- 1. Strategy AuditStrategy AuditononDell ComputerInc.Dell
ComputerInc.Presented byPresented ToDr Sanyia EL Galaly
2. Dell Corporation originationDELL INC. was founded in 1984 by
Michael Dell atage 19 while he was a student living in a dormitory
atthe University of Texas. As a college freshman, hebought personal
computers (PCs) fromthe excessinventory of local retailers, added
features such asmore memory and diskdrives, and sold them out ofthe
trunkof his car. He withdrew $1,000 in personalsavings, used his
caras collateral fora bankloan,hired a few friends, and placed ads
in the localnewspaperoffering computers at 10%15% belowretail
price. Soon he was selling $50,000 worth of PCsa month to local
businesses. Sales during the firstyearreached $600,000 and doubled
almost every yearthereafter. Afterhis freshman year, Dell left
school torun the business full time. 3. Company Background Dell
Inc. established in 1984 by MichaelDell Inc. established in 1984 by
MichaelDellDell Operational regions : Americas; Europe,Operational
regions : Americas; Europe,Middle East and Africa (EMEA);
Asia-Middle East and Africa (EMEA); Asia-Pacific and Japan
(APJ)Pacific and Japan (APJ) Employs more than 82,700 peopleEmploys
more than 82,700 peopleworldwide.worldwide. Grew during the 1980s
and 1990s toGrew during the 1980s and 1990s tobecome an
internationally known brand.become an internationally known brand.
Direct Business Model is the foundationDirect Business Model is the
foundationfor Dells business.for Dells business. Dell was the
number one supplier ofDell was the number one supplier ofcomputer
systems and became secondcomputer systems and became
secondworldwideworldwide 4. Company History In 1996, Dell began
selling computers via its web site. 2001, Dell overtookCompaq to
become the largest sellerofpersonal computers in the US. Dell
achieves No. 1 ranking in global market share in 2001 In 2003 ,
name was changed to "Dell Inc. In 2006, Dell purchased the
computerhardware manufacturerAlienware In January 2009, Dell
announced that they will withdraw allmanufacturing from Limerickand
move it to its new plant inthe Polish city of Lodz by January 2010.
Raised theircost-reduction target to 4$ billion. Cost Cutting
methods leaded tothe revenue Generated peremployee 1mio (tripled of
IBM,twice HPs) outsourced some operations (ie component production
, expressshipping) own assembly line in low laborwages countries
Cost pressuresleaded to change manufacturing strategy (closed
companysdesktop plants in Texas and Tennessee in 2008 and 2009
2011)to outsource (In Europe closed its Ireland plant and sold its
5. Organizational Departments Strategies Just on Time Technique
Mastered process engineering andsupply chain management Spent less
on R&Dthan did otherOpponents ( 1% of sales on R&Dversus
the 5% typically invested byotherlarge computerfirms) Imitatorin
New technologies 95% of Dells notebookcomputerswere assembled in
Dells plants inMalaysia and China. Dell also plans to double
itsEnterprise business (server, storageand networking) from ~18.0
billionto ~$30.0 billion by 2014. Thisexpansion activity will be
backed bycontinued acquisition of scalabletechnologies and strong
organicgrowth. 6. Dell Inc. FourPsA technology imitating Product
that have the newFeatures afterbeing standardized.Dell machines
were made to orderand delivereddirectly to the customer. The
company had nodistributors orretail stores.Dell PCs had
consistently been listed among the bestPCs on the market by PC
World and PCMagazine.Competitive Price low cost (not perceived
asproviding high-quality Products) 7. Market is Changing 2006 sales
Growth 5%with aForecast 7% sales Growth 2010-2015. Between 2006
-2010,HPreplacedDell as Market leader, & Dell wasnow battling
with Acerforsecondplace Personal computerbecame acommodity ,
consumers were nolongerinterested in paying top dollarfora
computerunless it wasunique, what created a markettrend towards
Apple Mac Laptops. New Tablet Technology Cut 25% ofPC notebooksales
since itsintroduction in April throughAugust, 2010. Dell countered
the iPad with a tabletcomputercalled Streakin May 2010,but failed
to generate muchenthusiasm orsales forthis product. 8. Market is
Changing corporate buyers increasinglypurchased
theircomputerequipmentas part of a package of services toaddress
