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