Dell Case Study

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CASE STUDY
Creative Media Services
Written by Todd Beals
Media & Technology Analyst
4/22/03
TABLE OF CONTENTS:
Executive Summary……………………………………………………………………….3 Introduction………………………………………………………………………………..4 Problem Identification…………………………………………………………………….4 Company Analysis………………………………………………………………………...5 Critical Success Factors…………………………………………………………………...7 Distribution Channel Analysis…………………………………………………………….8 Sales Infrastructure Analysis……………………………………………………………...9 Industry Analysis………………………………………………………………………….9 Competitor Analysis………………………………………………………………………9 Customer Analysis……………………………………………………………………….10 SWOT Analysis………………………………………………………………………….11 Current Strategy (4P’s, Target Market, Positioning)…………………………………….11 Strategic Options…………………………………………………………………………13 Recommendations & Implementation…………………………………………………...15 Appendix……………………………………………………………………………..18-20 2

EXECUTIVE SUMMARY
As one of the world's leading direct computer systems companies and a premier supplier of technology for the Internet infrastructure, Dell's competitive advantage is its direct customer focus. Constant interaction with its customers online and via the telephone gives Dell the ability to understand unique computing needs that drive individual and enterprise productivity. Even though growth rates for the computer industry are expected to be less than previous years, Dell can still successfully operate, enjoying healthy sustainable profits. A main problem is a sagging US economy which Dell has no control over and a saturated PC market with lower profit margins from industry price wars. Dell should focus on being a “market taker”, instead of trying to be a market maker and capitalize on its ability to enter new markets and quickly dominate, as it did in the low-end server and workstation markets. It should pursue a multi-continental expansion of its middle and high end server products. Dell should also pursue the external data storage market through acquiring a leading company like the EMC Corporation. Having already captured a large share of the US market, Dell should try and increase its server, storage, and service segment penetration overseas to gain more international market share, particularly in China and Latin America. Studies might also be done on African and Russian markets as Dell has no physical presence in these regions. The only viable strategy in order to achieve Michael Dell’s goal to double Dell Computers’ current revenue to $60 billion by 2007 is to work on methods to improve sales in these 3 new areas. A combination of service, storage and server product growth across newly established international markets will help achieve this ambitious goal. While the US economy is in a recession, there is still plenty of room to grow outside its borders. 3

INTRODUCTION
Dell was founded in 1983 by Michael Dell, an 18 year old college freshman from Texas who started out upgrading hard drives for IBM compatibles on nights and weekends. Within a year, his service business had grown to an incredible $6 million from performing computer upgrades for local area businesses and he dropped out of school to concentrate on the business. When Dell changed his strategy and started offering custom built-to-order machines, the business exploded, with $70 million in sales by the end of 1985. Evolving into an assembler company, Dell was able to exploit certain events occurring in the industry and swiftly adapted to meet market conditions. Five years later, total sales had grown to an unbelievable $500 million and Dell became nationally known as a supplier of state-of-the art desktop and portable computers. Dell continually achieved phenomenal records in sales and profit growth, eventually making it the most successful company ever in the PC industry, surpassing $25 billion in 2000. As one of the world's premier providers of computer products and services, Dell was the US market leader in its core products, the desktop and laptop markets by 2001....
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