specific problems, service-oriented rivals like IBM, HP, andOracle
had an advantage overDell. Allof these competitors had made
largecommitments to servers, software, andconsultingall having
highermarginsthan personal computers. IBMhadsold its laptop, hard
drive, and printerbusinesses to focus on building itsservices
business Hewlett-Packard acquired ElectronicData Systems in 2008 to
boost itsexpertise in services. By offering customers a package
ofservers, software, and storage, HPdominated the servers business
with32% market share, with IBMcloselyfollowing with 28% share of
themarket. Oracles acquisition of Sun Microsystemsgave it 8% of the
servermarket. Dell offered x86 open-systemservers. Inorderto
bettercompete in the largeenterprise market segment. Dell purchased
Perot Systems, an ITservices company, in 2009. Even afterthis
acquisition, however, servicesaccounted foronly 13% of Dells
sales.In 2010, Dell attempted to acquire 2PAR,a data storage firm,
but was outbid byHP. 9. VISION STATEMENTDells vision is to lead in
all regions we serve. The foundation of our success is the same in
theUnited Kingdom and France , China and Japan, Canada and other
countries.Customers want technology products that are relevant to
them, offer great valueand can be easily purchased and used. Thats
what our team around the globeconsistently delivers). Dells vision
is quite focused and assumes customerneeds to be somewhat
homogenous throughout the world.Evaluate VisionDell provides a
classic example of how the principles of strategicmanagement have
been used to translate an innovative vision into asuccessful and
sustainable enterprise. Their vision statement basically tellsthe
way they do their business. They want to be successful in the
digitalworld for this they rely on lates ttechnology. Dell provides
quality productsto cater the needs of the people. In intend to
build good relationship withtheir customers and suppliers.KEY
TOWARDS STRATEGIC PLANING 10. MISSION STATEMENT Dells mission is to
be the most successful Computer Company inthe world atdelivering
the best customers experience in markets we serve. In doing so,
Dellwill meet customer expectations of: Highest quality , Leading
technology, Competitive pricing ,Individual and company
accountability, Best-in-class service and support, Flexible
customization capability, Superior corporate citizenship,
FinancialstabilityEvaluate Mission The company primarily deals in
PCs, servers and software operating on twoscales of business namely
B2B and B2C. This customer base includes largeenterprises, small
and medium businesses, government and consumers. Dell is aglobal
company with presence in over world wideKEY TOWARDS STRATEGIC
PLANING 11. Mission Statement Evaluation MatrixFirm
CustomerProducts& servicesMarkets Profit
&GrowthTechnologySelf-ConceptPublicImageEmployeesDellInc,Yes
Yes Yes Yes Yes Yes Yes No Covered most of the elements that should
be cover however it neglectedCovered most of the elements that
should be cover however it neglectedthe employees.the
employees.un-memorable Mission , Too Longun-memorable Mission , Too
Long..VALUESVALUESfirst priority is to be a successful business and
that means investingfirst priority is to be a successful business
and that means investingforgrowth and balancing short term and long
term.forgrowth and balancing short term and long term. 12. the
Board of Directors of Dell (the "Board") has established
aGovernance and Nominating Committee (the "Committee") Most Of the
Top Management were assembled and integrated ofexperienced
executives from companies like Motorola, Hewlett-Packard,and Apple.
July 2004, Kevin Rollins replaced Michael Dellas Chief Executive
Officer,allowing the founder to focus on being Chairman of the
Board. Thissituation did not last long. Michael Dell owned 11.7%
out of the org shares , however all the othermembers owned 1%
onlyCorporate Governance 13. Corporate GovernanceName
DesignationMichael S. Dell Chairman & CEODonald J. CartyLaura
Conigliaro FinanceWilliam H. Gray, III Governance and Nominating
(Chair); Leadership Development andCompensationAlex J. Mandl
Presiding DirectorAudit (Chair), Governance and NominatingRoss
Perot, Jr.James W. Breyer Finance (Chair)Janet F. Clark
AuditKenneth M. Duberstein Governance and NominatingGerard J.
