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Dell Incorporation

Founded Austin, TX, USA (November 4, 1984 as "PC's Limited")


Founders

Michael S. Dell

Industry

Products

Technology and ICT Desktops Servers Notebooks Netbooks Peripherals Printers Televisions
US$ 63.3 Billion (2012) US$ 4.43billion (2012) US$ 3.49 billion (2012) US$ 44.53 billion (2012) US$ 8.91 billion (2012)

Revenue Operating income Net income Total assets Total equity

Headquarters

Round Rock, TX, USA Global Michael S. Dell (Chairman & CEO)

Area served Key people

Employees
Subsidiaries Website

1,10,00 (2012) Alienware ASAP Software EqualLogic


Dell.com

Dells Global Presence


The Americas EMEA Asia Pacific China

Austin Texas

Limerick Ireland

Nashville Tennessee

Xiamen China

Eldorado do Sul

Brazil

Sales Offices in 43 countries Sales presence in 170 countries 7 Manufacturing Sites

Penang Malaysia

DELL BANGLORE

1984-1985-1987--

Founded in 1984 with a capital of 1000 dollars. Produced first computer Turbo of its own design. Started the first international operations.

1988-1989-1990--

Changed its name to Dell computer corporation. Dell released its first notebook computer. Tied up with Best Buy,Costco,etc,Dell shifts business over seas to try to gain market share. $500 million sales; with an extensive line of products. Changed to Direct Selling model. Dell goes online; $1 million per day in online sales; $5.3B in annual sales, (NOTE) same year AMAZON starts selling books online!!.

1993-1994-1996--

1997--

Dell online sales at $3 million per day; 50% growth rate for 3rd consecutive year, $7.8B in total annual sales even though US hit recession.

Cont
1999-2002-2003-Dell overtook Compaq to become the largest seller of PCs in US. Introduced Dell brand printers. Changed its named to Dell, Inc.

2004-2005--

Michael Dell stepped down as CEO & Kevin Rollins was asked to take his seat. Dell records one of its poorest years in company history.

2006-2007--

Dell Acquired Alienware.It gives access to Gaming Users. Kevin Rollins resigned. Michael Dell became the CEO once again.DELL 2.0 campaign AND Dell resumed it partnership with Retail giants With $61.101B sales & employees over 76,500, makes a strategic acquisition of Systems for $3.9B USD. In 2010 Dell finally paid $100 million to settle the SEC's charges of fraud. Drops from 2nd position in PC market to 3rd.Overtaken by Lenovo.

2009 Perot 2010--2012---

Interesting Facts
The 10 largest US companies run on Dell. The top 5 US commercial banks run on Dell. 14 of the top Supercomputers run on dell. Ships about 1,40,000 systems per day- thats more than one every second. Dell is the only computer company offering free computer recycling to consumer worldwide.

Dell DOMINATION
DELL clearly dominated from 2001 to 2005.
Global PC Market Share by Units, Percent. 2001-2005 Rank 2001 2002 HPCompaq 2003 2004 2005

Dell

13.3

16.2

Dell

15.0 Dell

16.4

Dell

16.8

2
3 4 5 Other s

Compaq
HP IBM NEC

11.1 Dell
7.2 6.4 3.8 58.1 IBM NEC Toshiba

15.2
6.0 3.4 3.2 56.0

HP
IBM Fujitsu Toshib a

14.3 HP
5.1 3.8 2.9 58.9 IBM Fujitsu Acer

14.6
5.5 3.8 3.4 56.4

HP
Lenovo Acer Fujitsu

14.5
6.9 4.6 3.8 53.3

INDUSTRY CHALLENGE
component costs account for 75 percent of revenues and typically fall by 1 percent per week due to rapid obsolescence. Technological breakthroughs cause very short Product life cycles . Company who brings latest product to the market earliest benefits the most. Dell has been able to achieve the lowest inventory levels in the industry. In 2004, that was only three days of inventory on hand, compared to 30, 45, or even 90 days worth at competitors.

If your resources are stuck for inventory for 2-3 months ,how do you keep up with the rapid innovation cycle of industry and bring latest product to the markets?
With 90+ Days Manufacturer and Reseller Inventory, Channel Manufacturer Buys Here

120 115

Relative Component Cost

110 105 100 95 90

10-12% Cost Advantage


With 3 Days Inventory, Dell Buys Here
Typical Dell

-1 4

-1 2

-1 0

-8

-6

-4

-2

Weeks Relative to Delivery

DELL COMPETENCY:OPERATIONAL EFFICIENCY


Tight integration with suppliers Sourcing from few large suppliers. Emphasized minimum contact on parts through the supply chain. No more middle man. Dell implemented BUILD TO ORDER management system. Implemented JIT with suppliers in vicinity of DELL assembling plants. Used Information System for communicating the customer order, demand forecasting, errors. Provided the customization to customers, which was possible only because of supplier integration and operational efficiency. Taking orders from internet.

OFFSHORING
IN 2001 Dell offshored its customer support operations to India taking advantage of its cheap skilled labor .Two centers ,one in Bangalore and in Hyderabad. Contractual manufacturing to Low cost Manufacturers in eastern countries like Korea and china.Eg Quanta makes notebooks for Dell and HP.

