Dell Inc.

Company Profile:
Dell India Pvt. Ltd. designs, develops, manufactures, markets, sells and supports mobility
products, including laptops, net book, tablets, and also smart phones, desktops, PC servers
and networking products. The company was incorporated in 2003 and is based in Bangalore,
India. Dell India operates as a subsidiary of Dell Inc. Mr. Alok Ohrie is the full time
managing director for Dell India. Mr. P Krishna Kumar is the full time Executive Director of
Consumer and small business. Mr. Ravi Bharadwaj is the full time Executive Director of
Marketing. Dell empowers countries, communities, customers and people everywhere to use
technology to realize their dreams. Customers trust us to deliver technology solutions that
help them do and achieve more, whether theyre at home, work, school or anywhere in their
world. Dell began to redefine itself as the company that knows how E works. Capitalizing
on its reputation as an e-commerce pioneer, Dell has offered to share that expertise with its
customers as they develop their own e-commerce capabilities. Dell is using the virtual
company approach to expand the scope of its business without a commensurate expansion of
its own work force and without making a major acquisition.

History:
Dell Computer was founded by Michael Dell in 1984, while he was a student at the
University of Texas, Austin. Dell began by selling upgrades of IBM-compatible PCs and in
1985 began to sell its own brand of PCs. From the beginning, Dell operated on the direct
sales model, taking orders over the phone and building PCs to the customers specifications.
Dell entered the retail PC channel for several years in the early 1990s, but a downturn in
business in 1993 led it to return to its roots as a direct vendor (although the company does
work with resellers in some markets).
Dell grew rapidly and in the mid-1990s, its sales reached an inflection point, soaring from
$3.5 billion in 1994 to $25 billion in 1999. By 1999, Dell had become the number one PC
seller in the United States, and was number two worldwide. More importantly, profits were
soaring, thanks to the cost structure of the direct, build-to-order model. By turning its
inventory over 60 times a year, Dell minimized the rapid depreciation costs that mark the PC
industry, and by receiving payment from its customers before it paid its suppliers for
components, Dell operated on a negative cash conversion cycle. This minimized Dells
working capital requirements and allowed it to achieve high rates of return on its invested
capital. The result was an exceptional run for Dells stock, which outperformed even
stalwarts such as Microsoft and Intel in the 1990s (Kraemer, et al., 2000). This success has
taken place against the backdrop of falling PC prices, brutal competition, and enormous
losses by other PC makers. Dell has not only survived, but thrived in this environment thanks

to the fundamental advantages of the direct model, and to its continued efforts to improve its
execution of that model. It also has taken advantage of its direct model to build strong, stable
relationships with the large corporations and other organizations who are its core customers.
Unlike indirect vendors, Dell knows who its customers are and has a great deal of
information that it uses to provide a high level of service and support, to target customers for
retention and expanded sales, and to sell additional third party hardware and software. But
even Dell has not been immune to the turmoil in the PC industry. While its most recent 26%
growth rate continues to outpace the industry as a whole, it has not been able to match its
earlier growth rates of 50% a year, and was hit hard by the slowdown in PC sales in late
2000. The result has been a sharp fall in Dells stock price and a reminder that Dell is
vulnerable to the brutal price competition and cyclical demand of the PC industry.

Competitors:
Dells major competitors in its core corporate PC market are Compaq, IBM and HewlettPackard. In the consumer and small business market, it faces competition from fellow direct
vendor Gateway, and from Compaq, Hewlett-Packard, Apple, and newcomer e-Machines. In
the portable PC business, the key competitors are Toshiba, IBM, and Compaq. In the critical
server and Internet infrastructure markets, Dell competes with Sun, Compaq, HP, and IBM.
As Dell moves into new service businesses such as Internet hosting, it faces new competitors
such as Exodus and Corio, some of whom may also be Dell customers.

