D Ell Computer Gs


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D Ell Computer Gs

  1. 1. Date- 12th February Strategic Marketing 2009 Case-Study Write-up Dell Computer Corporation Strategic Marketing Suggested by-……….Dr. Mayank Saxena Submitted by-………Aarti Thakur, GhanShyam, Pawan Gehlot, Rakesh Sharma Class-………………..PGPSM 4th Term College-……………..CH Institute of management Studies Subject-……………..Sales Management Group Name- Aarti Thakur, GhanShyam, Pawan Gehlot, Rakesh Sharma Class- PGPSM College- CHIMS
  2. 2. Date- 12th February Strategic Marketing 2009 “Major Issues of the Case and our stand point” There are following key issues related to the case- 1. Product designing: Customization (Good Strategy) - One of the primary areas for decision making at Dell was product designing. As the Dell offered customized product and it was succeed in making differentiation on the unique product designing process. The company could enter in a competitive market and could maintain its position just because of the custom made products. As mentioned in the case that Apple was technological sound and leader in technology, hence it was very tough to Dell to compete with Apple in the same competency. Therefore the product customization strategy was key competency of the company which gave it competitive advantages. In addition to these points we would like to put one more supportive point that IBM’s concentrated efforts to make the PC legitimate option in the minds of the corporate customers led to an explosion in the demand for IBM PCs which the company could not satisfy. 2. Working Capital Scarcity- AS mentioned in the case that Dell’s sales, was $3.3 billion in 1994 and available cash to perform operational activities was $20 million. Here if we calculate the ratio of working capital (Cash) to sales then that is 0.606, which is too less because ideal ratio is one. The available amount can not serve the purpose of going for abroad operations, as the company is planning for that. Group Name- Aarti Thakur, GhanShyam, Pawan Gehlot, Rakesh Sharma Class- PGPSM College- CHIMS
  3. 3. Date- 12th February Strategic Marketing 2009 3. Tough Competition: Restless approach (Good Strategy) - Vice chairman of the company stated that computer industry obviously will grow but there will only be handful of players with a coherent strategy and consistent bottom line. For the purpose the company adopted creative and restless approach. One of the strategies adopted by the firm was to be fundamentally strong. 4. Selection of Distribution Mode: Direct through vendors (Good) - Dell was delivering its products mainly through vendors directly. The issue in selection of appropriate distribution mode was that, by the time, distribution was mainly through electronic stores such as Radio Shack, Computer Retail Stores and smaller independent specialty electronic stores. So selection of virtual market at starting is not more than taking a risk. But at all, the strategy was successful. The company could differentiate itself from others just because of unique distribution channel. 5. Delivery Service (Good Strategy)- Dell was able to provide services such as 24-hour hotline for complaints, 24- to 48- hour guaranteed shipment of replacement parts. This strategy gave the Dell competitive advantages. 6. “Made-to-order” Strategy- Dell’s focus was on selling somewhat more customized products via mail orders to business customers. Manufacturing cycle “made-to-order” giving it important economies benefits. 7. Customer Relationship Evaluation Criteria- The clients used to evaluate vendors based on product reliability, compatibility with installed base and stability in technology. In the customer relationship segment there were following competitors- Compaq, IBM, HP and Group Name- Aarti Thakur, GhanShyam, Pawan Gehlot, Rakesh Sharma Class- PGPSM College- CHIMS
  4. 4. Date- 12th February Strategic Marketing 2009 other leading brands. But instead of large competition Dell was able to maintain its position and good relationships with its clients. Apart from this Dell focused on greater value addition resulted in higher gross margins for Dell in the relationship segments. 8. Inventory Management: 30 days inventory (Good Strategy) – As Dell offered customized products therefore it is needed to have stock of product components. The company maintained around 30 days of component inventory so that it can replenish quickly. 9. Trouble Shooting Services (Beneficial Initiative) - Dell had over 300 technical support representatives who could be accessed by phone at any time. Most problems were resolved in 24 to 48 hours. These strategies gave benefits to the company over the competitors. 10. Laptop offerings- Dell was able to anticipate the future and changing customer preferences as a result it started offering laptops. The strategies adopted by the firm assisted in growing it in competitive market. 11. Retail Channel (Not successful)- Michael Dell realized that the company’s foray into retail channels was not successful. Retail channel did not permit Dell to use of its major attributes, mass-customization of its products. “Strategic Decision” Dell and Topfer were supposed to resole three strategic decisions- 1. Balance of product emphasis- First of all they had to decide the balance of product emphasis between laptops, desktops and services. Means they were supposed to had clarity about their focus area. Here Group Name- Aarti Thakur, GhanShyam, Pawan Gehlot, Rakesh Sharma Class- PGPSM College- CHIMS
  5. 5. Date- 12th February Strategic Marketing 2009 we, as strategists, would suggest that instead of paying attention on single strategy they should take care of both the things. Products are needed to expand the market but services assist in making loyal customers and for long term business proper balance of all these things is needed. Though the laptop market is different from desktop market. It is emerging trends consequently should not be ignored. There were following issues related to laptop markets- a. Laptop business- Yes, Dell should enter again into the laptop market because this is emerging trends in customer preference. Customers preferences can not be ignored therefore Dell needs to enter into laptop market. b. Distribution of laptops- In our opinion there is no harm in selling the laptops by the same distribution channel. We have following supportive points in above decision- i. One is that Dell is having already setup for direct distribution and it was successful ii. Secondly, retail channel, as checked by Dell, was failed to serve the purpose. Hence Dell should use the same distribution channel 2. PCLAN Server Market- The second area of concern was Dell’s strategy in the PC LAN server market. This market was emerging as one of the dynamic, fast growing and fiercely competitive market in the industry. Due to not providing the feature/service Dell’s many of the customers were shifting to competitors products. One strong point here we would like to discuss is that if the company is not accepting and entertaining new trends then its difficult for it to survive in the market. Group Name- Aarti Thakur, GhanShyam, Pawan Gehlot, Rakesh Sharma Class- PGPSM College- CHIMS
  6. 6. Date- 12th February Strategic Marketing 2009 There were only few issues like quality, reliability of the products, which could handle by the firm easily. 3. International Expansion- On this particular point of decision we would like to comment only that global distribution of the customized products with the same efficiency and effectiveness is not possible. If the company, suppose, go for the international operations and gets failed then there are very high chances to lose its market value and image. Hence we would not suggest for Dell to go for international operations at this point of time. Thanks Group Name- Aarti Thakur, GhanShyam, Pawan Gehlot, Rakesh Sharma Class- PGPSM College- CHIMS