Project Report on Dell

8/2/2019 Project Report on Dell

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PROJECT REPORT ON DELL

Submitted By : Section A


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ACKNOWLEDGEMENT

This project comes out to be a great source of learning

and experience. A lot of effort has been put by various

people to make this project a success. This has greatly

enhanced our knowledge about Dell Inc. We greatly

acknowledge our indebtness to Mr. Rahul Mishra, for

helping us throughout this project and for providing us

in-depth knowledge. This project is a culmination of

efforts of our entire team whose sincere inputs and

focused attitude could bring this project to fruition.

Finally, thanks to almighty God who has been a source

of strength and confidence.


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Index Mission, Vision, Aim, Objective

Executive Summary

External Environment PEST Analysis Industry Analysis

Strategy

Corporate Business Functional

Competition Core Competency Porters Five Forces Model

Porters Generic Strategy

Internal Environment SWOT Analysis TOWS Analysis Porters value Chain Model

Corporate Culture

Forecast Key Issues & Challenges

Suggestions Conclusion

MISSIONMission Statement :To provide customers with superb value, high quality, relaventtechnology, customized systems, superior service and supportand products and services that are easy to purchase and use.

Statement Strategy :To do business with its customers one on one through the phone


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and internet. In doing so, Dell will meet its customerss expectionsof :Highest quality.Leading technology.

Competitive pricingIndividual and companys accountability.Best in class service and supportFlexible customer capacityFinancial stability.The direct relationship continues throughout thecustomer experienceInterpretation : Mission statement tells the purpose of existenceof the company.Dell through its mission statement tells that they

are a totally customer oriented company that aims to providecustomers with high quality and value throughcustomization,according to the needs of the customers.They wantto deliver high value with the help of latest technology that iseasy to use.They also wanttheir products and services to beavailable for consumers at low price.Dell has been very successful towards its mission statement .Theyare no doubt customer oriented as they provide award winningcustomer servicesthat is well known through out the world.Their

Direct Business Model is a very efficient and effective way ofdoing the business.In this, the products are directly sold to thecustomers and interemidiateries are deleted from theprocess.This helps in reducing costs for Dell and they in turn passon this savings to the customers.Dell provides customizationthrough which customers get what they want.Along with providingquality products ,Dell also provides quality services.The purchaseof Dell products have become easy as its all done through phoneor internet (www.dell.com). Its been a successful way of sellingtheir products.Dell has also started to sell through retail storeshence making the purchase of their products easy for thecustomers.Suggestions : Dell is the market leader after HP and has beenquite successful w.r.t to its mission .But is not up to the markwhen we talk about its technology part. Dell is quite slow inadding new value added features to its product and in using thenew technology ,as compared to its competitors.Therefore ,itshould try to bring changes in its products more quickly than itscompetitors.If Dell concentrate on this part there is no doubt that

it will become No 1 on the world map.


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Dells mission is also known as::OUR PEOPLE- THE SOUL OF DELL :At Dell, we value and are committed to: Customers: creating loyal customers by

providing a superior experience at greatvalue. The Dell Team: our continued success lies inteamwork and the opportunity each memberhas to learn, develop and grow. Direct Relationships: being direct in all we do. Global Citizenship: participating responsiblyin the global marketplace Winning: having a passion for winning in

everything we do.VISIONVISION STATEMENT:Through effective and strategic community partnership, dellsupports educational services programs that address the criticaland most basic technology access needs of its neighbours in Dellcommunities prerequisite to success in digital world.Interpretation : Dell provides a classic example of how theprinciples of strategic

management have been used to translate an innovative visioninto a successfuland sustainable enterprise. Their vision statement basically tellsthe way they do their business.They want to be successful in thedigital world for this they rely on latest technology.Dell providesquality products to cater the needs of the people.In intend to buildgood relationship with their customers and suppliers.

OBJECTIVES1. Modify laptop designs according to students preferences.

2. Double laptop sales in student market.3. Increase revenues by 25% by the end of the second year oflaunching.4. Develop a promotional campaign to promote the modifiedlaptops.5. Increase awareness of the existent agency project objectiveresearch strategic plan conclusion.