Business Strategy:
Dells business has been built on direct sales, build-to-order strategy for producing and
selling PCs. While Dell originally sold to hobbyists and experienced individual PC users, by
the late 1980s, it was making inroads into the corporate market. Dells direct approach
appealed to MIS departments in large organizations who often didnt need or want the
various services provided by corporate resellers. Dell concentrated its efforts on working
closely with those departments to simplify their lives and lower the total cost of ownership
for PCs. Gradually, Dell developed its own sales force to deal directly with CIOs and other
top executives, helping penetrate corporate accounts that had long been dominated by
established IT vendors such as IBM, HP and DEC. Dell offered competitive prices, high
levels of support, and a focus on selling and supporting PCs without the distraction of
offering a full line of hardware and services.
Dell has capitalized on the inherent advantages of its business model to grow rapidly and
profitably. A key advantage of direct sales and build-to-order production is that expensive
inventory does not build up in the channel and lose value before it can be sold, and new
products can be introduced without having to clear out old inventory in the channel. Dells
inventory turnover rate of 60 times per year compares to 12-15 times for most indirect
vendors. Also, customers often pay for the final product before Dell pays suppliers for the

parts that go into the PC, so that Dell operates on a negative cash conversion cycle. Dells
manufacturing operations are set up to support this business model by building PCs to a
customers specifications, pre-loading software and a hard drive image in the factory, and
providing an asset tag that can be scanned to keep track of the PC throughout its lifecycle.
The build-to-order process has been carefully honed for years, and involves the entire
production cycle and supply chain. Thus, a Dell PC is designed to minimize human touches
in production, suppliers are selected to ensure high product quality, suppliers are physically
integrated into production, and the entire order fulfilment process is managed by a
sophisticated combination of internal and external information systems.

Internal Organization:
Dell is organized along geographic lines into the Americas, Asia-Pacific and Japan, and
Europe. The company decided in the mid-1990s that in order to manage a company that was
growing at 50% a year, it needed to decentralize decision making rather than try to control
everything from the U.S. Therefore, each of the regions has its own regional headquarters, its
own manufacturing facilities, and its own IT infrastructure.
Dells business activities are organized in each region around different customer segments.
(1) Relationship (large corporate) customers,
(2) Home and small business (sometimes called transaction customers)
(3) Public sector (government and educational) customers.
Dells segmentation is reflected in its product mix, which has different lines for each segment,
in its marketing strategies, which vary by segment, and in its e-commerce and Internet
strategies.

Product Development:
Dell customers can order PCs with a variety of configurations for items such as processor
speed, memory, storage, sound and video, networking, and monitors. For the most part,
however, Dell keeps its configurations fairly limited, with only a few options for each item.
But even so, there are thousands of possible permutations for each product, and several
products in each line. One estimate is that Dell offers a total of 1.6 million different possible
product configurations for all its product lines.
Dell works with partners such as Microsoft and Intel on product development, and with
contract manufacturers such as Quanta for product engineering. By leveraging the
innovations of the PC industry value chain, Dell minimizes its R&D costs. Its own R&D
budget is only about 1.6% of revenues, compared to 4-7% for IBM, HP, Compaq and Apple,
who are supporting their own technology platforms.

Dell also offers a wide range of third party software and accessories for sale through its
DellWare (for relationship and public sector customers) and Gigabits channels.
Software also can be installed at the factorystandard applications such as Microsoft Office
for all customers, and non-standard or custom applications for relationship customers. In
general, then, Dells product strategy is aimed at enabling it to capture both new customers
and a larger share of its current customers dollarsfrom PCs to servers and storage; from
software to services; and from its own products to third party products. In return, Dell gives
customers the convenience of buying a full range of products and services from one source.

