Dell: New Horizons

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Executive Summary

Dell is the most successful company in PC industry of 21st century. It has shown phenomenal growth record over the past decades & listed as America’s third most admired company. Their core strength lies in Direct model offering closer customer interaction and Virtual Integration. This is giving a low cost advantage to Dell and its competitors are not able to imitate this model for all these years. The products of Dell are known for their quality, service & on time delivery. Their focus on customer satisfaction helped them overtake their competitors and acquire Number 1 position in the market. Now with the success in its hands Dell wants to take a larger bite in server and storage market. Also it wants to explore more opportunities in international markets.

Executive summary2
Situation Analysis4
The Problem5
Evaluation criteria9

Situation Analysis

Dell, the most successful company in PC industry is evaluating its options on how to proceed further. What strategies it should follow to continue the same growth rate which it has been enjoying over the years. To continue the same Dell employees are looking into international markets & also to venture into greater pie of Servers and storage market. However there is ambiguity among employees if this new model will be compatible with the Dell’s existing model. How well will the new model compliment Dell’s Low cost, direct customer relationships and Virtual Integration strategies? So there is a need to evaluate the expansion plans vis-a-vis existing model.

The Problem
The following questions need to be answered.
1)What has made dell successful to date?
2)What is Dell’s position in the Industry as of 2002?
3)On august 12 2002 Business Week article, indicated that by 2007 Dell intended to double revenue to $ 60 billion. How should Dell go about building the nearly $6 billion annual sales growth?  
Q1) What has made dell successful to date?
Various factors have contributed to the success of Dell. In 1985 when the company shifted its focus to assembling its own brand PC's available on Build to Order basis, the business grew dramatically. Customers were much comfortable dealing with the manufacturer directly rather than resellers. This direct model approach also gave Dell edge over its competitors in terms of pricing. The 'Virtual Integration’ strategy adopted by Dell to get into partnership with the industry leaders like Intel & Microsoft helped Dell leverage on their R&D investment. Dell's strategy to venture into Workstations loaded with Windows product prices below the market rate was a success. Same was the case with Server's where Dell offered more powerful Pentium Pro servers. So we see from the above 2 product lines that both Product and Pricing have played important role in success. Dell's wide reach into the market and identifying the next high technology market, which could be sold at a comparatively lower price driven by its Direct model is its major strength. The operations excellence that Dell achieved helped it operate at inventory level of only six days. They had strong support of suppliers who supported on a Just In Time basis. With the boom of internet after 1995, customer service areas were automated which strengthened Dell's efficiencies on both transaction and relationship sides. The online model provided them 50% of the revenues. The segmentation done by Dell of its customers into Relationship Business, Small & Medium Business and Consumer Business helped Dell cater to the needs on a more specific basis. The demands and expectations of these customers were different & Dell was able to cater to them effectively. Dell also invested in International expansion to cater the needs of worldwide markets for local support. This help increase satisfaction and loyalty among customer including big customer like P&G and Exxon.

Q2) What is Dell’s...
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