Executive SummaryAbout Dell :

Founded in 1984 by Michael Dell No.1 PC provider in the U.S. and No.2 worldwide


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Based in Round Rock, Texas Employs more than 82,700 people worldwide Grew during the 1980s and 1990s to become a brand Direct Business Model is the foundation for Dells business

Dell maintains a consistent focus on offering the best valueand customer experience Dell is a trusted technology innovator with a diversified,comprehensive IT portfolio Dell is a global company committed to its customers andemployeesDell Competes in :

Computer HardwarePersonal Computers (primary)

Computer Networking EquipmentComputer PeripheralsComputer ServicesInformation Technology ServicesHistory : In 1996, Dell began selling computers via its web site Introduced the 316LT, the companys first notebookcomputer in 1989 Joined the top-five computer system makers worldwide in

1993 Earning appr. $1 million per day 7 months after the launch ofdell.com in 1996 Introduced E-Support, an online tool to provide technicalsupport to customers 1999 1999, Dell overtook Compaq to become the largest seller ofpersonal computers in the US 2007, Dell set a goal of becoming the greenest technologycompany on Earth for the long term. The company launched

a zero-carbon initiative For the first time, Dell achieves No. 1 ranking in globalmarket share in 2001 2003, name was changed to "Dell Inc." 2006, Dell purchased the computer hardware manufacturerAlienware January 2007, started a turnaround plan that promises toyield $3 billion in annual savings over the next three years.Dell Structure : It conducts operations worldwide, and managebusiness in three geographic regions:Americas region, based in Round Rock, Texas, covers the


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U.S., Canada, and Latin America.Europe, Middle East and Africa (EMEA) region, based inBracknell, England, covers Europe, the Middle East, andAfrica.

Asia Pacific-Japan (APJ), based in Singapore, covers the Asiancountries of the Pacific Rim as well as Australia, NewZealand, and India.Acquisition : September 8 1999 - First acquisition ConvergeNetTechnologies on May 8 2006 - Acquired Alienware, a specialty computerdesktop manufacturer, integrated it into the company's highendproduct line. It introduced several new items to Dell

products, including AMD microprocessors.To prevent crossmarketproducts, Dell continues to run Alienware as aseparate entity but still a wholly-owned subsidiary. January 28 2008 - Acquired EqualLogic to gain a foothold inthe iSCSI storage market.It was the largest acquisition of$1.4 billion .Integrating EqualLogic's products into thecompany drove manufacturing prices down. It extendedDell's leadership in simplifying IT for customers and partners. 2008 Three acquisitions ,EqualLogic, The NetworkedStorage Company, and MessageOne 1999-2000 -Purchased stakes in four companies(NaviSite,Com2001.com,Fast Search & Transfer, Netyear Group). Divested two companies, in 2000 and 2008.Major customers:large corporations,government agenciesmedical and educational institutionssmall businessindividualsComing products :New PowerEdge ServersNew Enterprise Computing PortfolioInnovation Aids RecoveryUltra-Thin Laptop, AdamoFinancials : Revenue in the QY 09 fell 16% from the same period a yearago to $13.4 billion. Profits plummeted 48% to $351 million,

or 18 cents a share, from $679 million, or 31 cents a share. Revenues of $61,133 million during the financial year ended


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February 2008, an increase of 6.5% over 2007. Operating profit of the company was $3,440 million inFY2008, an increase of 12.1% over 2007 Net profit was $2,947 million in FY2008, an increase of