Manufacturing and Logistics:

Dells build-to-order manufacturing process can turn an order around in under a week from
the time an order is received until the PC is delivered to the customer. The actual time of
assembly is as little as seven hours, including software installation and extensive system
testing.
A key to manufacturing is managing inbound logistics with suppliers and contract
manufacturers. To have the parts it needs at the right time to assemble a PC, Dell requires
suppliers to hold inventory in warehouses within a 15-30 minute drive of its plants. Dell then
informs the warehouse when parts must be replenished, and they are trucked to the plant,
where they are pulled off of the trucks as needed. When a PC is fully assembled, it is sent to
an outbound logistics hub where it is joined with the monitor and peripherals so that the
complete system arrives at the customers site together. All of these logistics are coordinated
by Dell through its internal IT systems and via electronic linkages with suppliers, its own
logistics hubs, shipping companies, and distributors who handle third party items.

Sales and Marketing:

Relationship and public sector customers account for about 65% of Dells revenues overall.
They are serviced by these field reps and a support team of telephone service reps dedicated
to these accounts. Small businesses and consumers are served by several thousand phone reps
who can call up historical sales records to assist the customers in choosing systems that
match their prior purchase pattern. Approximately one-third of Dells employee base is in
sales and marketing.
The biggest change in Dells sales and marketing operations has been the introduction of the
Internet to handle online sales and to support Dells sales representatives. At first there was
resistance on the part of the country managers and sales reps, who feared losing commissions
if customers purchased online or through outbound call centres. To resolve this potential
internal channel conflict, Dell changed its incentive system so that country managers and
sales reps would receive credit for a sale to their customer accounts, whether it was made on
the phone, online, or in person.

Dell marketers basically categorize their market into two major segments, namely domestic
or individual customers, and business customers. These two customer segments can be
differentiated based on their characteristics below:
a) Businesses spend a lot more on the purchase of computers than domestic customers as they
usually allocate certain budgets on IT purchases.
b) Businesses are normally regular and repeat computer buyers, whereas domestic customers
normally buy once and repurchase only when the ones they own are out dated or spoilt.
c) Businesses often buy based on strategic plans for the usage of the firm, while domestic
customers buy for personal reasons such as for playing games or doing assignments.
d) Businesses usually have buyers or specialists to handle their IT purchases, unlike domestic
customers who make their own buying decisions.
e) Businesses take into account more factors when buying computers, which include price,
cost of maintenance, ease of upgrade, security and stability.
f) Last but not least, businesses purchase more complex machines like servers, whereas
domestic customers normally go for laptops.

Customer Relationship Management:

As one of the most successful computer corporations in the world, Dell certainly has a
remarkable customer relationship management to meet with the ever-changing customer
demands and maintain strong customer relationships despite the growth of its competitors
such as Apple, IBM and HP. Dell utilizes CRM to offer exceptional customer service to its
customers by promoting itself as a reliable and trustworthy service provider.
Customer Value = Benefits Costs Value is the entire product experience.
This is synonymous with Dells mission statement: To be the most successful computer
company in the world at delivering the best customer experience.
In the early 1990s, Dells attempt to sell its products through retail outlets failed as it turned
out to be unprofitable. Dell then shifted focus on customer service and support by allowing
customers to customize their orders. This unique strategy has been working well until today,
resulting in Dell being a leading virtual corporation in the computer industry. Dells simple
concept is to sell computer systems directly to customers. This approach is important for the
company to cut intermediary costs and to manage itself effectively across its product lines
and customer segments worldwide. With CRM, Dell can also cut the costs of gaining new
customers by retaining current ones to encourage repeat business.

Customer Experience:
In 1998, Dell launched a strategic program called the Customer Experience to leverage its
direct customer model. The company began to look at all of its business aspects from its
customers point of view, and deliver the best customer experience to them across all points

