Dell Inc. Case Analysis
- Length: 1028 words (2.9 double-spaced pages)
- Rating: Excellent
Part I: Introduction/Background Summary
In 1984, Michael Dell invested $1,000 in start-up capital to register his business as Dell Computer Corporation, which was known as PC's Limited. The company becomes the first in the industry to sell directly to end-users by passing the dominant system of using computers resellers to sell mass-produced computers. Dell Computer also pioneers the industry first thirty-day money back guarantee. It became the cornerstone of Dell's commitment to expand its service offerings, superior customer satisfaction, and the industries first on site service program. It also established its first international subsidiary in the United Kingdom, and raised $30 million in its initial public offering.
Part II: Problem Identification
The problem with Dell Inc. was the rapid growth within the company in their beginning stages.
Part III: Researching Internal and External Factors
Dell's strengths were oriented around listening to the customers, responding to the customers, and delivering what the customer wanted. The direct relationship was first through telephone calls, then through face-to-face interactions, and now through the internet. It has enabled them to benefit from real-time input from real customers regarding products and future products they would like to see developed. The company also doesn't use reseller or retail channels because every computer is built-to-order, which allows less inventory. The direct model allows them to take the pulse of whatever market and provide the right technology for the right customers.
Dell Inc. weakness was cell manufacturing because their assembled computers were being shipped five to six days after the order was placed. It is an inconvenience for the customers to always send their computer away to have it repaired. First, they are left without internet access. Second, the time it reaches Austin, Texas, have it repaired, and shipped back can take days. The company opportunities were the Dell U.K. that open business in 1987 and in that country it was a lot of companies selling cheap computers. Dell Inc. strides on loyalty among customers and employees, and that could only be derived from having the highest level of service and performing products. Segmentation within the company enables them to measure the efficiency of the business in terms of assets use. Dell Inc. evaluates their return on invested capital in each segment, compare it with other segments, and target what the performance of each should be.
It became a great way to identify what needed to happen for them to reach their full potential in each business.
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The threat within the company started with selling indirect to retail channels like Comp USA, Price Club, and Sam's. Dell Inc.
didn't have an idea as to whether or not they actually were making money on those companies. Inventory was also a threat because it depressed their earnings.
Part III: SWOT Analysis
• Direct Sales
• Designing own products
• Target large companies
• Efficient and flexible manufacturing operations
• Great customer service and tech support
• High quality computers
• Low prices
• Long term partnership
• Complete Care Accidental Damage Service
• Id tags in new computers
• Sending your computer back to Dell Inc in Austin, Texas
• Cell manufacturing
• Unopened products from partnerships
• Handle tech support over the phone
• Global expansion
• Direct store kiosks
• R&D organizations
• Speaking directly to customers
• Expansion in difficult products
• External storage devices
• E-commerce technology
• White-box segment (unbranded)
• Server business
• Printer market
• Premier pages
• New technology
• Sell indirect
• Rapid expansion
• Notebook computer
• Wi-Fi networking technology
Researching Internal and External Factors
In fiscal 2006, worldwide Dell Inc. reached 40.7 billion and the sales were stronger outside the United States. They ended the fiscal 2006 with $11.7 billion in cash and investments. Dell moved ahead of IBM into second place during 1998 and became the world leader in 2003 to 2005. Their competitors are Hewlett Packard, IBM/Lenovo, and Gateway. Dell Inc. has conquered success in global countries like Japan, Latin, and China. It's was very important to Dell Inc. that they became the leading market in China because of competitor Lenovo. The R&D focus of Dell Inc. was to find out new technology coming into the market. Dell Inc. also cares about the customer needs and problem so their products can be more cost effective. The also take pride in their customer service and technical support teams because it makes the customer feel their inquiries or difficulties were important. Advertisements through big name computers magazines, newsletters, and via internet boost their business.
It gave existing and new customer knowledge and interest in purchasing their products. Dell Inc. has competition with HP because they have an advantage with their printers. IBM customer service and technical support has better performance then Dell Inc. They also have an advantage because IBM global market acquired Lenovo, which is the number one computer maker in China. Gateway markets in the Mexican retail. The new entrant within the industry would be the wireless mouse and modem. The computers that are unbranded are less expensive for the customers who can't afford Dell computers. Customers also have friends and family that can build computers from scratch. Gateway has stores locally where customer can have their computers repaired.
There are Dell knock-off brands that are sold for a lower price on E-bay or internet websites. Instead of purchasing computers customer are purchasing TiVo and machines that can be attach to the television for internet access. Dell Inc. has a four day supply inventory average. Some customers and companies need their products right away. The partnerships with some suppliers may ruin Dell name because some products are not inspected. The downfall of HP reselling their printers to Dell Inc. was they decided to take over the printer market and increase their sales.
Part V: Possible Solutions
1. The solution to their rapid growth is to reduce cost, build sales, and increase cash flows within the company.
2. They need to detailed each business unit and learn valuable facts and data in managing a complex business.
3. They also need to take each goal slow and gradually.
Part VI: Best Solution Recommendation
The best solution for the problem is to reduce the cost and build sales within the company so it can serves the interest of the customers, shareholders, and the company as a whole.
SEGI UNIVERSITY Case Study
Individual assignment By: Kabiru Ahmed Shahir SCM-013621
How did Dell put the customer in control of the buying process? How does the Internet help in
this feature of Dell’s business?
The term buying process can be defined as a step by step procedure that businesses andindividuals go thru when purchasing a product or service it involves an interacting structure of people ,equipment ,methods and controls (Ulric & Richard, 2009)the decision on WHEN,WHAT, WHERE and HOW MUCH is that which is the leading or key component of aneffective inventory management because a purchasing system manages all A purchasing systemmanages the entire buying process from requisition down to purchase order and till payment isbeing done (Investopidea, 2012)This study will be on the consumer buying process online under the dell company how dell putits customer in control of the buying process Dell makes its order for computers ,workstationsand servers based on orders from customers ,dell never kept inventory or stock of any computer
, they put the customers in power because every customer’s computer was made to his own order
and according to the type of machine they want either a desktop or a personal PC (laptop) theconfiguration they want how fast (RAM)it should be how powerful it should be ?(Processor ) thehard-disk capacity which CD-ROM drive ,down to their preferred speakers and accessories.(Malviya, Nair, & Aniket, 2010)Another aspect that Dell used was the Upwards communication upward meaning from thecustomer to the company, allowing
something close to pepper’s idea one
-to-one scenario.Secondly the zero stock structure eliminated a whole series of costs which fell out of the supplychain, allowing lower cost to be transferred to the customer improving company competitivenessas well. (Saini, 2010) . Dell had operated its assembly lines in traditional fashion, with workerseach performing a single operation but few years later dell shifted to "cell manufacturing"techniques whereby a team of workers operating at a group workstation (or cell) assembled anentire PC according to customer specifications. The shift to cell manufacturing reduced
assembly times by 75 percent and doubled productivity per square foot of assembly space. Anorder form accompanied each metal chassis across the production floor; drives, chips, andancillary items were installed to match customer specifications. (Malviya, Nair, & Aniket, 2010)