14.1% over 2007Recent Developments : In January 2009, Dell announced that they will withdrawall manufacturing from Limerick and move it to its newplant in the Polish city of Lodz by January 2010. Raised their cost-reduction target to $4 billion. Dell also announced that it aimed to become a "onepercentcompany," giving away 1 % of pretax profits toeducation and digital inclusion projects mainly in

emerging markets, by February 2010.Product line :Business/Corporate Class :OptiPlex - office desktop computer systemsVostro - office/small business desktop and notebooksystemsn Series - desktop and notebook computers shippedwith Linux or FreeDOS installedLatitude - commercially-focused notebooksPrecision - workstation systems and high-performancenotebooks.PowerEdge - business serversPowerVault - direct-attach and some network-attachedstorage (NAS)PowerConnect - network switchesDell/EMC - storage area networks (SANs)EqualLogic - enterprise class iSCSI SANsHome Office/Consumer Class :Dimension - Consumer desktop systems.Inspiron - consumer desktop and notebook systemsStudio - medium-end consumer slim hybrid desktop andlaptop systemsXPS - enthusiast and high-performance desktop andnotebook systemsStudio XPS - high end design focus of XPS systems andextreme multimedia capabilityAlienware (XPS Extreme) - high-performance gamingsystems rivaling HP's gaming division,VoodooPC

Adamo - high-end laptop brand to compete with theMacBook Air


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Peripherals:USB keydrives , LCD televisions, and printers.Dell monitors LCD TVs, plasma TVs and projectors forHDTV and monitors

Services and support:Dell On Cal l - extended support services (mainly for theremoval of spyware and computer viruses)Dell Support Center - extended support services (similarto "Dell On Call") for customers in the EMEA. TheSolution Centers also support hardware for customersoutside of warranty.Dell Business Support - a commercial service-contractthat provides an industry-certified technician with a

lower call-volume than in normal queues; it covershardware- and some software-support.Your Tech Team - a new support-queue available tohome users who purchased their systems througheither Dell's website or Dell phone-centers. Thesecustomers gain access to a specialized queue currentlylocated in Tampa, Florida. Customers can request atechnician with whom they have worked previously, andthe technicians can troubleshoot a wider range ofproblems including some that would fall under the"Dell on Call" category. Data backup and virus removalremain out-of-scope for this queue.

Analysis of Dell in RECESSIONDell's biggest market, the US, revenue fell 17% and unitshipments dropped 23%.Sales were down significantly among all customers,particularly small and medium-sized businesses and thelargest corporate customers.Dell's changes have failed to drive consistent growth.Global job cutting programme.Dell announced a 10% cut in global jobs and announcedfurther job cuts at its Ireland sites earlier this year.There was a continuing decrease in end-user PC demand,and that was before the world's banking system went intomeltdown according to DellShutdown of its Edmonton, Alberta office, losing 900 jobs.Ending of about 8,800 jobs in 2007-2008 10% of itsworkforce.On January 8, 2009 , announced the closure of its


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manufacturing plant in Limerick, Ireland with the loss of1,900 jobs and the transfer of production to its plant inPoland.Profits fell by nearly half in the fiscal fourth quarter, and it

would slash $1 billion more in expenses to bring costs in linewith falling sales in the economic downturn.

PEST AnalysisPolitical : The political environment in the US has been changingabruptly in the previous year. Dell being an integral part of thiseconomy has also been greatly affected by these changes andhas not been able to counter them. Changes in the legislation andlaws of the US govt. have tried to revive the PC business but thereciprocations have been less then what was expected. The

company has been able to beat the expectations of Wall streetwho predicted more dip by posting less losses by cutting costs.The conservatism that exists in the consumer spending has beenincreasing which has adversely affected Dells performance.Issues of environment policies has also affected Dell as Dell cameunder significant pressure from environmental groups across theUS to assume responsibility for its old products and thisexperience sensitized company officials to the risks andopportunities of state and federal e-waste regulations and the

need to take proactive steps against them.Economic : high tarrifs on IT products makes Dell difficult toenter other markets apart from USA . since most of the populationof the world is young and adaptive to change in technology, dellaimed to manufacture its products which are more user friendlyand can be afforded by young professionals, because purchasingpower of working population saw an increase over the past fewdecades. Since the economy saw a change due to the meltdownand recession, dell also had to modify some of its policies to cope

up with the changing scenario.The change in the US economyalso effected Dell with it bring change in its core policies ofinventory and credit management of receivables and inventoryconversion days to decrease its operating cycle and thus reducecost.Social : Increase of younger population and working populationhave led to the increase of the use of computers.A technologicalrevolution has been around the corner, people have become techsavy,that have resulted in the increase in the demand forcomputers .These days people have time constrains and as aresult of it they prefer to buy the product online ,which has given


