“ Direct From DELL

Strategies That Revolutionized an Industry ”

Presented by:
• Abhishek Shahi
• Anu Gupta
• Krutika Doshi
• Saumya Chaturvedi
• Shivam Behl
• Vipan Kumar
 Mission Statement: “To provide customers with superb value,
high quality, relevant technology, customized systems, superior
service and support, and products and services that are easy to
purchase and use.”

In doing so, Dell will meet customer expectations of:

• Highest quality
• Leading technology
$2.0B • Competitive pricing
• Individual and company accountability
• Best-in-class service and support
• Flexible customization capability
• Superior corporate citizenship
• Financial stability
 Dell – the foundation

Initially named as PC’s Limited, Dell was founded in 1984

by Michael Dell
Headquartered in Round Rock, Texas
The startup aimed to sell IBM PC-compatible computers
built from stock components
In 1985, the company produced the first computer of its
own design — the "Turbo PC", sold for US$795 — which
contained an Intel 8088-compatible processor running at a
speed of 8 MHz.
Rechristened as Dell Computer Corporation in 1988 and
finally Dell Inc. in 2003 due to its expansion beyond
computers and into other arena
First international operation established in Ireland in 1987

www.dell.com 3
 THE SOUL OF DELL
Dell characterizes its statement of corporate philosophy called the "Soul of Dell” which defines the kind of company it
is and aspires to become. Below are the core elements of the Soul of Dell:

Customers: We believe in creating loyal customers by providing a superior experience at a great value. We
are committed to direct relationships, providing the best products and services based on standards-based
technology, and outperforming the competition with value and a superior customer experience.

The Dell Team: We believe our continued success lies in teamwork and the opportunity each team member
has to learn, develop and grow. We are committed to being a meritocracy, and to developing, retaining and
attracting the best people, reflective of our worldwide marketplace.

Direct Relationships: We believe in being direct in all we do. We are committed to behaving ethically;
responding to customer needs in a timely and reasonable manner; fostering open communications and
building effective relationships with customers, partners, suppliers and each other; and operating without
inefficient hierarchy and bureaucracy.

Global Citizenship: We believe in participating responsibly in the global marketplace. We are committed to
understanding and respecting the laws, values and cultures wherever we do business; profitably growing in all
markets; promoting a healthy business climate globally; and contributing positively in every community we call
home, both personally and organizationally.

Winning: We have a passion for winning in everything we do. We are committed to operational excellence,
superior customer experience, leading in the global markets we serve, being known as a great company and
great place to work, and providing superior shareholder value over time.

www.dell.com 4
 Dell’s Global Presence
The Americas EMEA Asia Pacific China

Austin
Texas Limerick
Ireland

Nashville Xiamen
Tennessee China

Eldorado do Sul Penang

Brazil Chennai Malaysia
India
www.dell.com 5
 Dell’s Competitive Advantage

Dell’s Direct Business Model

Commitment to Open Standards

Order Velocity/Build to Order

Supply Chain Optimisation

Continuous Process Improvement

www.dell.com 6
 Dell in China
Compared to United States, where the Personal Computer Industry is
saturated, in China the Personal Computer Market is still growing. According
to Forrester research, China had 54 million PC users in 2007, but the number
is expected to grow to about 500 million by 2015 - about half of the world
wide increase. While computer shipments are growing at less than 3% in the
U.S, the Chinese market is taking in 20% a year, which doubles the
worldwide rate. China's Lenovo, Haier and Founder, along with Taiwan's Acer
and Asus are also major players in the Chinese Market apart from Acer, Dell
and HP.

Difficulties faced by Dell in China:

Lack of infrastructure
Lack of credit card usage in China
Lack of efficient and effective postal service
Chinese customers “see and feel” the product before purchasing.
Business practices common in China such as bribery and giving of gifts,
violate normal Western corporate rules
Chinese governments inclination towards local players

www.dell.com 7
 Direct Selling Model

Core Competency

www.dell.com 8
 “Selling what you have,”
rather than
making what you want to sell
www.dell.com 9
 What the direct model is ???

Concept- Direct selling to customers.

