strategies - Market is changing fast and requires new products, R&D must become a priority to deal with this issue - Dell must create a team of experts who will participate in decision making and reduce threat of mistakes - Costumers always demand low prices, but they also want innovative products. Understand costumers rather than just listen to them. Train direct sales reps in research to get the right idea from costumers - Announce the new product lines and services to get the market excited and deal with the stock falling issue
  • 33. Internal Factors (IFAS)ExternalFactors(EFAS) TOWS Strengths (S) - Functional Structure (S) - Centralized structure: major decisions made by Dell(s) - High emphasis on customer support and service(s) - Marketing: efforts focus on four global business units based on customers: Large Enterprise, Public, Small & Medium Business, and Consumer(s) - Its own assembly line in various countries, including the US(s) - Master of process engineering and supply chain management (s) - Information System: Dell made a 3.6 billion purchase of a Perot Systems, an IT service company; it allowed the company to expand into higher-margin computing services (s). Threats (T) - Changing economic ratios: inflation, currency fluctuation (T) - Law regulations individual for every market (T) - Unstable political situation in parts of the world (T) - Developing environmentalism (T) - Quickly changing trends (O/T) - More and more customers expect ecofriendly products (O/T) - Visible climat change, Natural catastrophes (T) ST Strategies - Receive feedback from the costumer to be prepared for upcoming changes on the market - Quickly changing trends can be delt with better R&D - Own assembly line and centrilized structure could be core values in case of requiring quick response in rapidly changing environment - Dell is master of process engineering, which can be altered equally professionally to respond to the new trends of environmentalism, climate change and etc.
  • 34. Internal Factors (IFAS)ExternalFactors(EFAS TOWS Weaknesses (W) - Centralized structure: One man show (w) - Dependant on costumer views (w). - Lack of R&D (W) - Finance – Dell’s stock falls 42% since January 2007 (w) Threats (T) - Changing economic ratios: inflation, currency fluctuation (T) - Law regulations individual for every market (T) - Unstable political situation in parts of the world (T) - Developing environmentalism (T) - Quickly changing trends (O/T) - More and more customers expect ecofriendly products (O/T) - Visible climat change, Natural catastrophes (T) WT Strategies - In case of quick changes for political reasons centralized structure can react faster - Financial review is required to free up money in order to invest more in R&D, on the other hand ongoing operations cannot be hulted to maintain position on the market
  • 36. Growth through concentric diversification – Market requires new and innovative products Dell can use its strengths to learn about costumers needs faster than its competitors and is in position to quickly offer new products based on the feedback This will require more investment in R&D and thus additional funds Growth through horizontal diversification – Expanding to new less developed countries as Dell’s outdated cheap products could be more interesting for them Establishing itself on new markets; additional income Unstable political environment in some countries, requiring new supply chains, additional marketing costs Strategic Alternatives
  • 37. Retrenchment through sell out/divestment – closing down less profitable product line Storage (4%) Freeing up more money for R&D and additional marketing costs Loosing a specific part of the market R&D Strategy – Dell should produce more innovative products This will respond to the market needs; Dell is in position to provide Completely changing the current strategy; new additional costs Strategic Alternatives
  • 38. Recommended Strategy • Combination of Several Strategies 1 • Final goal - R&D Strategy, market requires new and innovative products2 • Free up money for working on new projects 3 • Should remain in its field of expertise 4 • The company has to find new markets with more interest in its products5 • Retrenchment through sell out/divestment; combination of Growth through concentric and horizontal diversifications, in order to finally arrive at the R&D Strategy.6
  • 39. Implementation Create a new department for R&D and bring in professional from outside, but the same field: - Dell was not concentrated on R&D and might not have a strong enough team - New team should be created to develop this part of the company 1 Hire an international sales manager: - Dell needs someone to lead entrance in different markets - Preferably someone with the experience of dealing with less developed countries 2
  • 40. Evaluation& Control New and stricter reporting system: - Monitor new people Dell himself doesn’t know - Control work in the unaccustomed field 1 Strengthen HR involvement and establish new system of team building and sharing of corporate culture: - New employees locally and internationally, who are not accustomed to corporate culture - New executives who, while implementing new ideas, must become part of the company 2
  • 41. Thanks for the Attention

Editor's Notes

  1. https://amigobulls.com/stocks/DVMT/income-statement/annual?f=pg
  2. http://www.dell.com/learn/al/en/alcorp1/secure/2014-11-04-dell-fastest-growing-integrated-technology-company
  3. http://investors.delltechnologies.com/phoenix.zhtml?c=254397&p=irol-govBoard
  4. The industry’s focus shifts from desktop PCs to mobile computing, software and technology services – areas of relative weakness at Dell; Dell abandons its original business model based on direct sales and value chain efficiencies have been abandoned; Cost reductions and competitive pricing led to fall in customer service rating – previously a strength of the company.