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Dell an advantage over others because of dell.com.Technological : Tecnological changes are happening at a veryfast rate due to which Dell is able to provide advanced technologyproducts to the customers.As a result of technological changes

Dell has also increased their product line.It is adopting to thetechnological changes as he old technology is becomingobsolete.One of the most important affets of technologicalchanges that have led to the increase of the demand of Dellcomputers is their Direct Business Model.They have excellentecommercecapabilities, which can be seen with the success of thedell.com .The recent technological changes can be seen in their recent

products like New PowerEdge Servers,New Enterprise ComputingPortfolio,

Innovation Aids Recovery, Ultra-Thin Laptop, Adamo,which will be in themarketvery soon.Dell could exploit the network-internet,extranet to reach the corners of theworld.

Industry AnalysisQ1 was a slow quarter for PC sales: The worldwide market fell 6.5%

year-overyearto 67 million units,Apple's Mac business leveled out after strong growth last year. U.S. Macshipments were down 1% year-over-year, representing 7.4% of themarket,according to Gartner. But that's a significant deceleration after thecompany grewU.S. shipments about 33% year-over-year during Q1 '08. (And grew U.S.shipments 8% year-over-year in Q4 '08,.)Meanwhile, Dell (DELL) sunk, as its shipments fell 16% to 26.2% of theU.S.market. And netbook specialist Acer grew its shipments by 49% to13.6% of theU.S. market, third to HP and Dell.COMPETITORSHewlett-Packard (HP):: HP recently posted better financial results than Dell, but hasannounced around 26,000 redundancies as part of its attempts to cut costs andintegrate the7.2bn acquisition of EDS.Dell rival Hewlett-Packard has also suffered in the globalrecession.

The world's largest computer maker reported last week that profits in the fiscal firstquarter


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ended Jan. 31 fell to $1.85 billion from $2.13 billion in the year-ago period. Revenuerose 1%,but failed to meet Wall Street estimates.Dell has been very very slow in introducing most of the value added features itscompetition has

incorporated (Such as face recognition of Lenovo, fingerprint recognition, SwivelMonitors andTablet PCs by HP,Apple,IBM,Sun Microsystems,Gateway, Lenovo, Sony, Acer, Toshiba and Asus.Dell and itssubsidiary, Alienware, compete in the enthusiast market against AVADirect, FalconNorthwest,VoodooPC (a subsidiary of HP), and other manufacturers.

StrategyCorporate strategy:

Dells corporate strategy is to provide products directly tocustomers.To provide high technology quality products andservices through customization.Their strategy also includes costcutting where ever possible.Business strategy: Dell's business strategy combines its directcustomer model with a highly efficient manufacturing and supplychain management organization and an emphasis on standardsbasedtechnologies.This strategy enables Dell to provide customers with superior

value; high-quality, relevant technology;customized systems;superior service and support; and products and services that areeasy to buy and use.Functional strategy::: Cost leader ship through direct sell modelIn direct sales model it sells directly to customers ,whichhas the following characteristics:

Efficient supply chain/distribution systemJust-In-Time inventory system reduces costsDirect sales by using www.dell.com

Internet increases good relations with consumers & suppliersImpressive Supply Chain ManagementStrong strategic alliances with other companies

Direct Business Model = Customisation+ Customer service

CORE COMPETENCYDell has an edge over its competitors due to the core competecy that exitswithin the organization.This is Dells Competitive advantage and has createdsuperior value above its rivals.Direct Business Model (low cost advantage+ customization)