Kleisterlee Leadership Development and Compensation, FinanceKlaus
S. Luft AuditShantanu Narayen Leadership Developmentand
Compensation (Chair)Board members include: 14. EXTERNAL ANALYSES -
PEST ANALYSESExternal Environment A scan of the external
macro-environment inwhich the firm operates can be expressed in
terms of the followingfactorsExternal Environment A scan of the
external macro-environment inwhich the firm operates can be
expressed in terms of the followingfactorsPolitical FactorsIssues
of environment policies has affected Dellas Dell came under
significant pressure from environmentalgroups across the US to
assume responsibility for its oldproducts and this experience
sensitized company officials tothe risks and opportunities of state
and federal e-wasteregulations and the need to take proactive steps
against them.Economic FactorsHigh tariffs on IT products makes Dell
difficult to enterother markets apart from USAdell aimed to
manufacture its products which are moreuser friendly and can be
afforded by youngprofessionals, because purchasing power of
workingpopulation saw an increase over the past few decades.Social
FactorsIncrease of younger population and working population
haveled to the increase of the use of computers. A
technologicalrevolution has been around the corner, people have
becometechsavy ,that have resulted in the increase in the demandfor
computers .These days people have time constrains and asa result of
it they prefer to buy the product online ,which hasgiven Dell an
advantage over others because of dell.com.IT FactorsTechnological
changes are happening at a veryfast rate due to which Dell is able
to provide advancedtechnology products to the customers. As a
result oftechnological changes Dell has also increased theirproduct
line. It is adopting to the technological changesas he old
technology is becoming obsolete. One of themost important affets of
technological changes thathave led to the increase of the demand of
Dellcomputers is their Direct Business Model. They haveexcellent
ecommerce capabilities, which can be seenwith the success of the
dell. The recent technologicalchanges can be seen in their recent
products like NewPower Edge Serversthe network-internet,extranet to
reach the corners ofthe world. 15. Ecological FactorsThe dot com
bubble was in between1997-2000 ,which was in the boom of the
Company growth,however it didnt affect the company
growthrates..Legal FactorsOperating in USA that depends on the
Privatesector in the economy offered Dell a bigopportunity to grow
with no legal issuesHIGHModerateINTENSEHIGHHIGHExternal
Analysis:Porters Five Forces 16. External Analysis: - Porters Five
ForcesThreat of New Entrants High IBM, Compaq and HP also entered
to Market The entry of new comers is quite difficult because of the
entrybarriers that are caused by: Buyer loyalty Brand name Low
priceAward winning customer service Customization
Decreasingprofitability shows that there is a threat of new
entrants. HPovertook dell few yrs back.Substitutes High Strong
presence of PCs throughout society One computer for every three
people in the U.S. Customer service Direct Business ModelHowever,
high price, and lack of software support prevent people
fromswitching to Apple system. 17. External Analysis - Porters Five
ForcesThreat of Rivalry: Moderate Price War Decreasing
profitability Low differentiation however, in the midst of sever
competition, Dellcan still gain market share from other
competitors. That provesDells business strategies have been
successfulBargaining Powerof Buyer: High Highly price sensitive The
cost leader has high market share which leads to highbargaining
power relative to its suppliers Reliability and customer service
become important factors. Dells products are very reliable and
customer service isoutstanding.These two factors help Dell to
create certain brand loyalt. But thatsgiven the fact that the
Company set the prices very low. If the pricesare raised too high,
customers will not hesitate to switch. 18. External Analysis -
Porters Five ForcesBargaining Powerof Supplier: High Dell has to
rely on many suppliers as a PC requires assembling ofthousands of
independent parts. Some parts are manufactured bydell or other low
power suppliers. But there are some componentsmanufactured by
monopolies which are standard for all PC in theglobe. Microsoft and
Intel products are standard for PC productsand these suppliers do
have high power over their buyers. 19. External Analysis SWOT
AnalysisSTRENGTHSProduction AdaptabilityFinancial PositionProduct
ReliabilityCompetitive PricesWEAKNESSES Rapid I.T. Advancement
Price WarsStrong Brands in The Market (IBM)OPPORTUNITIES Global
MarketsInternet UsageOutsourcingEcommerceMaintaining Low Price
LeadershipGlobal PresenceTHREATS I.T. Advancement Price WarsStrong
Brands in The Market (IBM)Changing Consumer NeedsHP / Compaq
MergerEmerging Markets. 20. Fromthe SWOT Analysis it is clearthat:-
firms very strong in the market and major weaknessesarekeeping up
with the I.T. advancement, and ensuring tocatch with industry
leader HP.Dells global presence creates opportunities forexpansion
inthe overseas markets. Its awareness about theenvironment makes it
a responsible investor. Its userfriendly web site makes it easy for
those who are notcomputer expert to go online and do the shopping
in avery safe environment.External Analysis SWOT Analysis 21.
External FactorEvaluation Matrix4 = Superior Response; 3 = Above
Average Response; 2 = Average Response and 1 = Poor ResponseNo.