of contact with the company. Instead of taking the reliability of hardware as the only criterion
to define quality, Dell started to pay attention to providing exceptional customer experience
as another necessary way to satisfy customers. They perceive the quality of their products and
services from the customers perspective and come out with solutions to meet or exceed those
customers expectations.
Dell can achieve two objectives as they improve every customers experience, namely an
increase in brand loyalty and subsequently repeat business, and an increase the value added to
the company which makes them more competitive over other low-cost computer and software
manufacturers. A customers touch points or experience with Dell include viewing the
companys advertisements, browsing through the company website, ordering a computer
system, and receiving post-purchase services. In the early 2000s, Dell already had over 16
million customer contacts a week. The wide scope of customer experience makes it a key to
the companys success.
Dell adopts a customer-centric relationship management by encouraging every employee to
focus on customer preferences and on building good relationships with them, as employees in
the company are frequently involved in making decisions that affect the customers. Each of
them is responsible to provide great customer experience. Customers are the key external
driving forces for Dell. They are the VIPs of the company so it is no wonder that Dell always
puts its customers first in every decision they make. Satisfactory and continuous customer
experience is essential to Dells success as it will drive more new customers to them while
retaining the current ones.

SWOT Analysis of Dell:

SWOT Analysis is a strategic method which highlights and used to evaluate the Strength,
Weakness, Opportunities and Threats of a company. The SWOT analysis for Dell is
evaluated below:
Strengths: Dell has a strong branding and positioning strategy. Dell tries to constantly update
its product and services with latest technology. Many of the Dells strength evolved from its
direct model. The low price, lean operation, direct marketing model, product Customization
by user, product diversification, reliable support, excellent customer service and efficient
utilization of e-commerce are major strengths of Dell.
Weakness: Dells weakness lies within its strategy, due to its Just-in time manufacturing it
has to completely depend on its suppliers. Dell lacks in attracting the student community, so
it loses the advantage of utilising the education market. Dell does not have any proprietary
technology like Apple. The technology used by Dell is shared by its major competitors.
Opportunities: With well-established e-commerce model Dell is able to reach any niche
market in any part of the world and sell its products directly to the customer. Dell tends to
diversify and extends its products constantly which create lot of opportunities. Dell also
makes partnership with its suppliers which further enhance its inventory and product
diversification.

Treats: The bargaining power of suppliers and buyers are so high for Dell. The major
competitors give tough fight for Dell in the market. The technology advances in a quick pace
which make the products obsolete is a quick span of time. Branding and low-cost strategy
should be intensified to sustain.

Challenges faced by Dells E-Marketing:

The intensity of Dells competitiveness and captivation can be effectively determined using
Porters five forces analysis.
Rivalry among competitors is high for Dell. Its major rivals are Apple Computer, Compaq,
IBM, Gateway, Hewlett-Packard, Silicon Graphics and Micron Electronics. Price war always
exists between the competitors. There is low differentiation and high concentration in the
market. Due more competition the profitability is low. Dell tackles its rivals by lowering the
prices of its products, improving quality, improved features for customization of its products
by the users, wide range of varieties and offers, quicker manufacturing and shipment,
extending service and increasing advertising.
The threat of new entrant is moderate for Dell. Dell has a powerful branding strategy, so
brand name will be a enter barrier for new entrants. The capital investment is low for new
entrants and decreasing profitability indicated that Dell has potential treat for new entrant.
The e-marketing of Dell faces a huge challenge. The E-Marketing has a major disadvantage
when compared to traditional marketing, such as, the inability of the user to touch, see and try
the product before they purchase. However, Dell has some offers to the buyer like one year
free service and videos which explains features of the products. E-Marketing strategy should
be able to overcome this drawback.
The number of online shoppers is increasing day by day. Due to global reach and effective
communication, e-commerce and e-marketing becoming more popular.
The first major challenge is to reach and attract the user to the Dell website through effective
e-marketing, for this e-marketer need to attract online users to view what offer they have for
the user. When the number people view the offer is more, there is possibility to increase
sales. The advertisements must my creative and attractive to seek the attention of the user.
The next big challenge is to make the website user to buy the product, as just the user visits to
the website is just the first step; it does not count to the profitability of the company. Dell has
to make sure those products and offers are really convincing to the user. The user should be
notified and updated regarding the offers, products and services constantly.