Business Analysis of Dell
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
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
References: Asia Case Research Centre, The University of Hong Kong. (2007). Dell: Selling Directly, Globally (2007). Poon Kam Kai Series, 25. Bloomberg Businessweek. (2012, October 9). Company Overview of Dell (China) Company Limited. Retrieved from Computers and Peripherals: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=5498781 Dell. (2010, September 16). Dell To Build Flagship Manufacturing and Customer Support Center In Chengdu To Support Western China Growth; Expands Xiamen Operations. Retrieved from Dell: http://content.dell.com/us/en/corp/d/secure/2010-09-16-chengdu Dell. (2012). Dell Board of Directors. Retrieved from Borad of Directors: http://content.dell.com/us/en/corp/leadership-board-of-directors Dell. (2012). Knowing our Company. Retrieved from Knowing our company: http://content.dell.com/us/en/corp/knowing-our-company.aspx Goldsmith, E. B. (2005). Consumer Economics: Issues and Behavior. New Jersey: Pearson Education Inc. Kotler, P., & Keller, K. L. (2006). Marketing Management. New Jersey: Pearson Prentice Hall. Mind Tools. (2011). Porter 's Five Forces Worksheet. Retrieved from Mind Tools: http://www.mindtools.com/pages/article/worksheets/PortersFiveForcesWorksheet.pdf Wheelen, T. L., & Hunger, D. J. (2006). Concepts in Strategic Management and Business Policy. New Jersey: Pearson Education Inc. Wheelen, T. L., & J., H. D. (2004). Cases in Strategic Management and Business Policy. New Jersey: Pearson Education Inc.