Professional Documents
Culture Documents
Selling Directly, Globally BY Arun Kumar T - 028
Selling Directly, Globally BY Arun Kumar T - 028
Selling Directly, Globally BY Arun Kumar T - 028
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 23rd year of operation Ranked 2nd in the US and worldwide PC market in 1999 Expanded from a US$6.2 million in 1985 to US$21.7 billion.
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 Computer Corporation became official in May 1984. It was founded on the Direct Business-toConsumer 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
Demographic
Target Consumers: small to medium sized businesses in the US market Location: In the US, UK and 14 international subsidiaries by 1999 The Direct Model:By selling personal computers directly to customers. With Closer contact with customers, there was less need for massive amount of inventory.
Dell computer directly sells to customer and therefore, both retailer and distributors are omitted from supply chain. The supply chain has three main links:
1. 2. 3. Materials flow from suppliers and their upstream suppliers at all levels Transformation of materials into semi-finished and finished products through the organizations own production process Distribution of products to customers and their downstream customers at all levels
Global
Operated sales offices in 33 countries Served customers in more than 170 countries and territories around the world
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 They very much dependendent of just in time inventory.
On line purchasing Strategy: Online technical support, order status information and online downloading of software. Intensity of rivalry
Product Substitutes
Power of Suppliers
Power of Buyers
Shipping in US and worldwide: Compaq, IBM, HP, and NEC Competition in Chinas PC industry in 1999:
1. 2. 3. 4. 5. 6. 7.
Strengths
Weaknesses
The price of a PC was the equivalent of two years of a persons savings. Retail buyers only accounted for 10% of sales.
Opportunities
To increase market presence in China, the second largest PC market in the world
Chinas 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.
Threats
Chinas nationalistic policies made US companies operating in China vulnerable to the ups and downs of Sino-American relations. The Chinese government made no secret that national PC vendors would be promoted.
Direct sales operations Customer service Just-In-Time inventory usage Customisation: To attract the corporate clientele , dell created customised premier pages that allowed them to purchase through intranet. E support E commerce strategy. Building customer loyalty.
Tangible Resources
Intangible Resources Direct model
Dell was named the as one of 1999s ten best web support sites by the association of support professionals
Current Strategies
Business-level strategy
Differentiation from competitors.
Corporate-level strategy
Financial position
Dells Customer Group were divided into three segments: LARGE CORPORATE ACCOUNTS(1500+ EMPLOYEES) PREFERRED ACCOUNTS DIVISION (500 -1500 Employees) HOME AND SMALL BUSINESSES(<500 EMPLOYEES)
Success in niche market Fast service Current value Consistent sales growth
Channels
Direct
Direct business-to-customer model Cutting out the cost of distribution
Indirect
Pricing advantage Chinese were uncomfortable with credit card sales , especially of high price ticket products that cannot be viewed before purchases.
Partially yes, and partially no. Dell could not succeed its business compared to the other markets
Uncomfortable with credit card sales Costs of enforcing the direct model took a sizable chunk away from Dells earnings Future potential for Internet growth was huge Uncertain