Weight RatingWeightscore CommentsOPPORTUNITIESThe 3.50 WEIGHTED
SCORE in Dells EFEMatrix represents that Dell is respondingin an
excellent way to its opportunitiesand threats in the I.T.
industry.In other words we can conclude thatDells strategies
efficiently and effectivelytake advantage of its opportunities
andtake serious steps to minimize thepotential threats.The WEIGHTS
are industry based andRATINGS represent the effectiveness offirms
strategy. Or we can conclude howeffectively Dells strategy is
responding tothe factors.1 Global Markets 0.1 3 0.32 Internet Usage
0.1 3 0.33 Outsourcing 0.1 4 0.44 Ecommerce 0.2 4 0.85Maintaining
Low PriceLeadership 0.05 3 0.156 Global Presence 0.05 2 0.17 EMS
0.1 4 0.4THREATS1 I.T. Advancement 0.05 4 0.22 Price Wars 0.05 4
0.23 Strong Brands in The Market(IBM)0.1 3 0.34 Changing Consumer
Needs 0.05 4 0.25 HP / Compaq Merger 0.05 3 0.15Total Price ($ ) 1
3.5 22. External FactorEvaluation MatrixIn CPM ratings represents
Strengths and Weaknesses. 4 = Major Strength; 3 = Minor Strength; 2
= Minor Weaknessesand 1 = Major Weakness.DELL IBM HPNo. Critical
Success factor Weight RTG SCR RTG SCR RTG SCR Comments1 Ecommerce
0.15 4 0.6 4 0.6 4 0.6Dells 3.65 score represent that it
iscompeting fiercely with itscompetitors in the domestic andglobal
markets.2 Leader Ship 0.15 4 0.6 4 0.6 4 0.63 Global Expansion 0.1
3 0.3 4 0.4 3 0.34 Competitive Prices 0.05 3 0.15 4 0.2 4 0.25
Service/Repair 0.1 3 0.3 4 0.4 3 0.36 Direct to Customers 0.05 4
0.2 3 0.15 4 0.27 Adaptability 0.1 3 0.3 4 0.4 3 0.38Understanding
Customers0.1 4 0.4 4 0.4 3 0.39EMS0.05 4 0.2 3 0.15 3 0.1510Worlds
Leading Web Site0.05 4 0.2 4 0.2 3 0.1511Quality Control0.1 4 0.4 4
0.4 3 0.3Total 1 3.65 3.9 3.4 23. Internal FactorEvaluation Matrix4
= Superior Response; 3 = Above Average Response; 2 = Average
Response and 1 = Poor ResponseNo. Internal Factors Weight
RatingWeightscore CommentsStrengthDells WEIGHTED SCORE of
3.50represent that it is excellent in its overallinternal
strategies when it come toexplore strengths and weaknesses.The
WEIGHTS are industry based andRATINGS represent the effectiveness
offirms strategy. Or we can conclude howeffectively Dells strategy
is respondingto the factors.1 Production Adaptability 0.1 4 0.42
Financial Ratio 0.1 4 0.43 Product Reliability 0.1 4 0.44 C.
Relationship 0.1 4 0.45 Build To Order 0.1 3 0.36 Comp Prices 0.1 3
0.37 Leading tech 0.1 3 0.38 Distribution channel 0.1 4
0.4Weakeness1 Little Product Diversification0.05 3 0.152 No
Business Diversification0.1 3 0.33 One Man Show0.05 2 0.1Total
Price ($ ) 1 3.45 24. Strategic Factors Analysis Summary (SFAS)
Matrix4 = Superior Response; 3 = Above Average Response; 2 =
Average Response and 1 =Poor ResponseNo. Internal Factors Weight
RatingWeightscore Duration CommentsShort Med LongS1 Products
Adaptability 0.11 4 0.44 x Key Factor of successS2 Build To Order
(JIT) 0.05 3 0.15 x xIncrease the window for dircectcustomerS3
Competitve Prices 0.08 3 0.24 x ximprove its position againstmarket
leaderS4 Distrubution Channels 0.05 2 0.1 x x Increase the
distribuor channelsWeakenessW1Narraw Product Diversification0.05 3
0.15 x xDell to increase the diversity ofproductsW2 CRM 0.08 3 0.24
xW3 One Man Show 0.07 3 0.21 xOpportunitiesO1 Global Markets 0.1 3
0.3 xO2 Ecommerce 0.08 4 0.32 xO3 Outsourcing 0.03 4 0.12
xTHREATST1 New technologies 0.05 4 0.2 xT2 Strong Brands in The
Market(IBM) 0.1 3 0.3 x xT3 Changing Consumer Needs 0.1 4 0.4 x xT4
New Market Mergers (HP /Compaq )0.05 3 0.15 xTotal 1 3.32 25. Tows
Matrix External Opportunities(O)O1. Global MarketsO2. EcommerceO3.
