E.M.D.

Case Study

The Education Of

Michael

Made By:
Vikrant Vishal
( Roll No .: 60 )
Submitted To:
Prashant Kuntal
( Roll No .: 32 ) Mrs . Surbhi
Dileep Rajput Arora
( Roll No .: 21 )
 Contents
1.History
2.Case Synopsis
3.Critical Factors Of Success
4.Supply Chain Management
5.Marketing Strategy
6.Customer Services
7.SWOT Analysis
8.What’s missing in Dell ??
9.
10.
 History @
• Dell was founded in 1983 by Michael Dell, an 18
year old college freshman from Texas who
started out upgrading hard drives for IBM
compatibles on nights and weekends.
•
• Within a year, his service business had grown to an
incredible $6 million from performing computer
upgrades for local area businesses .
•
• When Dell changed his strategy and started offering
custom built-to-order machines, the business
exploded, with $70 million in sales by the end of
1985.
•
• Evolving into an assembler company, Dell was able
to exploit certain events occurring in the industry
• Dell continually achieved phenomenal records in
sales and profit growth, eventually making it
the most successful company ever in the PC
industry, surpassing $25 billion in 2000.
•

• As one of the world's premier providers of

computer products and services, Dell was the
US market leader in its core products, the
desktop and laptop markets by 2001.
•
 Case Synopsis
• The case primarily mentions the rise of Dell for a
mere assembling company to one of the largest
PC making companies of the world.
• IBM desktop business sold to Lenovo, Compaq
sold to HP and Gateway stocks crashing are
the current scenario ,but Dell is thriving.
• Jack Welch said “ No one has pulled the levers
of cost,quality and service better than
Dell”.
• Dell has used its low cost, direct sales model to
compete with its competitors.
• By 2005 Dell was the market leader with a market
share of 17.6.

• 1989 developed a high-end products code named
olympic-customers rejected the product as a
result Dell killed the products .
• 1993 poor quality notebooks-Dell brought Apple’s
John Medica to fix the mess, who made Dell
focus on the notebook that worked the best and
scrapped the rest.
• Conducted “Tell Dell” surveys.
• Today one in every 3 PC’s shipped from US is Dell
product.
• Dell spends less than $500 million in R&D which
is significantly less than HP or Apple.
• They have only four days of inventory so less
cash tied up in goods.
• 1998 $745,000 of revenue per employee ,seven
years later,the company does a sales of
$900,000 per employee.
 Move into printers
• Dell has 20% of market share in US for inkjet
printers.
•
• Price of Dell color laser is half the price of HP and
the toner is 45% less.
•
• Same strategy-no middleman hence less prices
and more profits.
•
• New feature which alerts the customer that’s he
is low on ink.
•
• Yet to be seen whether Dell can overtake HP in
the printers business.
•
 Critical Factors Of Success
• Supply Chain - A key component of Dell's supply
chain management was having materials in
close proximity to Dell factories;


• therefore suppliers are required to have inventory

hubs near the manufacturing plants.
•
• Dell had reduced its inventory to an all-time low
of a 5 day supply, which comparatively was 20
to 70 days for its major competitors, thereby
creating a competitive advantage.


• Customer Efficiency – Dell constantly

monitored the customer’s shifting preferences,
which helped in pricing, inventory
management, and cost accounting.
•


• Market Sensing - Dell consistently sensed

market changes before they happened and was
able to anticipate and identify product areas to
maximize sustainable profits using its Direct
Model.
•
• As a result of this ability, Dell could pick and
choose which market they entered, making
sure it was a market leader quickly upon
entering.
• Channels – Dell used its Direct Model approach
when entering major markets, but for smaller
markets it operated through its distributors.
•
• Computers were shipped directly to the customer,
cutting out the middle man.


• Customer Analysis - Customers valued Dell’s

uniqueness of: offering the ability to easily
customize their PC’s, dealing directly with the
manufacturer, and the attractive pricing
resulting from the 'direct model’.
•
• Dell understood the different needs of its large
corporate, small business, and governmental
customers and attempted to optimize its 7,500
worldwide sales and support reps for each
particular segment.
Strategies Adopted
By
Dell’s Competitive Strategy

Corporate Competitive Strategy

Product Supply Chain Marketing

Development or Operations and Sales
Strategy Strategy Strategy

Information Technology Strategy

Finance Strategy

Human Resources Strategy

WHAT IS SUPPLY CHAIN
Supply MANAGEMENT
chain
management
" Is the strategic management of activities involved in
isthethe strategic
acquisition management
and conversion of activities
of materials to finished
involved in the acquisition and conversion
products delivered to
of materials to the customer"products
finished
delivered to the customer.

