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Case: Dell Computer – Using E-commerce to Support the Virtual Company<br />GROUP-4<br />Alok Joshi 	              - 2009EP...
Topics<br /><ul><li> Background and Overview
 Business Strategy
 Organization of Business Activities
 Internet and E-commerce
 Future Strategy for Growth</li></li></ul><li> Dell – Background and Overview<br /><ul><li>Founded by Michael Dell – 1984
Youngest CEO in the World
Included in Forbes 500 list – 1992
Forbes 2010 Rank – 38, Revenue $53 Billion, Profit $1.4 Billion
Number one PC seller in US – 1999 (No. 2 in the world)
Adopted internet selling model – 1996
Inventory turnover – 60 times a year
Competitors – Compaq, IBM, HP</li></li></ul><li>Dell – Background and Overview (contd.)<br /><ul><li>Design, develop, manu...
Customized to individual customer requirements
Products and Services
Enterprise solutions: include servers, storage, and related services, software and peripherals
Client categories: include mobility, desktop products, and also related services, software and peripherals</li></li></ul><...
Customer financial services for business and consumer customers in the U.S.</li></li></ul><li>Business Strategy - Direct s...
No inventory in channel to lose its value before sale
New product can be introduced without waiting for old inventory clearance
60 times inventory turnover vis-à-vis 12-15 times for most vendors
Negative cash conversion cycle </li></li></ul><li>Business Strategy – Direct Customer Relationship<br /><ul><li>Detailed c...
Information can be used for add-on Product and services – Replacement and product upgrade
Customer calls Dell – PC Outsourcer – Full life cycle management</li></li></ul><li>Business Strategy – Dell E-Commerce Com...
No channel conflict – resellers / distributors
Build to order – Opportunity to customer to configure products online
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Epgp(one year) 2009-10_it strategy_groupassignment_case-dell_final

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

  1. 1. Case: Dell Computer – Using E-commerce to Support the Virtual Company<br />GROUP-4<br />Alok Joshi - 2009EPGP003<br />Kapil Wadhwa - 2009EPGP013<br />Mohammed Jaipuri - 2009EPGP016<br />Prateek Narula - 2009EPGP024<br />Rajendra Inani -2009EPGP027<br />Prof. S. Ramanathan EPGP 2009-10<br />IT StrategyIIM, Indore<br />
  2. 2. Topics<br /><ul><li> Background and Overview
  3. 3. Business Strategy
  4. 4. Organization of Business Activities
  5. 5. Internet and E-commerce
  6. 6. Future Strategy for Growth</li></li></ul><li> Dell – Background and Overview<br /><ul><li>Founded by Michael Dell – 1984
  7. 7. Youngest CEO in the World
  8. 8. Included in Forbes 500 list – 1992
  9. 9. Forbes 2010 Rank – 38, Revenue $53 Billion, Profit $1.4 Billion
  10. 10. Number one PC seller in US – 1999 (No. 2 in the world)
  11. 11. Adopted internet selling model – 1996
  12. 12. Inventory turnover – 60 times a year
  13. 13. Competitors – Compaq, IBM, HP</li></li></ul><li>Dell – Background and Overview (contd.)<br /><ul><li>Design, develop, manufacture, market, sell, and support a wide range of products and services
  14. 14. Customized to individual customer requirements
  15. 15. Products and Services
  16. 16. Enterprise solutions: include servers, storage, and related services, software and peripherals
  17. 17. Client categories: include mobility, desktop products, and also related services, software and peripherals</li></li></ul><li>Dell – Background and Overview (contd.)<br /><ul><li>Broad range of configurable IT and business services, including infrastructure technology, consulting and applications, and business process services
  18. 18. Customer financial services for business and consumer customers in the U.S.</li></li></ul><li>Business Strategy - Direct sales – Build to order <br /><ul><li>No build up of expensive inventory
  19. 19. No inventory in channel to lose its value before sale
