DELL

SELLING DIRECTLY,GLOBALLY
 DELL

PRESENTED TO: PRESENTED BY:

Prof. Ranjan Paul Bappi Dey – 27

Sk.Asif Azhar-23
Anil Panigrahi-06
Anurag Karmakar-17
Kiran Shekhar Sahu-
40
 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 Executive Leadership Team
 Michael S. Dell - Chairman of the
Board and Chief Executive Officer.
 Paul D. Bell - Senior Vice President and
President, Americas.
 Michael R. Cannon - President, Global
Operations.
 Donald J. Carty - Vice Chairman and
Chief Financial Officer.
Dell Executive Leadership Team
 Ronald G. Garriques - President,
Global Consumer Group.
 Mark Jarvis - Chief Marketing Officer.

 Stephen F. Schuckenbrock - Senior

Vice President and President, Global
Services, and Chief Information Officer.
 Lawrence P. Tu - Senior Vice President,
General Counsel
 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 rivalry-
 Legend remains #1 in China
 Product Substitutes-
 Legend is adopting the just-in-time delivery mode
 Power 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. Legend
2. IBM
3. HP
4. Founder
5. Great Wall
6. …
7. Dell
 SWOT Analysis
Strengths:
 Great Customer Service -
 Customers 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 if a problem arise
 SWOT Analysis
Weaknesses:
 Unfamiliarity with the Chinese socioeconomic
situation -
 The price of a PC is equivalent to savings of two
years of a person.
 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 the Chinese Government-
 China’s 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
 Benefits of direct sales method
 Direct sales with build-to-order is a powerful
model for both Dell and its customers.
 Customers get what they want, rather than be
forced to choose among a fixed set of options.
 Dell wins because by developing and building only
those systems that customers want, Dell
eliminates the excess cost of buying too many
components, having high storage and inventory
costs.
 Dell can use savings in other areas such as web
site improvement, marketing and distribution.
 Selective Expansion
 Size of market
 Availability of resources
 Local acceptance of Dell product
 Sufficient management resources at local
level
 Suppliers ability to deliver parts at short
time.
 Adequate arrangements with carriers
 Operating cost
 Strategic Analysis
 Current Strategies-
 Business-level strategy
 Differentiation from competitors.
 Corporate-level strategy
Financial position
Source- www.dell.com
net sales(in us$ millions)
20000
18000
16000
14000
12000 net sales(in us$
10000 millions)

8000
6000
4000
2000
0
FY 97 FY 98 FY 99
 Net income(in US$ millions)
1600

1400

1200

1000
Net income(in US$
800 millions)

600

400

200

0
FY 97 FY98 FY99
net revenue by probuct lines for 1999

enterprise
13%

portables
23%
desktops
64%
 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
 Related Questions
 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
 Implementation plan
 Dell needs to target less tech-savvy people who
don’t have good knowledge about computers.

 Add more information about the components so that

even low-tech people could understand.

 Shorten the steps in configuration phase and

eliminate several options so that customers would not
lose patience. Also eliminate those component
selections which are least selected to make the
process of configuration faster and not that difficult.
THANK YOU.