Dell Dan McLindon Kyle McDaniel Jeremy Smiley Tom Anderson Ray Moorman

Key Question for Dell What is Dell? A computer manufacturer? A consumer electronics company? An online retailer? An IT service partner? What is their focus?

Secondary Questions What contributed to Dell’s success and rapid growth in the late 1990’s? Is Dell’s build to order model still an advantage? Why is Dell choosing to become more like HP and HP more like Dell? What does Dell do well and where does it struggle? Can Dell ever be successful in B2C market in developing countries with Direct to Consumer distribution? What is Dell? A computer manufacturer? A consumer electronics company? An IT service partner? What is their focus? What is Dell doing today to set itself apart from the competition in the highly competitive and rapidly evolving computer hardware industry?

Dell Inc. Product Timeline YearProductCurrent Position In MarketSuccess of Failure? 1984B2C PCs2 nd behind HPSuccess 1988B2B PCsN/ASuccess 1995WebsiteRevenues greater than Yahoo, Google, eBay and Amazon combined Success Late 1990’sX86 Servers1 st domestically, 2 nd behind HP globally Success 2001Data-routing switches and Data storage devices N/ATBD 2002Large Enterprise IT servicesN/A, but not in top 6Success, rapidly growing revenues 2003Printers20% market share in USTBD 2003Consumer ElectronicsN/ATBD 2003Retail POS systemsN/ATBD Conclusion – Expanding product set into several highly competitive markets with well established players. Strategy is be the low cost leader.

Build to Order AdvantagesDisadvantages Selling direct to customers cuts out the middleman, which increases Dell’s margins. Customers not able to touch and feel the product, which is a large ticket purchase Mass customization using standard parts allows Dell to control their costs and enables them to pass savings to customer. Build to order requires innovation and investment in manufacturing technologies and facilities. Build to order allows for JIT, reducing costly inventories of components, which may quickly become obsolete. Competitors have been able to outsource to third party manufactures, pushing the burden of component inventory costs onto suppliers. Conclusion – Dell has spent its time and money on innovation to become an effiecient manufacturer of computer hardware. Was that an effective use of their resources?

Is Build to Order still an advantage? Enabled success in late 1990’s Dell low cost leader Improved reputation for quality Still works well in B2B Businesses like to customize a solution that fits exactly what they need BTO gives Dell the ability to control quality and the opportunity to sell additional value adds to enterprise customers Struggling in B2C Difficulty with distribution in emerging BRIC countries, especially China Competitors have closed the gap on price and product offerings by outsourcing manufacturing

PEST Analysis for Dell

Industry Overview (Supply) Porter’s five forces: Rivalry among existing competitors Threat of substitute products H Bargaining power of buyers Threat of new entrants Bargaining power of suppliers

Porter’s Five Forces FactorAnalysisImpact Threat of substitute products Bargaining power of suppliers Bargaining power of buyers Competitive rivalry Threat of new entrants

Industry Overview (Supply) FactorRanking (1-5) Threat of substitute products Bargaining power of suppliers Bargaining power of buyers

Industry Overview (Supply) FactorRanking (1-5) Rivalry among existing competitors Threat of new entrants

CompetitorsProducts SoldSelect Financials2008 Market Share HP Apple Toshiba Sony Cisco Competitors within the PC Industry

What is the competition doing?

Internal Analysis – Markets Served

Internal Analysis – Core Competencies Core CompetencyDescription Core Competencies Red – Easy for competitors to develop Yellow – Possible for competitors to develop Green – Very difficult for competitors to develop

Internal Analysis – Growth Initiative Expanding number of locations at a rapid pace Heavy reliance on franchise partners Targeting 17% increase per year in number of locations by 2010 No international locations but considering expansion into Canada Is this aggressive growth strategy prudent in the highly competitive and mature QSR industry? Year Number of new locations Total Locations Percent Increase N/A % % (forecasted) 2000 (forecasted) 49%

Internal Analysis - Manufacturing

SWOT Analysis for Dell StrengthsWeaknesses OpportunitiesThreats

Recommendations  Develop a more focused strategy. Examine where the company is creating the most value for customers and invest in that business line  Focus on growth in B2B channel and the continued development of value-added IT services  Everyone competing on price, need to find new ways to create value