PC Wars - Dell V/S Lenovo

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About the strategies worked on by Dell and Lenovo, to keep up in their market share.

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PC Wars - Dell V/S Lenovo

  1. 1. THE PC WARS By Team G5 (MBA B) Anoop M Paul Geo George Elias Manjima Fibin Rajesh Krishnan Nair Shabin Sajan Ullas Udayakumar
  2. 2. 2
  3. 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 3
  4. 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. 4
  5. 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. 6. INDUSTRY PROFITS AT A GLANCE 40% Notebook average profit margin 2% Netbook average profit margin 0.6% 30Operating source: Canalys estimates November 2009. Margin 20 10 0 Other 0 components Software Peripherals 100% Microprocessors Personal Services computers 6 source: Profit Pools: A Fresh Look at Strategy, O.Gadiesh & J.L. Gilbert, Harvard Business Review, June 1998.
  7. 7. DELL INC. – DIRECT BUSINESS MODEL 7
  8. 8. DIRECT BUSINESS MODEL . . . 8
  9. 9. STRENGTHS OF DELL’S DIRECTBUSINESS 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. 10. WEAKNESS OF DELL’S DIRECT BUSINESSMODEL 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 10
  11. 11. LENOVO PVT. LTD –IMPORTATION OFFSHORE BUSINESS MODEL 11
  12. 12. LENOVO’S THREE PHASE PLAN – INNOVATION,OPERATIONAL EFFICIENCY & CUSTOMERSATISFACTION 12
  13. 13. STRENGTHS OF LENOVO’SIMPORTATION 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. 14. WEAKNESS OF LENOVO’SIMPORTATION OFFSHORE BUSINESS MODEL Additional step in the sales process Additional cost theoretically High delivery time Poor global perception Ignoring the potential market 14
  15. 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 15
  16. 16.  Physical presence in potential and existing markets An inorganic growth strategy 16
  17. 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. 17
  18. 18. BYTEAM G5 (MBA B) 18

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