Supplier al Flow Customer

Management Material/information flow Management
Information Flow

Schedule / Stock
Conversion Delivery
Resources Deployment

Leads to Business Process Integration

 Why SCM is so Important in PC
business
• M a te ria l co sts a cco u n t fo r 7 4 % ( $ 2 1 b illio n ) a ye a r
for dell.
•
• Im p ro vin g S C M b y 0 . 1 % h a s b ig g e r im p a ct th a n
im p ro vin g m a n u fa ctu rin g p ro ce ss b y 1 0 % .
•
• Changing technology obsoletes Materials’ value by
almost 1% per week .
•
• Rely on market forecasting to drive Production.
•
• Technological breakthroughs cause very short
Product life cycles .
 How has Dell used its direct sales and
build-to-order model to develop an
exceptional supply chain?

§ Close relationship with customers

and suppliers
§
§ First-hand and pure customer
feedback
§
§ High volumes of customer
information

 PC SUPPLY CHAINS

Custome Custome
r r
PULL
Distributi

Virtual Integration
on
Channel
s PULL
Dell
PUSH
Manufact
urer

Supplier PUSH
Supplier s
s

Typical PC Supply Chain Dell Supply Chain

(Compaq, HP, IBM, etc.)
 Dell’s Competitive Advantages
 D e ll is h a vin g o n e o f th e b e st S C M in th e w o rld .


• 9 0 % su p p lie s o rd e re d o n lin e u sin g in te g ra te d

w e b site s o f su p p lie r a n d D e ll ( B 2 B ).
•
• 9 5 % o f su p p lie rs situ a te d ve ry clo se to a sse m b ly
p la n t h e n ce co o rd in a tio n is e a sie r.
•
• Dell’s factories have only 7 hrs worth of inventory
for most items whereas industry wise it is around
10 days.
•
• 15 suppliers provide almost 85% of all supplies.
•
• Dell gets paid by customers and then pays to its
suppliers.
• How has Dell exploited the
advantage of the Internet to
improve performance?
•
– Dell established a unique e-commerce
model by embracing the Internet in its
supply chain.
•
• Dell brings products to market faster
than its competitors
•
• Customization and quick response
•
• Attract large business customers
•
• Collecting the payments
• Dell brings products to market faster
than its competitors


– Dell uses direct sales via Internet,

whereas Traditional PC
manufacturers previously assemble
PCs ready for purchase at retail
stores.
–


– PCs have life cycles of only a few

months.
–


– Thus, Dell enjoys early-to-market

advantage.
• Customization and quick response
– Dell
• uses the Internet to sell its products
• offers a virtually unlimited variety of
PC configurations.
–
– Buyers can click through Dell and assemble
a computer system piece by piece, based
on their budgets and needs.
–


 Marketing Strategy
 4 P’s Of Marketing


• Product: Dell's unique approach to

manufacturing separates the different
processes so that Dell is not reliant on singular
production or supplier's chain for equipment
production. Though there is no segregation of
the different products and services but
nevertheless in separating the components
enabled it to target the customers based on the
regions in which the products are
manufactured.
•
• By assigning each regionalized production center
particular component for production not only
have diversified the risk of concentration of
•
• Price: Dell's product pricing reflect the
affordability of the local consumers.
• For example basing plants in Xiamen, China Dell
has been able to provide products and services
at the local prices without incurring additional
costs to price. Price reasonability and the
availability of support, after sales services and
parts have alleviate Dell's position from others.
•
•