Competitor Model
Loss of control over product & information flow & customer relationships Supplier PC maker Distributors Retailers Resellers Integrators Final Custo mer

HP,IBM ,GATEWAY followed this model STILL GAP EXIST EVEN IN DIRCT MODEL,LEADING TO INCREASE IN INVENTORY TIME

Suppliers
What if suppliers receive material order as soon as the customer places order??????

Customers

DELL ZERO TIME MODEL


Suppliers
Ownership of the value chain

Customers

With the use of virtualization DELL managed to significantly reduce the response time in processing the order. As soon as the customers place order, DELL SCM software converted the ORDER into parts to be supplied or material to be billed,that can be directly used by suppliers. Decreased the inventory by better DEMAND forecasting by sharing the sales data, demand forecasting .

Competitors Disadvantages vis--vis Dell


Need to hold inventory at each step in value chain . Have to pay suppliers first before getting paid from customers .

Caught with short supplies of hot products- lost sales.


Stuck with excess inventories of slow selling products . With about 2,000 product transitions a year, the ability to reduce product time to market is critical.

Results: 3 days of inventory - Inventory turns of 106 per year

Suppliers Logistics Hubs Dell Factory Delivery

Local Suppliers

Supplier Owned

Dell Owned

Customer

TOLANI INSTITUTE OF MANAGEMENT STUDIES

Dell Chooses i2 SCM S/W package


Dell chose i2 Technologies for its SCM system. i2 serves almost 70% of the SCM market. Every 20 sec the S/W aggregates orders, analyzes material requirements ,compares Dells on-hand inventory with its suppliers inventory and then creates a supplier bill of material to meet its order needs . Instead of forecasting the daily supply needed, Dell receives the exact material every two hours to fulfill actual customer orders.

ASSUMPTIONS FOR DIRECT SELLING


Customers are well versed with configuring systems, laptops etc.(What if they are not?) User have easy access to Internet?(Was it the case when Dell entered India, china?) Users have credit Card or are well versed with E-payment system.(Arent Indians still apprehensive about buying online)?

PROBLEMS
Product involved was OptiPlex desktops and Latitude notebook Language and cultural rifts between disgruntled U.S. customers and Dell's bright but unseasoned Indian support staff fueled the flames. American people found Indians to be technically lacking in knowledge and complained rigidly sticking to a script provided to them. Dell had to call-back 17000 units due to technical problem . Recall of Sony Battery cells in laptops in 2006 With the Red ocean of Competition ,Dell had to PUSH its product through tie ups with retail giants like BestBuy,Costco,Tata Croma in India,Gome in China, Bic Camera in Japan, Carphone Warehouse in the UK, DGSi and Tesco in various parts of Europe and Wal-Mart in the US, Canada, Brazil, Mexico and Argentina. Cost leadership shifted to Lenovo and Acer. Lawsuit against Dell for "false advertising and deceptive business practices Both quality and legal issues faced by Dell. Today the market is more for standardized model rather than customization. Dells major revenues come from Large corporate customer and SMBS.Dell had laid focus on END CONSUMER(Where is the growth coming for the PC MARKET?) Corporations postponing purchases and upgradation in wake of recession and cost cutting.

MARKET SHARE DROP

DELL MARKET SEGMENTATION

DELL TRANSITION THROUGH M&A


In 2009, Dell acquired Perot Systems, based in Plano, Texas, in a reported $3.9 billion deal. Perot Systems provided Dell with applications development, systems integration, and strategic consulting services through its operations in the U.S. and 10 other countries. In addition, the acquisition of Perot brought a variety of business process outsourcing services, including claims processing and call center operations. On February 10, 2010, the company acquired KACE Networks a leader in Systems Management Appliances. On August 16, 2010, Dell announced plans to acquire the data storage company 3PAR. On November 2, 2010, Dell acquired Software-as-a-Service (SaaS) integration leader Boomi. In March 2012, Dell agreed to buy SonicWall, which acquisition was completed 9th May 2012, a company with 130 patents. SonicWall develops security products, is a network and data security provider.

On 2 April, 2012, Dell announced that it wants to acquire Wyse, global market-leader for thin client systems
On 3 April, 2012, Dell announced that it has acquired Clerity Solutions. Clerity, a company offering services for application (re)hosting, was formed in 1994 and has it headquarters in Chicago. At the time of the take-over aprox. 70 people were working for the company.

TRANSITION TO 2012
Dell lost its 2nd position to Lenovo. It has lost its distinct competitive advantage as competitors too have developed efficient supply chains. Dell had to partner with distributors and retailers reducing its margins and increasing the product cost. PC has moved from being a Infrastructural peripheral in late 80s for COMPANIES to being a commodity for masses. The demand center has gradually shifted from US to EUROPE to ASIA. The demand is for a leaner, Stylish PC. High end design in electronic gadgets has become very ever important. Price no longer is the first priority for consumers. Blooming competitor like Apple and Samsung has rocked the PC market with iPad and Tab with their keyboard less Touch technologies Standard of living had increased spending power which makes cost is no longer a constraint. Mobility is the need of the hour. Smartphones and Tablets have adversely affected PC Sales.