STRATEGIC MANAGEMENT

“ CASE STUDY ON DELL COMPANY ”

Presented by:
• Imran Shinwari
$2.0B
MBA (029)
 OUTLINES of CASE STUDY

History
Vision statement
Mission statement
Organizational structure
Internal factors
Competitors
Conclusion

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 OBJECTIVES
History
Vision statement
Mission statement
Strategy statement
Financial analysis
SPACE
BCG
IFE
conclusion

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 Mission Statement: “To provide customers with superb value,
high quality, relevant technology, customized systems, superior
service and support, and products and services that are easy to
purchase and use.”
Strategy Statement: “To do business with its consumers one-on-
one, through the phone or internet.”

In doing so, Dell will meet customer expectations of:

• Highest quality
• Leading technology
$2.0B • Competitive pricing
• Individual and company accountability
• Best-in-class service and support
• Flexible customization capability
• Superior corporate citizenship
• Financial stability
 MICHAEL DELL

Three Golden Rules of Dell:

1.Disdain Inventory
2.Always listen to the customer
3.Never sell indirect

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 DELL Inc - TIMELINE
The founder of Dell. The company he founded in ’84 for $1,000.
1983 develop an interest in personal computers.
1984 with sales approaching $80,000 a month.

1983-- Michael Dell starts business of pre-formatting IBM PC HD’s on

weekends
1985-- $6 million sales, upgrading IBM compatibles for local businesses
1986-- $70 million sales; focus on assembling own line of PC’s

1988-- Initial IPO $30 million

1990-- $500 million sales; with an extensive line of products

1996-- Dell goes online; $1 million per day in online sales; $5.3B in annual sales
1997-- Dell online sales at $3 million per day; 50% growth rate for 3 rd
consecutive year, $7.8B in total annual sales.

1999-- Dell Computer was the largest retailer on the internet.

2005-- $49.2B in sales.

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 Dell Computer Corporation

A Fortune 200 company in just 14 years

Dell is the World's largest PC maker having Build To Order
model.
No 1 in profitability for the computer systems industry
As of 2006 it employs more than 63,700 people. Customers
in 170+ countries.
For the last couple of years it has held its position as market
leader (it took it from rivals Hewlett-Packard).
According to the Forbes 50 2005 list, Dell ranks as the 28th-
largest company in the United States by revenue.
In 2006, Fortune magazine ranked Dell as No. 8 on its annual
list of the most-admired companies in the United States.
Major competitors are IBM, APPLE, HP.

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 DELL Brand-Names for Its product ranges

OptiPlex: Office desktop computer systems

Dimension: Consumer Desktop computer systems
Latitude: Commercially-focused laptops
Inspiron: Consumer laptops
Precision: Workstation systems and high-performance laptops
PowerEdge: Larger corporate servers
PowerVault: Direct-attach and some network-attached storage (NAS)
Dell EMC: Storage area networks
XPS: Enthusiast/high-performance systems
Axim: PDAs utilizing Microsoft's Windows Mobile
Dell On Call: Extended support services

Dell Digital Jukebox (DJ) MP3 Players (discontinued, August 18 2006)

Dell monitors LCD/plasma TVs and projectors: HDTV and monitor use

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 DELL’s SUCCESS

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 Dell’s Global Presence
The Americas EMEA Asia Pacific China

Austin
Texas Limerick
Ireland

Nashville Xiamen
Tennessee China

Sales Offices in 43 countries

Eldorado do Sul Sales presence in 170 countries Penang
Brazil 6 Manufacturing Sites Malaysia

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 Dell’s Competitive Advantage

Dell’s Direct Business Model

Commitment to Open Standards

Order Velocity/Build to Order

Supply Chain Optimisation

Continuous Process Improvement

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 Benefits of Dell Direct
Model

Better understand customer needs

Customers receive exactly what they
want: not standard solution
Minimized inventory
New technology delivered immediately

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 Dell Growth

$55 FY05 revenue of $49.2 billion 20%

$50 Market Share FY05 = 17.8 %
18%
$45 16%

Units Market Share %

$40 14%
Revenue Mkt Shr
$35
Revenue $ Bn

12%
$30
10%
$25
8%
$20
$15 6%
$10 4%
$5 2%
$0 0%
FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05

(Annualized)
www.dell.comSource: IDC All Form Factors 13
 DELL Growth Highligh

Growth Highlights

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 PROFITABILITY
COMPARISON

Profitability Dell Hewlett-Packard IBM GATEWAY APPLE

Gross Profit
17.50% 23.90% 41.40% 8% 27%
Margin

Pre-Tax Profit
7.60% 5.40% 28.10% -15% 4.66%
Margin

Net Profit Margin 6.00% 4.10% 9.50% -15% 3.3%

Return on Equity 75.6% 9.6% 26.5%

Return on Assets 14.9% 4.7% 8.2%

Return on
Invested 45.8% 7.4% 10.9%
Capital

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 SWOT Analysis Dell

Strengths

Strong supplier relationship

Lower unit cost
Strong quicker reaction to customer wants and need
Better reach at lower cost
Strong customer retention and relationship
Brand equity.

Weakness

Dependence on volume.
Inventory

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 Opportunities

International growth.
Pricing flexibility.
Computer moving towards commodity status.
Rapidly changing technology leading to upgrade.

Threats

Regional competition.
Changes in technology.
Prolong economic downturn.
Reliance on supplier.
Commodity pricing.

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 INTERNAL FACTOR EVALUATION
MATRIX
No.S INTERNAL STRENGTH WEIGHT RATING WEIGHTED
SCORE
1 Production adaptability .10 4 .40
2 Financial ratio .10 4 .40
3 Product reliability .10 4 .40
4 Customer relationship .10 4 .40
5 Build to order .10 3 .30
6 Competitive price .10 3 .30
7 Leading technology .10 3 .30
8 Supply chain .10 4 .40
INTERNAL WEAKNESS WEIGHT RATING WEIGHTED
SCORE
1 Little product .05 3 .15
diversification
2 No business diversification .10 3 .30
3 On man show .05 2 .10
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TOTAL 1.00 3.50
 BOSTON CONSULTING GROUP MATRIX

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 SPACE MATRIX
Factors determining competitive advantage 0 1 2 3 4 5 6
Market share Small 3 Large
Product quality Inferior 5 Superior
Product life cycle Late 1 Early
Product replacement cycle Variable 3 Fixed
Competitions capacity utilization Low 3 High
Technology know how Low 5 High
Vertical integration Low 3 High
innovation slow 4 fast
27 0 1 12 4 10 0

Factors determining Financial

0 1 2 3 4 5 6
Strength
Return on investment Low 3 High
Leverage liquidity Imbalanc 5 Solid
e
Liquidity imbalanc 5 Solid
e
Capital required verses capital High 2 Low
available
Cash flow low 3 High
Ease of exit from the market difficult 1 Easy
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Risk involve in business much 3 Little
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 Factors determining environment stability 0 1 2 3 4 5 6
Technological changes Many 2 Few
Rate of inflation High 5 Low
Demand variability Large 1 Small
Price range of competing products Wide 1 Narrow
Barriers to entry into market Few 5 Many
Competitive pressure/rivalry High 0 Low
Price elasticity of demand Elastic 0 Inelastic
Pressure for substitute product High 3 Low
17 0 2 2 3 0 10 0
Factors determining industry strength 0 1 2 3 4 5 6
Growth potential Low 4 High
Profit potential Low 4 High
Financial stability Low 5 High
Technology know-how Simple 5 Complex
Resource utilization Inefficient 6 Efficient
Capital intensity Low 3 High
Ease of entry into market Easy 6 Difficult
Productivity, capacity, utilization Low 6 High
Manufacturers barraging power Low 6 High
45 0 0 0 3 8 10 24

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 THANK YOU

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