Sell directly to consumers. By selling directly to the

customer Dell removes all the cost that they would have


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incurred during the holding and marketing of the products.Dells model is based on build-to-order process, wherecompany builds each PC on demand.Customers can choosewhat components they want for their computer, Dell then

assemble the order and ships it.This strategy improvescustomer satisfaction and reduces costs and risks to thecompany.No intermediariesNo warehousingSelling direct lowered dell costs by 25-40% compared tocompetitors.Dell passed these savings to customers.Dellbelieved that this could help best understand customersneeds and provide the most effective computing solutions to

meet these needs.Build products to consumer orderEliminate retail mark-ups and costsReduce risks associated with large inventories of finishedgoodsClose relationship with consumers & suppliersUse information to enhance the Value ChainTotal customization of their personal computers.ADVANTAGES::

Price for Performance. By eliminating resellers, retailers andother costly intermediary steps together with the industry's mostefficient procurement, manufacturing and distribution processDell offers its customers more powerful, more richly configuredsystems for the money than competitors. Saves money and timeCustomization. Every Dell system is built to order. Customersget exactly, and only, what they want.Just In time: Orders are build at the time of order. a just-in-time(JIT) manufacturing approach, which minimizes inventory costs.

Service and Support. Dell uses knowledge gained from directcontact before and after the sale to provide award-winning,tailored customer service.Latest Technology. Dell's efficient model means the latestrelevant technology is introduced in its product lines much morequickly than through slow-moving indirect distribution channels.Inventory is turned over every 10 or fewer days, on average,keeping related costs low.Superior Shareholder Value. Dell was the top-performing stockamong the Standard & Poor's 500 and Nasdaq 100, andrepresented the top-performing U.S. stock on the Dow Jones World


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Stock Index.Profitability:Through the direct business model Dell haseliminated the resellers markup as well as the risks associatedwith large inventories of parts and finished goods. Dell frequently

receives parts just hours or even minutes before assembling a PCto fill a customers order. Since the prices of computercomponents are constantly going down, it makes sense to avoidbuying large inventories of stock that could be purchased at alater date for less. And since computer components also go out ofdate quickly, this avoids antiquated stock. This, in turn, improvesprofitability and allows Dell to sell its products for a lower price tothe customer.Customer Focus:Is dedicated to meeting the expectations and

requirements of internalcustomers; gets first-hand customerinformation and uses it for improvements in products andservices; acts with customer in mind; establishes and maintainseffective relationships with customers and gains their trust andrespect.Internet Leadership Sales via Dells Web site surpassed $18million per day during early 1999, accounting for 30 percent ofoverall revenue. The company's application of the Internet toother parts of the business --including procurement, customersupport and relationship management -- is approaching the same

30-percent rate.The world's second-biggest computer maker has recently switched froma pureonline and phone sales model to build an expanding network of retailstores,putting its PCs and laptops within the reach of consumers withoutInternet access.

Porters Five Forces modelThreat of New Entrants: MODERATEThe entry of new comers in quite difficult because of the entry barriers thatare caused by:

Buyer loyalty

Brand nameLow price

Award winning customer service

CustomisationDecreasing profitability shows that there is a threat of new entrants.HPovertook dell few yrs backRivalry: HIGH

Price WarDecreasing profitability


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Low differentiationHowever, in the midst of sever competition, Dell can still gain marketshare from other competitors. That proves Dells business strategieshave been successful.Threat of Substitutes: LOW

Strong presence of PCs throughout societyOne 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.Bargaining Power of Buyer: High

Highly price sensitive

The cost leader has high market share which leads to high bargainingpower relative to its suppliers

Reliability and customer service become important factors.Dells products are very reliable and customer service is outstanding.These two factors help Dell to create certain brand royalty. But thatsgiven the fact that the Company set the prices very low. If the pricesare raised too high, customers will not hesitate to switch.

Porters Generic StrategiesCost leadership: Dell has been very successful because of itscost leadership.It has been able to reduce the costs with the helpof its Direct Business Model.In this Dell sells directly to itscustomers hence eliminating the intermediateries.The cost isreduced by:(1) passing distributors and retail dealers that reduced marketingand sales costs by eliminating the markups of resellers,(2) building to order greatly reduced the costs and risksassociated with carrying large volumes of both and finishedgoods.3) cutting out the intermediaries between the manufacturer andthe consumer.Initially, Dell's direct from the factory approach relied on

telephone sales.With the emergence of the Internet, Dell Computer could extendthe reach andscope of the direct sales model at a relatively low marginal cost.The companywas ideally positioned to take advantage of the Internet becauseof itsdistinctive supply chain. Unlike its major rivals, Dell did not faceany channel

Dconflict with resellers or distributors by going online. Moreover,


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with a build-to order manufacturing process already in place,customers could easily configuretheir own products online, just like they were already doing overthe telephone.