  20. 20. New product can be introduced without waiting for old inventory clearance
  21. 21. 60 times inventory turnover vis-à-vis 12-15 times for most vendors
  22. 22. Negative cash conversion cycle </li></li></ul><li>Business Strategy – Direct Customer Relationship<br /><ul><li>Detailed customer data (Name / equipment / duration of relationship)
  23. 23. Information can be used for add-on Product and services – Replacement and product upgrade
  24. 24. Customer calls Dell – PC Outsourcer – Full life cycle management</li></li></ul><li>Business Strategy – Dell E-Commerce Company<br /><ul><li>First web site – 1994 – ahead of competitors – selling online (Dell.com)
  25. 25. No channel conflict – resellers / distributors
  26. 26. Build to order – Opportunity to customer to configure products online
  27. 27. By 2000 - $ 50 Million a day web enabled sale
  28. 28. Internet to coordinate entire value network – Suppliers / Logistic Providers/Distributors of third party products, SI, Service providers
  29. 29. Tight information linkage between Dell and its customers</li></li></ul><li>Business Strategy -E – Works Strategy<br /><ul><li>Dell know internet and could help its customers achieve similar success
  30. 30. Dell taps a high growth market and improve its margin without adding workforce
  31. 31. Information infrastructure sales force through service and s/w providers
  32. 32. Actual labor incentive consulting done by partners</li></li></ul><li>Business Strategy -Dell Core competencies<br /><ul><li>Selling hardware – Services does make money
  33. 33. High margin items – Large servers, Storage devices for e-commerce, commodity desktops and laptops
  34. 34. Three core operating systems – Windows , Linux, Novell)
  35. 35. R&D investments - enhance capabilities of sever line
  36. 36. Sticking to Intel Hardware Platform</li></li></ul><li>Business Strategy -Dell Ventures<br /><ul><li>$700 million investment in 50 internet companies
  37. 37. Broadband, Wireless communication, B2B, B2C, ASPs, Server and Storage infrastructure, Internet content and e-consulting
  38. 38. Access to new technology without expanding its own R&D
  39. 39. Financial gains on company going public</li></li></ul><li>Business Strategy -Large corporate <br /><ul><li>Own sales force directly deal with CIO / Top executives
  40. 40. Competitive prices
  41. 41. High level of support
  42. 42. Focus of selling without distraction of offering a full line of H/W and Services
  43. 43. Cut down on unwanted services by established player
  44. 44. Extranet based Premier Pages (later Premier Dell.com)</li></li></ul><li>Business Strategy -Dell’s success over its competitors<br /><ul><li>Virtual corporation - Directly to customers - being in center of all communication
  45. 45. Customer focus, Supplier partnerships, Mass customization, JIT
  46. 46. Innovation – Use of IT to coordinate across company boundaries – efficiency - effectiveness
  47. 47. Blur traditional boundaries in the value chain
  48. 48. Complex web of relationship – not doing things by himself
  49. 49. Only assembly - Standard parts and components manufactured by others</li></li></ul><li>Organization of Business Activities<br /><ul><li>Internal Organization
  50. 50. Organized along geographic lines
  51. 51. Decentralized decision making in individual geographies
  52. 52. Customer Segments
  53. 53. Relationship customers
  54. 54. Home and small business
  55. 55. Public Sector </li></li></ul><li>Organization of Business Activities<br /><ul><li>Product Development & Marketing
  56. 56. Product line similar across different geographies
  57. 57. Local customization-language, power sources etc
  58. 58. Worked with recognized partners like MS, Intel etc
  59. 59. Offered wide range of third party softwares and accessories
  60. 60. One third Dell’s employees bas is in sales/marketing
  61. 61. credit for sale of PC’s to sales person
