matching dell strategy

1. Matching
Dell
GROUP-9

2. About the company
• An entrepreneurial company started by Michael Dell, who found it in 1984 out of a
dorm room.
• Direct Model- Build relationship directly with consumers, cut down the
middleman
• Production process to cut inventory, suppliers co-located, close collaboration with
suppliers for efficient logistics
• Eliminates the need for inventory and intermediaries leading to built-in price
advantage.
• Market worldwide, with a manufacturing facility in Ireland, Malaysia and Austin,
US.

3. INDUSTRY
• Products: Based on well-defined, Wintel-based standards first established by IBM. Wide range of
configurations, highly competitive global markets for components except for Wintel (processor and
operating system)
• Evolution:
1975-81 start-up
1981-86 - Early explosive growth, high margins, IBM entered in 1981
1990-95- Crest because of the economy, but prices keep falling
1995-99-Growth recovery but the industry is at a late-growth maturity stage
• Customers: Large/medium companies/government, small businesses, consumers, education
• Channels: Retail, distributors, small resellers, integrated resellers, direct Manufacturing: Assembly-
line, low entry barrier, Asian manufacturer’s capacity

4. Question: -1 Dell Advantage
• Direct-to-customer business model Approach: DELL DIRECT
• Workstations and servers made to order, leading to no inventory
• Flexible Manufacturing:- Build-to-order manufacturing and Mass
customisation
• Cell Manufacturing reduces assembly time by 75% and doubles
productivity
• Role of Internet
• Faster shipment of product within 5 to 6 days

5. • Partnerships with Suppliers
• To part with a few outside vendors and stay with them as long as they
maintained their lead.
• Some vendors had plants or distribution centres within a few miles of Dell's
assembly plants and could deliver daily or even hourly if needed.
• JIT allows suppliers to operate with only a few days of inventory for some
component
• Sony monitors delivery, delivering both the product to the consume
simultaneously

6. Measure?
• Financial indicators since 1995, Dell has been gaining market share quickly,
growing about three times the 16% average annual rate of global PC sales
• Dell overtook Compaq as the U.S. sales leader in the third quarter of 1999 &
IBM during 1998
• In 1998, Dell Computer was the 2nd PC market leader in the United States,
with a nearly 13.2% share, Compaq with 16.7%, Gateway with 8.4%,
Hewlett-Packard with 7.8% and IBM with 8.2%.
• By 1999, Dell Computer posted revenues of over $18 billion, up from $3
billion in 1994 and stock price rose by 5600%.