Dell's build-to-order and sell-direct approach attractedgrowing numbers ofcustomers, not only in the United States, but all over theworld.The supply chain compression resulting from the direct-tocustomermodel gave his company a substantial unit costadvantage over everyone else. With an inventory turnover rate ofabout 60 times per year, Dell has minimized the rapiddepreciation and inventory write-off costs that have chronicallyplagued the PC industry. It has also greatly reduced its working

capital requirements by operating on negative cash conversioncycle receiving payment from its customers beforeit pays itssuppliers for components.Many of the major players in the PC industry have continued tomanufacturetheir products in bulk and keep their distributors and retailersstocked withample inventories. As a result, Dell has sustained a comparativeadvantage asa result of its lower overhead costs.For example, Dell's overhead costs (selling, general andadministrative expenses) in both 1999 and 2000 were less than10% of its total revenues versus industry norms of 15-17 percent.The direct sales model also enables closer customer integration.Dell has builtstrong and stable relationships with both the large corporationsand smallerenterprises that are its core customers. Unlike its rivals, whodepend on

indirect sales, Dell possesses a great deal of information about itscustomers.By logging all of its interactions with customers, Dell knows theirpurchasingbehaviour, demand patterns, and satisfaction levels. With a littlebit of data mining, Dell managers can determine how customersbuy computers, whatmotivates different types of buyers, and thereby accuratelyforecast demand in

various market segments.Dell also collects timely informationabout the performance of its products. This enables it to respond


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quickly to emerging problems and, in some cases, avoid costlyrefunds and service calls. More generally, Dell Computer knowswho each end user is, what equipmentthey have bought, where it was shipped, and how much the

customer hasspent. This information helps Dell to provide high levels ofcustomised service;to offer complementary products and services; to coordinatemaintenance andtechnical support; and even to forecast (if not encourage) PCreplacements and upgrades. Some of its corporate customershave even outsourced their entirerange of PC inventory activities, from purchase to disposition, to

Dell.SWOT ANALYSISStrengths

No inventory buildupAcquition with Equalogic

Quality product and serviceWhole world focusBrand nameCustomer service

Cost efficiency

Direct sellmodel=customization+fast+delivery+low costWeaknesses

No proprietary technology

High dependency oncomponent suppliersoccasional product recall.Eg.In2004 Dell had to recall 4.4million laptop adaptersbecause of a fear that they

could overheat, causingelectric shocks or fires.

unable to switch supply

Winning culturelatest technology

First mover advantagee-commerce capabilities:www.dell.com

Buid to order manufacturingprocess

Product design+after salesservice


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Expert Supply ChainManagementdues to the lack of largesuppliers in the World

high attrition rates among

visitors to Dell.comno physical presence ofservicecentres

slow in introducing fancyfeaturesLack of innovationOpportunities

Network-internet, intranet andextranetDeveloping nations marketLow costs and growingadvanced technology

Growth in business, educationand government markets

global wide access to customers andmarket.

ExpansionIncreasing income of consumers

GlobalisationThreats

Competition

Currency fluctuation incountries outside the US

Political instability

Tariff trade barriersRecessionDecling sales

TOWS AnalysisStrenghts-opportunities:: Dell has cost leader ship in the market .Theyprovide

quality at reasonable price ,which would help them to establishthemselves in thegrowing economies.The income of consumers is also increasing andthey couldexploit this situation and increase the profis of thcompany.Business,education andgovernment markets are growing and therefore the demand forcomputers will alsoincrease in the coming time ,so Dell should try to reach even to thesmallest


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corners of the world to increase the sales.Globalisation would help Dellto presentitself on the global platform.It would be able to exploit this opportunitybecause of

its core competencies.OpportunitiesWeakness::Dell lacks innovation as compared to itscompetitors.It is also slow in creating value added features to itsproducts and slowin bring change in its product line so as to carter any new product ortechnologylaunched in the market .Strenghts-Threats::Dell provides quality and is well known for itscustomer

service.It has an edge over its competitors becaususe of its DirectBusinessModel.It could over come its competitors because of this factor.Weakness-Threats::One of the major threats for Dell is the declingsales of PCsand recession.But Dell is not the only one that is affected by this ,everycompanyin the industry is the victim.