OutsourcingExternal Threats(T)T1. New technologiesT2. Strong Brands
in The Market (IBM)T3. Changing Consumer NeedsT4. New Market
Mergers (HP /Compaq )Internal Strengths(S)S1. Products
AdaptabilityS2. Build To Order (JIT)S3. Competitive PricesS4.
Distribution ChannelsSO1. Using Competitive prices tolead the law
income Marketsthrough E Commerce and GlobalMarkets.(S3 O1,O2)2.New
Distribution Channels forthe new global markets .(S4-O1)3. Can
adopt new product tosatisfy global markets needs.(S1-O1)ST1.being a
flower in the New tech. , thatwill minimize the threat of the
newtechnologies(S1-T1)2.Competitive Prices and easydistribution
channels will compete withStrong competitor Brands and
newCollations(S3,S4T2,T4)-Internal Weaknesses (W)W1. Narrow
ProductDiversificationW2. CRMW3. One Man ShowWO1. Marketing the
existing productsin nave markets.(O1,O2- W1)2.Outsourcing new
CustomerCare Teams to enhance CRM(O1-W2)WT1. develop new products
with imitatingtechnologies.(T1-W1)2. Enhance the CRM system
tocompete with competitors (T4,T2-W2) 26. COMPETITVE STARTEGY
EVALUATION Dells major competitors include:
Hewlett-Packard(HP),Acer,IBM,Apple Dells business strategy is a
successful cost leadership strategy. The companysformula for
success has been based upon its unique customization, delivery,
andcost proposition. First, Dell must integrate its cost leadership
skills with differentiated productfeatures and related services to
create value for its customers and achievethebenefits of an
integrated cost leadership/differentiation strategy. Secondly,
becoming a diversified IT company opens up opportunities in
relatedbusinesses, where similar products, buyingprocesses, target
customers, or otheroperationally-related activities can produce
synergies. This business-level and corporate-levels trategy
combination offers Dell a methodof dealing with the companys
competitive realities. Both strategies arediscussedbelow.BUSSINESS
STRATEGY 27. BUSSINESS STRATEGYCORPORATE STARTEGY EVALUATIONMeasure
the Relative ProductShareProducts/Services of the Business Saels of
200Relative AverageSalesDESKTOP PCs 19573 1.70SERVER AND NETWORKING
6474 0.56LAPTOPS 17423 1.51STORAGE&PRINTERS 2435 0.21Total
43470 -Cash Cow -Dells PC division includingLaptops segment
(running position andownership of over 18% ofthe worldmarket
)-STAR- Servers Networking BusinessDells market share has
increasedsubstantially over the last several years toalmost
11%,overtaking Sun to rank as the#3 producer of servers-QUESTION
includes printers, digitalcameras, monitors, storage, HDTVs andmany
other products. These productstogethermake up 16% percent of
Dellsoverall revenue and have shown
moreEnterprisePC&LaptopStorage 28. Recommended Strategy 29.
Strategic Alternatives & Recommended StrategyDell Should adopt
the following strategic in order to go with the change inmarkets
:Corporate StrategiesCorporate StrategiesGrowth StrategyDell adopts
the Product Development Strategy, by taking the existing products
tothe new markets; and Dell can benefit the E-Commerce expansion
andglobalization in implementing this strategy.The top Management
team can implement another Strategies that concerned withthe Growth
Rates of the Sales:Invest more in the R& D department to come
up with new technologies to coupwith the marketInvest in acquiring
new organizations the services, systems & Networking to
coupwith the changes in the B2B field 30. Implementation On the
Business level , DellShould Steer its Strategy toKeep on Cost
leadership ascompetitive strategy, as theyare know as a low
costproduct with imitatingproducts , what will make itharder to
reposition thisimage in the mind of theaudience with the sameBrand
On the functional strategies ,Dell should re- engineer theR&D
dpt. And invest more tobe able to come up with newcompetitive
technologies . Should also concentrate onCRM and increase the
Staffof the customer service andreview the policies as thenumber of
the customercomplaints is increasing lately Business
StrategiesBusiness Strategies Functional StrategiesFunctional
Strategies 31.
Appendixhttp://www.theofficialboard.com/org-chart/dell
