Dell - charter.net
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Transcript Dell - charter.net
Dell
Selling Directly, Globally
History
Founded in
1983 by Michael Dell at age 18
Began selling upgraded PCs and add-on
components from a dorm room at the University
of Texas
In its 15th year of operation
Ranked 2nd in the US and worldwide PC market
in 1999
History (continued)
In
1985, Dell was a $6.2 million business
In 1996, Dell began its Internet approach
Dell expanded to $21.7 billion in 1999
Dell Profile
Dell
Computer Corporation became official in May 1984.
It was founded on the Direct Business-to-Consumer
Model.
It is the fastest growing among all major computer
systems companies worldwide.
Michael Dell is the youngest CEO of a Fortune 500
company
In July 1999, Dell became the #1 PC Vendor to
businesses in the US
General Environment
Demographic
Target
Consumers: small to medium sized
businesses in the US market
Location: In the US, UK and 14 international
subsidiaries by 1999
General Environment
Global
Operated
sales offices in 33 countries
Served customers in more than 170 countries and territories
around the world
Technological
Internet
presented a medium which Dell used to enhance its
direct sales approach
24 hour on-line technical support, order status information,
and downloading of software
Industry Analysis
Intensity of
Legend
rivalry
remains #1 in China
Product Substitutes
Legend
Power
is adopting the just-in-time delivery mode
of Suppliers
IBM, HP, and Compaq establish plants in China
Power
of Buyers
Chinese
were uncomfortable using credit cards online
thus hurting online sales
Competitive Environment
Shipping in US and worldwide: Compaq, IBM, HP,
and NEC
Competition in China’s PC industry in 1999:
1.
2.
3.
4.
5.
6.
7.
Legend
IBM
HP
Founder
Great Wall
…
Dell
SWOT Analysis
Strengths
Great Customer
Customers
Service
can call or access Dell’s website and
order a customized computer in less than 10 minutes.
A customer then has a number of methods to contact
Dell’s technical support such as the phone, online
and on-site repairs should a problem arise.
SWOT Analysis
Weaknesses
Unfamiliarity with
the Chinese socioeconomic
situation
The
price of a PC was the equivalent of two years of
a person’s savings.
Retail buyers only accounted for 10% of sales.
SWOT Analysis
Opportunities
To
increase market presence in China, the
second largest PC market in the world
China’s
PC Industry had seen extraordinary growth
between 1990 and 1996.
Dell
had a good chance of increasing its
presence in the Chinese market by introducing
the Direct Model.
SWOT Analysis
Threats
Red Tape with
China’s
the Chinese Government
nationalistic policies made US companies
operating in China vulnerable to the ups and downs
of Sino-American relations.
The Chinese government made no secret than
national PC vendors would be promoted.
Capabilities
Direct sales operations
Customer service
Just-In-Time inventory usage
Core Competencies
Tangible Resources
Intangible Resources
Strategic Analysis
Current
Strategies
Business-level
strategy
Differentiation from competitors.
Corporate-level
Financial
strategy
position
Performance Appraisal
Success in
niche market
Fast service
Current value
Consistent sales growth
Strategic Alternatives
Channels
Direct
Direct
business-to-customer model
Cutting out the cost of distribution
Indirect
Selling
through distributors and adding value resellers
Strategic Alternatives
Products and Service
Build-to-Order
direct sales approach
Knowing
exactly what customer wants
Free installation of applications software
Timely delivery of orders
Comprehensive on-line purchasing tool
On-line
technical support
Order status information
On-line downloading of software
Strategic Alternatives
Building a business solely on pricing
Pricing advantage
Epilogue
Does
Dell succeed?
Partially
yes, and partially no.
Dell could not succeed its business compared to the other
markets
The
factors affecting Dell’s direct-business model in
China
Uncomfortable
with credit card sales
Costs of enforcing the direct model took a sizable chunk away
from Dell’s earnings
Future potential for Internet growth was huge
Uncertain