Value chain model

FIRM INFRASTRUCTUREThe main strength of Dell is in its inventory management. As the companysells through direct model , it mostly receives its payments from itscustomers immediately online or through the credit card. It then placesorders on the component vendors and proceeds on the assembly but pays tothe suppliers only after 36days after the product is shipped. As a result , thecash-conversion ratio for Dell is negative as compared to other PC makerswho have positive cash conversion ratios due to advance payment tosuppliers.OPERATIONSDell outsources all its components manufacturing, including sub-assemblies

like motherboards and nearly the entire production chain for notebook PCs.However it does not outsource the final configuration and keeps control overthe production supply chains. Regional components manufacturers whichmay be units of Asian, European and American companies are increasinglysupplying to Dell.INBOUND LOGISTICSSince Dell follows build to order and just in time policies, the inventoryremains in the suppliers books till Dell puts the order.Dells direct selling model depends critically on lead time management sothat insufficient lead conversion time would not leave the company withoverage and underage of components.

MARKETING SALESDell has eliminated from its value chain the intermediaries, who would have


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charged a 20 -30 margin, from the value chain and aligning the supply chainclosely to the assembly factories and the order-taking system.Dell has integrated the direct-selling model intricately with the supply chain.Even though the company assembles 80000 PCs a day, it does not have anywarehouse ,the assembly factories hold inventories for maximum of two days

while the entire operation inventory is a maximum of 72days.TECHNOLOGY DEVELOPMENTDell spends little on research and development, at $400 million , a fraction ofHPs $4 billion. Yet its management of supply chain is near perfect and theassembly operations are highly efficient and designed such that a PC isassembled by one worker so that any defects can be traced down to humand made accountable.

Corporate CultureDell's Culture

believes in being direct in everything they do.success is based on maintaining direct relationships built on trust.Winning Culture and comprehensive diversity initiatives create acorporateenvironment based on meritocracy, personal achievement and equalaccessto all available opportunities.focus our internal efforts on cultivating and promoting best practicesamongour global workforce in the areas of policy development, training,

recruitment, mentoring, development, advancement and culture change.Work/Life Effectiveness and career management programs enhanceourability to retain and develop valuable team members and demonstrateourcommitment to the Dell Team.Dell sponsors a community of networking groups formed byemployees that help foster a more inclusive workenvironment, improve communication among employees

and enhance understanding of all employees about the valueof diversity.Our goal is to enable employees to maximize theircontribution to the company while also maintainingeffectiveness between their work and personal lives.We advocate flexibility in the workplace to empoweremployees, teams and managers to hold discussions aboutboth the needs of the business and each employee'sindividual Work/Life Effectiveness goals, and then to

construct a plan for fulfilling both priorities.Dell is committed to developing our workforce and helping


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employees achieve their personal and professional best.Through an Career Management Program, we strive todevelop, fully engage, and retain high-performing talent

ForecastDell has worked its way through the US economy with changes happening inconsumer spending inflation rates, interest rates and has changed its strategiesaccordingly to increase its market share and market presence. Below is a view ofthe US economy and an analysis of Dell in this regard.GDP of the US economy for the year 2003-08.YearGDP in %2003 37685.028 3.70 %2004 39811.632 5.64 %2005 41969.756 5.42 %2006 44118.008 5.12 %2007 45845.477 3.92 %

2008 46541.179 1.52 %The US economy is a developed economy and due to this extensive development itsGDP has been decreasing constantly over the years and has decreased to minimalproportions. In this kind of economy , Dell has provided services to capture a part ofthe consumers purchasing capacity in the PC market.But due to a recession in the market Dell as other PC manufacturers has facedcritical issues regarding sales, job cuts and decrease in market share.Dell has not been able to sustain its competitive advantage in the US economy dueto wide spread recession but Dell was able to sustain its sales growth in othercountries as compared to the US as seen in revenues of Dell. Dell has arrayed intodifferent product mixes to sustain its growth in these periods. Dells supply chainand direct build to order models have been able to keep its sales up.

