This document discusses the PC wars between Dell and Lenovo. It provides background on each company, including that Dell was founded in 1984 and is the third largest PC maker, while Lenovo was founded in 1984 and acquired IBM's PC business in 2005, making it the second largest PC maker. The document then examines the PC industry, noting it is very price competitive with low margins. It evaluates Dell's direct business model of building PCs to order with low inventory and costs. Lenovo uses an importation/offshore model working through wholesalers. The summary identifies strengths and weaknesses of each company's model. Dell needs to improve R&D, partnerships, and offer more options for customers. Lenovo

1. THE PC WARS
By Team G5 (MBA B)
Anoop M Paul
Geo George Elias
Manjima Fibin
Rajesh Krishnan Nair
Shabin Sajan
Ullas Udayakumar

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3. ABOUT DELL INC.
 Founded in Austin, Texas, U.S in November 4th 1984.
 Founder: Michael Dell.
 Employees: 1,03,300 employees all around the world.
 Dell is the third largest PC makers in the world after
HP and Lenovo.
 Dell is ranked 41st in the Fortune 500 companies list
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4. ABOUT LENEVO PVT. LTD.
 Founded in the year of 1984 by Liu Chuanzhi.
 Lenovo was incorporated in Hong Kong in 1988
under its previous name, Legend.
 Lenovo is the second largest PC maker in the
world after HP.
 In 2005 Lenovo acquire IBM personal computer
business and became a worldwide brand by
sweep ‘Chinese centric image’.
 Currently Lenovo markets ‘Thinkpad’ notebooks
and ‘Thinkcenter’ desktops under its brand.
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5. THE PC INDUSTRY OF TODAY
 Strangest Industry
 Very Price Competitive
 Systems and Components sold at low margins
 Rapid price fluctuations in the market.
 Vendors keep low inventories
 Vendors contend with high Bankruptcy Rates 5

6. INDUSTRY PROFITS AT A GLANCE
40%
Notebook average profit margin 2%
Netbook average profit margin 0.6%
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Operating source: Canalys estimates November 2009.
Margin
20
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0 Other
0 components Software
Peripherals
100%
Microprocessors Personal Services
computers
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source: Profit Pools: A Fresh Look at Strategy, O.Gadiesh & J.L.
Gilbert, Harvard Business Review, June 1998.

7. DELL INC. – DIRECT BUSINESS MODEL
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8. DIRECT BUSINESS MODEL . . .
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9. STRENGTHS OF DELL’S DIRECT
BUSINESS MODEL
 Dell Direct Business Model’s Five Principles :
1. Most Efficient Path to the Customer
2. Single point of Accountability
3. Build – to – order
4. Low Cost Leader
5. Standards Based Technology
 Supplier Relationships
 Pricing – low inventory cost & low product cost
 Customer Relationship Management (CRM)
 Increased application of Internet based technologies
 Low operating costs
 Customer Delight – the end result 9

10. WEAKNESS OF DELL’S DIRECT BUSINESS
MODEL
 Not a computer manufacturer, but a maker
 Lack of solid dealer / retailer relationships
 ‘Simple buying’ not possible since each product is
custom built
 No ‘touch and try’ feeling presented to customer
 Penetration of low-end market and rural market
 Requirement of a Credit Card for online purchase
 Customers’ perspective of Salesmanship
 High cost to bring in a Dual System Model – a
model having both Direct and Retail Sales
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11. LENOVO PVT. LTD –
IMPORTATION OFFSHORE BUSINESS MODEL
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12. LENOVO’S THREE PHASE PLAN – INNOVATION,
OPERATIONAL EFFICIENCY & CUSTOMER
SATISFACTION
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13. STRENGTHS OF LENOVO’S
IMPORTATION OFFSHORE BUSINESS MODEL
 Maintaining close contact with the corporate
customers, while handling all transactions
through wholesalers.
 All operational processes of importation and
distributation done by wholesalers.
 Cost of maintaining the local operation dropped
when the system came to practice.
 Good marketing and distribution strategy
 Strategic alliance with suppliers
 Quick after-sales responsiveness
 Effective Dual Business Model 13

14. WEAKNESS OF LENOVO’S
IMPORTATION OFFSHORE BUSINESS MODEL
 Additional step in the sales process
 Additional cost theoretically
 High delivery time
 Poor global perception
 Ignoring the potential market
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15. WHAT DELL MUST HAVE . . .
 Improved R & D and bring in innovations –
Others’ expenditure 4-5 % of Nett Revenue
 Partnership with microprocessors companies like
AMD who offer a varied technology
 Strategic relations with dealers / suppliers
 Give a ‘Touch and Try’ to its customers
 Should bring in a ‘Simple Buying’ experience
 Rural & Low-end market-share
 Flexibility to ‘Adapt and then Adopt’
 A Dual Business Model
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16.  Physical presence in potential and existing
markets
 An inorganic growth strategy
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17. CONCLUSION
We think that by implementing the
suggestion made above, the company Dell Inc.
can overtake its competitors to become No.1 in
the market. The thing the company need the
most is the flexibility to ‘Adapt and then Adopt’
as and when the market demands.
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18. BY
TEAM G5 (MBA B)
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