You can place order over- telephone, web-
site.
You can make payment by credit card, in
your nearest bank or at your gate.
You can customize the product according to
your need
You will get delivery within next 48 hours.

www.dell.com 10
 The three tests

Wide Access- three geographic regions:

the Americas; Europe, Middle East and
Africa; and Asia Pacific-Japan.
Difficult to Copy- IBM, Compaq and
Chinese giant Legend tried to replicate
but failed.
Customers Benefit- Benefit of good
quality product at low cost.

www.dell.com 11
 Why this competency???

To eliminate its inventories and huge working

capital requirement.
Generated enormous amounts of cash that
used to fuel its growth.
Avoided the time and cost factors the
intermediaries add.
Finally high standard of customer satisfaction
by competitive price and high quality.

www.dell.com 12
 How they did it- The Magic

Account selection
Demand management
Product lifecycle management
Supplier management
Forecasting
Liquidity management

www.dell.com 13
 Pest
Analysis

www.dell.com 14
 Political Factors
Lot of red tape involved in securing
government contracts.
Chinese government opened markets for
International players.
Chinese government prefers to promote
national PC vendors to foreign companies.
Government control of internet usage in
China is another threat to the growth of the
internet.

www.dell.com 15
 Economic Factors
Problem of Software Piracy.
Shortage of skilled labor.
Standard of living is not very high.
Customers want the cheapest system.

www.dell.com 16
 Social Factors
Consumers have negative attitude
towards huge investment involve in
computers
Dell had to incur cost in following “Direct
Model Approach” to gain consumers’
faith & trust in the company & product.
Less awareness regarding e-commerce &
usage of cards.

www.dell.com 17
 Technological Factors
China’s annual PC production would reach 7.6
million making it the third largest in the world.
The potential for Internet growth is huge in
China, giving DELL the opportunities to
expand into a new market.
Internet facilities are costly in China.
Chinese Govt. trying to develop Software
Industry

www.dell.com 18
 PORTER’S FIVE MODEL
HIGH

INTENSE
HIGH

NONE MODERATE

www.dell.com 19
 PORTER’S ANALYSIS

Threat of New Entrants – HIGH

• Foreign and local competitors
• IBM, Compaq and HP also entered in 1990s
• Less government policy barriers
• Potential barriers include
• High Industry Growth

Threat of Substitutes – NONE

Bargaining Power of Suppliers – HIGH

• Dell and most competitors use the same core products
that are required to make PC.

www.dell.com 20
 PORTER’S ANALYSIS CONTD..

Bargaining Power of Buyers – MODERATE

• Few buyers purchase a large portion of industry output
• Brand reputation and product differentiation can mitigate

Competitive Rivalry – INTENSE

• High profit potential due to industry growth
• Price pressure from local competitors
• fixed costs of production capacity
• Aggressive competitive response
• Lenovo adopting Dell’s direct sales model in China
• Lenovo’s joint venture with IBM to increase it’s share

www.dell.com 21
 Industry players in China in 2002

Market Share

30 Legend
42
Founder
Tongfang
Dell
10
IBM
3 4 5 6
HP
Unbranded

www.dell.com 22
 Industry players in China in 2007

Market share

28
36
Lenovo
Founder
6 Dell
HP
8
13 Tong Fang
9
Other

www.dell.com 23
 Lenovo Vs Dell in 2009
2009

5,80,000 Computers sold at

subsidized rates in the rural market.
• Lenovo sold 42 % out of the total .
• Dell had less than 1% .

www.dell.com 24
 SWOT

Analysis

www.dell.com 25
 Strengths
Direct Model
Product Reliability
Customer Relationship
Build To Order
Competitive Prices

www.dell.com 26
 Weakness
Dependent on suppliers.
IT advancement.
Low budget on R&D
Absence of “Gunaxi” and Physical touch.

www.dell.com 27
 Opportunities

Internet
Introduction of new and enticing
products
Bluetooth,WiFi,4G services
Handset industry

www.dell.com 28
 Threats

Strong Brand names in the market.

Price war
IT advancement(PDA’s)
Dell sources from Far Eastern nations
where labour costs remain low,
competitors can do the same

www.dell.com 29
 Three golden rules at Dell :
`Disdain inventory'
`Listen to the customer'
`Never sell indirect'

Thank You
www.dell.com 30