US interest rates for the year 2003-08June 25,2003 1%Dec 14,2004 2.25%Dec 11,2005 4.75%June 29,2006 5.75%Dec 11,2007 4.75Oct 29 ,2008 1%The US federal reserve has been bring out cuts to keep the momentum in theeconomy going and this has also helped the PC market to grow especially Dell. From2003 to 2007 Dell has reported profits YoY due to the policies followed by the USgovernment.

Interest rate cuts have had the following implications on Dell.Thus with the fed cutting rates to provide incentives to the corporate to grow, Dellhas used this opportunity to increase investment in the co. and stretched its wingsfurther in different markets.But in 2008 Dell has lost heavily to profits of $351m from $671m in the last yearwith a collapse in the supply chain and initial raw material cost increasing and anoverall decrease in consumer spending and low cost behavior of the economy. Dellssupply chain has taken a hit with its cost advantage not being applicable in thisscenario and it resorting to retail supply then doing it through its own chain ofsuppliers.Inflation numbers in the US economy.Year CPI - Inflation Rate*

2008 5.0%2007 2.8%2006 3.2%


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2005 3.4%2004 2.7%2003 2.3%

As is evident in the US economy and world over inflation rates have been on alltimes high in the previous year and this high rate of inflation resulted in lowconsumer spending in capital goods in corporate bodies and households.

Inflation has taken its toll on Dell with posting sharper-than-expected fall in revenue asconsumers bought cheaper personal computers and overall demand remained weak. And

this fall could be worse if it wasnt cushioned by cost cuts including job cuts.

Dell is trying to sell its computer factories around the world a move to overhaul abusiness model that previously was central to the companys strategy, but whichnow is no longer competitive. The U.S. firm has approached contract computermanufacturers with offers to sell the plants to counter the effects if falling profitsand rising costs.

Key Issues & ChallengesRecession

failed to drive consistent growth.Decling SalesDell is quite slow in providing value added features to itscustomers ascompared to its competitors.Tough competition.

SuggestionsShould look for Alliance-mergers and acquisitions that wouldbring synergic benefits for the company

Reduce the attrition rate by Converting visitors intocustomers(people who visit the Dell site)Focus on developing nationsPhysical presence of Service centers would add value to theircustomer serviceInvest more in Research and Development.Reduce errors in Dells direct Internet ordering system andcreate a Clearance area on its websiteEnhance customer support services

Increase Company recognition through a national advertisingcampaign.Should not only depend on the internet sales, should giveequal importance to retail stores. Though they have startedwith the retail selling but they should give equal importanceto it as they give to online sellingBuild a variety of competencies (build core competenciesinto diverse product lines)Should focus on developing nations like India, China etc..

Demand for laptops will increase in the coming futuretherefore they should try to exploit this situation


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ConclusionDell computer is successful in global markets as a result of bestunderstanding of customers' needs and their direct sell businessmodel. Dell's environmental programs for product asset recovery

and product design for environment have spanned more than adecade. The company designs and customizes products andservices to the requirements of the organizations and individuals,and sells an extensive selection of peripheral hardware andcomputing software.Dell is a well known name in the world that has been verysuccessful towards its mission.It has focused on customizationand maintaining low cost that has been very profitable for thecompany .

But are faced with the proble of de slipping sales in the U.S. .theyare being forced to look at alternative ways of brining revenue tothe company,We believe that they will be able to tackle thissituation and would maintain a tight grip on the market due totheir cost leadership and because of their coming strategies.

Documents

Project Report on Dell