Business Analysis of Dell

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Business Analysis of Dell Inc.
A Strategic Management Case

Sailesh R. Pant
Strategic Management Class
ctober 11, 2012

Business Analysis of Dell Inc.
A Strategic Management Case
Dell Inc. has been renowned for its name in desktop computer sales and its direct model of dealing with customers and suppliers to eradicate interference of intermediaries. The concept of direct model has provided Dell Inc. with competitive advantage in achieving cost leadership and visibility of customer demand. Also, Just in Time inventory system used by Dell Inc. helped them achieve cost reduction and pass it on to the customers. Conversely, the concept of direct model may be ideal for markets in the US and UK, but countries like China, which happens to be the second largest pc market, is not ready for the direct model adopted by Dell Inc. The concept of directly dealing with customers and selling computers over the phone or on the internet does not apply to countries like China where most people rely on paying cash and believe in properly examining products physically before they purchase it (Asia Case Research Centre, The University of Hong Kong, 2007). Current Situation

Current Performance
Market Share of Dell Inc. from fourth quarter of 2005 to fourth quarter of 2006 has decreased from 17.50% to 14.70% respectively. Growth rate from the market share analysis from 2005-2006 has been -8.40%. Growth rate for all vendors in PC market for 2005-2006 was 9%. In 2007, the market share increased to 15.20% from 14.70% for Dell Inc. The Net Income for Dell Inc. for 2005, 2006, and 2007 are $3,043 million, $3,572 million, and $2600 million respectively. Analyzing Dell’s operating results from 2005 to 2007 it is evident that Net Income has decreased significantly between 2005 and 2007. In August 2007, Dell announced that it was going to let go 9,000 employees worldwide, which happens to be 10% of its workforce. Most importantly, in the year 2007, Dell Inc. was investigated by Security and Exchange Commission on financial reporting in the US, and there was massive recall of laptop batteries worldwide and top executives of Dell Inc. transferred to key rivals in Asia (Asia Case Research Centre, The University of Hong Kong, 2007). Strategic Posture of Dell Inc.

Mission and Objective. The mission and objectives of Dell Inc. is “to be the most successful company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: highest quality, leading technology, competitive pricing, individual and company capability, superior corporate citizenship, financial stability (Dell, 2012).” Strategies and Policies. Strategies of Dell Inc. is to be the premier provider of products and services, including those that customers require to build information technology and internet infrastructures. Core competencies of Dell Inc. assume that all businesses share many product technologies, knowledge bases and distribution linkages. Dell Inc. sales objective in the case is to penetrate the lucrative Chinese PC market and achieve more than 10% of its global sales from Chinese customers making them the second largest computer manufacturer in the country (Dell, 2012). Strategic Managers

Board of Directors
Dell Inc. separates its Board of Directors into three classes and each board of director serves three-year term. Michael Dell is the founder, chairperson and CEO of the company. Other board members include James W. Breyer (Finance Chair), Janet F. Clark (Audit), Gerard J. Kleisterlee (Leadership Development and Compensation), and Alex J. Mandl ( Presiding Audit Chair). Most of the board of directors in Dell Inc. have been with the company for a long time and have faith in Michael Dell’s persistent focus on the direct sales model (Dell, 2012). Top Management

Dell Inc.’s top management positions are occupied by experienced members who have been promoted from within the company. For China PC market,...
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