  5. This slide is similar to slide 2, but we need to go through the slide 2 – it seems a bit problematic
  6. Dilemma should be towards the end – lets go through the 2nd slide 
  7. https://amigobulls.com/stocks/DVMT/income-statement/annual?f=pg
  8. fficiency model: In this model a company waits until a product becomes standardized and then enters the market with a low-priced, low-margin product that appeals to the mass market. This model is used by Wal-Mart, Dell, and Southwest Airlines. Who it serves What it provides How it makes money How it differentiates and sustains competitive advantage How it provides its product/service21
  9. Capabilities refer to a corporation’s ability to exploit its resources. They consist of business processes and routines that manage the interaction among resources to turn inputs into outputs. For example, a company’s marketing capability can be based on the interaction among its marketing specialists, distribution channels, and sales people. When these capabilities are constantly being changed and reconfigured to make them more adaptive to an uncertain environment, they are called dynamic capabilities Barney, in his VRIO framework of analysis, proposes four questions to evaluate a firm’s competencies: 1. Value: Does it provide customer value and competitive advantage? 2. Rareness: Do no other competitors possess it? 3. Imitability: Is it costly for others to imitate? 4. Organization: Is the firm organized to exploit the resource? Financials: Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage, calculated by dividing a company’s total liabilities by its stockholders' equity. The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity.
  10. The concept of financial leverage (the ratio of total debt to total assets) is helpful in describing how debt is used to increase the earnings available to common shareholders. When the company finances its activities by sales of bonds or notes instead of through stock, the earnings per share are boosted: the interest paid on the debt reduces taxable income, but fewer shareholders share the profits than if the company had sold more stock to finance its activities. The debt, however, does raise the firm’s break-even point above what it would have been if the firm had financed from internally generated funds only. High leverage may therefore be perceived as a corporate strength in times of prosperity and ever-increasing sales, or as a weakness in times of a recession and falling sales.
  11. Current ratio = current assets/current liabilities The current ratio is the classic measure of liquidity. It indicates whether the business can pay debts due within one year out of the current assets. ... For example, a ratio of 1.5:1 would mean that a business has £1.50 of current assets for every £1 of current liabilities Quick ratio -> The higher the ratio, the more financially secure a company is in the short term. A common rule of thumb is that companies with a quick ratio of greater than 1.0 are sufficiently able to meet their short-term liabilities. Quick ratio shows the extent of cash and other current assets that are readily convertible into cash in comparison to the short term obligations of an organization. A quick ratio of 0.5 would suggest that a company is able to settle half of its current liabilities instantaneously. Debt/equity – total liabilities/shareholders equity The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders' equity.
  12. Capabilities refer to a corporation’s ability to exploit its resources. They consist of business processes and routines that manage the interaction among resources to turn inputs into outputs. For example, a company’s marketing capability can be based on the interaction among its marketing specialists, distribution channels, and sales people. When these capabilities are constantly being changed and reconfigured to make them more adaptive to an uncertain environment, they are called dynamic capabilities Barney, in his VRIO framework of analysis, proposes four questions to evaluate a firm’s competencies: 1. Value: Does it provide customer value and competitive advantage? 2. Rareness: Do no other competitors possess it? 3. Imitability: Is it costly for others to imitate? 4. Organization: Is the firm organized to exploit the resource? Financials: Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage, calculated by dividing a company’s total liabilities by its stockholders' equity. The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders’ equity.
  13. The concept of financial leverage (the ratio of total debt to total assets) is helpful in describing how debt is used to increase the earnings available to common shareholders. When the company finances its activities by sales of bonds or notes instead of through stock, the earnings per share are boosted: the interest paid on the debt reduces taxable income, but fewer shareholders share the profits than if the company had sold more stock to finance its activities. The debt, however, does raise the firm’s break-even point above what it would have been if the firm had financed from internally generated funds only. High leverage may therefore be perceived as a corporate strength in times of prosperity and ever-increasing sales, or as a weakness in times of a recession and falling sales.
  14. Use strengths to take advantage of opportunities changing environment and growing demand-use this opportunity Functional Structure Direct Marketing Business Units Market posture: efforts focus on four global business units based on customers: Large Enterprise, Public, Small & Medium Business, and Consumer(s
  15. Take advantage of opportunities by overcoming weaknesses. 1.R&D – use opportunity to become innovative 2.Expert Team 3.Trainings direct marketing team
  16. Use strengths to avoid threats Quickly changing trends – Master of process engineering and supply chain management 3.Receive feedback from customers Developing environmentalism
  17. Minimize weaknesses and avoid threats 1.Unstable political situation-centralized structure 2.Free up money
  18. So far Dell was not concentrated on R&D and as such it might not have a strong team for it. Therefore Dell should create a new department for R&D, bring in a professional from outside, but the same field to lead it and create a team of new people who will develop this part of the company. Dell should also hire an international sales manager to lead its entrance in different markets, preferably someone with the experience of dealing with less developed countries in order to be prepared and for the Horizontal Growth to go smoothly.
  19. In order to monitor new people who Dell himself doesn’t know very well and to control work in the fields the company is not accustomed to a new, stricter reporting system must be implemented, during which these and all other managers will have to produce detailed action plans. After these changes Dell will have more employees from international side, new employees who are not accustomed to corporate culture and new executives who must, while implementing new ideas, still become part of the company. So Dell must strengthen involvement of HR in these actions and create a new system of team building and sharing of corporate culture.