• Place: Dell has been able to affect the location

strategy aspect of its marketing campaign. As
Dell's products are always available at the
nearest dealers customers develop trust for the
"local Dell" thereby achieving the objective of
gaining their trust in Dell products and services,
and forming a large and diversified consumer
• Promotion: Dell in the past have not
concentrated on extensive marketing
campaigns but this revolutionarized in 1999
when Dell changed its tactics by engaging in
extensive marketing campaigns.
•
• The "Be Direct" attitude has changed the way
consumer view Dell as the local producers.
  Sales promotion
 1 ． Broken down market
 Dell computer companies will be in
accordance with the product range of its
products, respectively, in different areas of
application or market classification classification,
a different strategy.
 2 ． Pricing strategy
 Through direct sales, Dell than in the other
major manufacturers of low cost 100 to 200 U.S.
dollars, which use low-cost marketing strategy.
 3 ． Advertising strategy
 Advertising in Dell website, but no. Dell
website contains a wide range of multimedia
pictures, and many more performance charts, and
even made some advertising in the form of slides.
These customers can purchase fully stimulate
 Customer Services
• 1 ． Online orders, and by a single production
• Dell companies to enable customers to purchase
computer Dell.com and PremierDell.com for
enterprise customers, the company has provided
more than 60,000 customized web site to allow
customers to track orders for the purchase and
implementation.
• Valuechain.dell.com orders through direct
transmission to the supplier of raw materials Dell
companies, such suppliers will be able to receive
real-time information on raw materials, thus
contributing to Dell companies control inventory.
• 2 ． Video distribution and delivery guarantee
• Dell particularly unique is that the company provided
a special specialized services : network users can
choose in accordance with their own preferences
• As a result, the network of shops in the best
possible selection, Dell sites in the forefront in
computer networks. Dell customers at the
center of the customer requirements for
different customers different custom,
personalized products. In all customers choice,
the website also provides the corresponding
price, payment method and delivery address
and the identification and door-to-door in two
days.
•
• 3 ． Online technical services and technical
support
 Dell companies provide online services and
technical support is very broad, users answer
questions, the escalation on Windows, software
upgrades informed, and so on. A wide range of
services not only to increase the intrinsic value of
their products, can also be user satisfaction, and
• 4 ． Online forums , help and Search services
• Not only large customers, small enterprises, a
large number of persons were also attract home
office in Dell brands around. From the autumn of
1998, Dell established executives and customers
online forum "had breakfast with Dell" extended
to small business users, the topic of this live
chat server market trend not only includes such
large topics, but also for general users the
opportunity to make a wide variety of issues,
then adopted Dell online knowledge base in
artificial intelligence software to help
automatically answered.
• Dell also provides comprehensive search services.
A user-friendly search service can find their
desired product and technical support. The
scope is very wide search, the search is on the
• 5 ． Orders enquiry and Purchase logistics
and delivery logistics
• Customers only in the number of Internet
customers of six figures or purchase orders
numbers, a few minutes, will receive a detailed
report on the progress of orders.
• Delivery logistics, the same achieved its online
electronic payment, "customers trolleys" and
transport management, etc. functions.
• Purchase of logistics enterprise-enterprise e-
business, not reflected in the website,
presumably in the company's internal network
will be involved.
•
Financial Performance
 SWOT Analysis
• Strengths: Dell's dynamic organizational
structure allows it to achieve diversified
targets.
• By allowing the components to directly become
integrated in the manufacturing process of Dell,
it has been able to reduce middle channel
costs.
• These components, such as OEMs, logistics,
system integrators, repair and support
companies, component suppliers, third party
HW and SW suppliers and distributors have
become each of the company's manufacturing
processes so that ease of provision to the
customers is possible.
•

• Weaknesses: Within the strengths lies Dell's

weaknesses. Much of its strategies have to rely
on the capacity and capability of these
• Opportunities: Having established an
integrative and virtual network, Dell has been
able to achieve the high level of corporate
outcome that challenged most of the industry
leaders. The established value web corporate
model have also allow Dell to have global wide
access to customers and market. Reaching any
niche market in any continent is therefore not a
problem for Dell's marketers.
•
• Threats: However, due to the integration of
components in Dell's organization structure,
Dell compete not only compete at the final
product level but also at the suppliers level.
Third party software for example have great
competition for price and product
categorization which could eventually affect
 Can DELL be like
APPLE/HP ??
•
• The computer business is a tough
way to make a living. To survive, a
company has to prove that it can
scrap its way back from defeat.
Hewlett-Packard has done it.
Apple has done it. Now it is Dell's
turn to show that it can gut its way
through a grueling turnaround
regimen.
•
• So far, however, Dell is missing the biggest
element in the turnarounds at Apple and
Hewlett-Packard: deep product design
teams.
•

• Both Apple and HP appealed to consumers

to claw their way out of slumps. Apple,
under Chief Executive Steve Jobs,
launched catchy new products ranging
from all-in-one iMacs to the iPod line of
digital music players.
•

• Hewlett-Packard, likewise, poured resources

into designing slick, retail-friendly PCs to
compete on crowded store shelves even
as it was slashing jobs and shuttering
excess manufacturing capacity. That was
good enough to move HP past Dell to the
top spot in the PC business.
• Dell, by contrast, has never spent
much on research and
development. For the fiscal year
ending in February 2008, Dell spent
$610 million, scarcely more than
1% of its sales, on research and
development--and that is up from
the prior year.
•
• By contrast, HP spent $3.6 billion, or
3.5% of sales, on R&D for the year
ending in October 2007.
• If Dell is to grab dollars from
beleaguered consumers, it will have
to wring a lot more innovation out
of its slim R&D budget.
•
• Or it's going to have to sink fresh
resources into the job: a tough task
when you're promising
 

 Thank you 