  62. 62. Customers choose the configuration of there PC’s</li></li></ul><li>Suppliers<br />Dell<br />Final Customer<br />Organization of Business Activities<br /><ul><li>Manufacturing and Logistics
  63. 63. Manufacturing by regions
  64. 64. Build to order manufacturing ~one week turnaround
  65. 65. Suppliers close to the plants
  66. 66. In some cases the suppliers is in the plant itself
  67. 67. Sophisticated IT system and electronic linkage with suppliers for coordination and control</li></li></ul><li>Leveraging E-Commerce<br /><ul><li>Dell was much less mature compare to IBM and HP at time when Internet took off
  68. 68. Direct Business Model
  69. 69. Internet Orders
  70. 70. Phone Calls
  71. 71. Mass catalog mailings
  72. 72. Value Proposition
  73. 73. Easy Ordering process
  74. 74. Customization & Flexibility
  75. 75. Latest Technology
  76. 76. Easy access after sales support
  77. 77. Personalized service attracted B2B customers</li></li></ul><li>The Dell Value Chain <br /><ul><li>Close Relations with Customers & Suppliers
  78. 78. Elimination of Bull Whip Effect & Early to Market
  79. 79. Collection of Payments and Negative Working Capital
  80. 80. Assemble / Made to Order & Faster Inventory Turn-over
  81. 81. Reduced Costs => Competitive Pricing
  82. 82. Solid Information management & Internal Alignment</li></li></ul><li>Embracing the Internet<br />In its Supply Chain:<br /><ul><li>Partners access to Order information
  83. 83. Close co-ordination between IT and Dell Online
  84. 84. High Supply Chain Visibility allows Partners to plan based upon demand
  85. 85. Outsourcing services through system integration with service partners</li></ul>Customer:<br /><ul><li>Improved Customer Reach
  86. 86. Online Ordering & Self Service Tools
  87. 87. Paper-less transactions
  88. 88. IT Management Tool
  89. 89. e.g. B2B premier pages
  90. 90. Outsourcing on-site services through system integration with service partners</li></li></ul><li>Dells IT and Ecommerce Applications<br />Logistics Company<br />CMs/OEMs<br />Systems Integrators<br />EDI<br />Dell<br />EDI<br />I2<br />Intranets<br />DOMs<br />DPS<br />Glovia<br />Tech Docs<br />Customer<br />EDI<br />Extranet<br />Finance<br />Procurement <br />MIS<br />Helpdesk<br />E-Com<br />Extranet<br />Components<br />Supplier<br />I2 msgs<br />Internet <br />EDI<br />Third Party HW and SW suppliers<br />Repair and Support Services<br />EDI <br />EDI <br />Distributors<br />
  91. 91. Performance<br />
  92. 92. Dell’s failures to Leverage E-commerce<br /><ul><li> Failure to convert E-Marketplace into a success due to lack of customer interest and vendors
  93. 93. Lack of integration between IT and Dell Online tools </li></ul> - No Global Structure<br /> - Chaos <br /> - Loss of business<br /><ul><li> Not able to push online sales in China and India</li></ul> - Lesser Usage of Credit Cards<br /> - lesser usage of Internet in semi-urban areas<br /> - Problems of Distribution Coverage<br /><ul><li> Touch and Feel of the product for Indian Customers</li></li></ul><li>Future Strategy for Growth<br /><ul><li>Increased Usage of E-Commerce in Developing Countries</li></ul> - Education Sessions to Institutional/Corporate Customers<br /> - Schemes/Discounts on Online bookings<br /><ul><li>Value added services - Usage of Business Analytics</li></ul> - Study the nature of purchase from Existing database<br /> - Design the value offerings based on spending pattern<br />
  94. 94. Future Strategy for Growth ( Contd..)<br /><ul><li>Better Usage of Knowledge Sharing tools </li></ul> - Sharing of Best Practices and Support solutions<br /> - Driving Innovation for offerings to new Markets<br /><ul><li>Partner network for Geographical Expansion</li></ul> - Better delivery and distribution in new markets<br /> - Onsite support<br /><ul><li>Region specific Customizations </li></ul> - Opening of stores for touch and feel experience<br /> - Presence of local sales, customer service and support teams<br />
  95. 95. Questions?<br />

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