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Business 2 Business Project

Customer Value Management at Dell

ePGP-04C-044 Karan Sangar, Senior Business Advisor, Dell India Pvt Ltd

ePGP-04C-055 Murali R, Senior Delivery Manager, Target Corporation

A little bit about Dell:

For more than 28 years, Dell has empowered countries, communities, customers and people everywhere to use technology to realize their dreams. Customers trust them to deliver technology solutions that help them do and achieve more, whether they're at home, work, school or anywhere in their world. From unconventional PC startup to global technology leader, the common thread in Dells heritage is an unwavering commitment to the customer. Dell has over period of time acquired companies & skills to become one of the forces as solutions provider in the growing solutions and services market. It has focused on four key growth areas: end user computing, enterprise solutions, software and services. Industry analysts recognize their strategic evolution and strength in PCs, the data center, software and services. Gartner positions Dell as a leader in 11 Magic Quadrant reports.

Our goal:
During this project, we will go through the Value Dell creates for the customer. We are all well familiar with Dell direct 2 customer approach enabling no middleman business model and creating a value for the customer through cost leadership achieved during this process. In recent past, Dells competitors has pushed them to look into not just direct but other well established models in the industry. HP has achieved substantial lead in overall PC sales due to long term relationships with LR (large retailers). Lenovo has built efficient distribution centers, low cost shipping methods & low cost structures especially in the consumer segment enabling them cost advantage. We will explore why and how dell could take advantage of the opportunities created from inside to mitigate risk from competitors, build relationship with LR & MR (medium retailers) and ensure smooth supply chain through less complexity that can be converted to value for the customer. We will look at understanding & creating value in direct & reseller channels by: -

Target Market segmentation through in house modeling capabilities & effective positioning & customer value propositions Products rationalization through complexity reduction Monitoring & assessing customer value by benchmarking against competition through effective product competitive analysis Working with Suppliers and across functions to enable benefit achieved through complexity reduction

Dell Recent performance:

Dell saw shipments decline by more than -10% globally and -14% in the United States. The vendor continued to face tough competition and struggled with customer uncertainty about the direction of its restructuring. Nevertheless, the decline in shipments was smaller than the past few quarters, and its sales to Asia/Pacific returned to positive growth.

Global PC Market Recent performance:

Worldwide PC shipments totaled 76.3 million units in the first quarter of 2013 (1Q13), down -13.9% compared to the same quarter in 2012 and worse than the forecast decline of -7.7%, according to the International Data Corporation. The extent of the year-on-year contraction marked the worst quarter since

IDC began tracking the PC market quarterly in 1994. The results also marked the fourth consecutive quarter of year-on-year shipment declines.

US PC Market Recent Performance:

The impact of slow demand has been magnified by the restructuring and reorganizing efforts impacting HP and Dell. Lenovo remains a notable exception as it continues to execute on a solid "attack" strategy. Mid- and bottom-tier vendors are also struggling to identify growth markets within the U.S.

Dells Next best Competitors Globally (Lenovo) & in US (HP) Recent Performance:
HP remained the top vendor, but posted a substantial double-digit decline in shipments after an aggressive fourth quarter kept growth flat during the holidays. HP's worldwide shipments fell more than 23% year on year in 1Q13, with significant declines across all regions, as internal restructuring continued

to affect commercial sales. Although HP maintained its leadership position in the United States, the company saw U.S. shipments fall -22.9% from a year ago. Lenovo remained second in global shipments and nearly closed the gap with HP. Lenovo continued to outpace the market, notably expanding shipments with its attack strategy. In the United States, Lenovo outperformed the market with double digit year-on-year growth compared to the market's double-digit contraction. Shipments in Asia/Pacific declined, however, keeping Lenovo's overall growth flat.

Dell historical performance: