From the beginning Dell has been focused on customer service by understanding the customer’s needs and providing the most effective computing power to meet those needs.
Even until this day Dell has held on to this viewpoint and they have gone from a dorm room based business to a multibillion dollar giant of the industry. The Dell Company we know today has maintained their competitive edge by using their easy to use customization interface along with maintaining relatively low costs by shipping directly from the supplier to the customer.Today Dell Company has seemed to be taking a step back from being such an aggressive competitor, to being just another company in the market. To regain our place at the top in the modern day Computer industry, we are very much looking forward to our many innovations and new products. Of these new innovations we will be opening up new retail stores at key locations that will also serve as sites to bring broken computers and desk tops to be repaired. We will also be branching the company into two separate directions Dell Home and Student, and Dell Professional to better serve these two markets with their vastly different needs and wants.With this separation the two departments will begin to work independently on several new product lines and software contracts so we can offer the customer anything they can want at the best price available. We hope that with these innovations we will be able to regain our competitive edge and bring our already exceptional customer service to a whole new level.
The American upper class describes the sociological concept pertaining to the “top layer” of society in the United States. This social class is most commonly described as consisting of those with great wealth and power and may also be referred to as the Capitalist Class or simply as the rich. (Thompson) People of this class commonly have immense influence in the nation’s political and economic institutions as well as public opinion. (Gilbert) If there is any market that can be considered as mass high end consumers, this is it. The majority of the members of the 10 million households that earn between $100,000 and $199,999 annually.The top of the upper class accounts for only 2 percent of all United States households, and make 200,000 dollars or more a year. While those in this upper echelon share a lot demographically with their slightly less wealthy counterparts, those who earn between $100,000 and $199,999, but the two groups are not exactly the same.
For one thing, while both tend to be concentrated in the power centers of America – New York, Washington and San Francisco – the super-wealthy individuals also have homes in sunny, leisure locales. Among them: Naples and West Palm Beach in Florida, and Santa Barbara in California.The majority of the individuals considered to be super rich tend to be older, more than one third of them are over 55. The American middle class is an ambiguously defined social class in the United States. (Thompson) While the concept remains largely ambiguous in popular opinion and common language use, (Thompson) contemporary sociologists have put forward several, more or less congruent, theories on the American middle class. Depending on class model used, the middle class may constitute anywhere from 25% to 66% of the total households in the country with the largest concentration of middle class citizens is in the mid west.The middle to upper middle class is dominated by people who identify as Caucasian.
– 82 percent of people in this category identify with that race group, a larger share than in the nation total population. Of the roughly 26 million households in this income group, about 11 million have an income between $60,000 to $74,999 (representing 43 percent of this segment); 10 million have an income between $50,000 and $59,999 (representing 37 percent); and 5 million have earnings between $45,000 and $49,999 (20 percent).Since the world is so diverse and a chart with all the demographics for it would be almost impossible to find here is a population growth chart of the top 25 countries so you can see exactly what countries are growing and leading the world in population. By these countries leading in population also help Dell define what countries to target when trying to get new overseas customers. As always further investigation needs to be done for each country but as an overview, the majority of future sales should be directed to the Eastern hemisphere. Rank CountryPopulation 1China1,338,612,968 India1,166,079,217 3United States307,212,123 4Indonesia240,271,522 5Brazil198,739,269 6Pakistan176,242,949 7Bangladesh156,050,883 8Nigeria149,229,090 9Russia140,041,247 10Japan127,078,679 11Mexico111,211,789 12Philippines97,976,603 13Vietnam86,967,524 14Ethiopia85,237,338 15Egypt83,082,869 16Germany82,329,758 17Turkey76,805,524 18Congo, 68,692,542 19Iran66,429,284 20Thailand65,905,410 21France64,057,792 22United Kingdom61,113,205 23Italy58,126,212 24South Africa49,052,489 25Korea, South48,508,972 Source- CIA World Fact book (Table 1 Demographics of Top 25) Economic Environment.Demand in the computer market been steadily increasing since the mid-1990s along with the positive trend in the economic recovery.
Furthermore, the share of households owning a computer was lower in Europe and Asia, than in the United States. The boom in the information technology sector has increased as the demand for computers and has become a basic commodity for the common man. The computer industry expects a growth of approximately ten percent over the next few years. (Dell pg. 5) This is said because of the economic situation in other countries having an impact on the purchasing power of potential customers.This will then cause the inflation rates to change and value of country’s currency to fluctuate which will determine the profitability of a company.
Computers have become a necessary tool in everyday life. In schools, teachers use computers every day whether if it is for communication or posting educational notes, computers are a necessity in the modern day classroom. Computers are also essential in the workplace for most of the same reasons. In other words it seems that the demand for computers and technology are growing larger with each passing year. 2009 marked the first year in the post-World War II era that global output – and per capita income – declined; output contracted 1% year-over-year, compared with average increases of about 3. 5% per year since 1946. And global trade plummeted nearly 25% from 2008’s level, the largest single year drop since WWII. Among major countries, the biggest GDP losses occurred in Russia (-7.
9%), Mexico (-6. 5%), Japan (-5. 7%), Italy (-5.
0%), and Germany (-5. 0%), while China (+8. 4%), India (+6. 1%), and Indonesia (+4. 4%) recorded the biggest gains. Among all countries, output increased the most in Macau (+13. %) – top for the second consecutive year – Azerbaijan (+9.
3%), and Qatar (+9. 2%). In 2009, global per capita income fell about 2% to US$10,500, as global unemployment rose from just over 7% in 2008 to nearly 9% in 2009 – underemployment, especially in the developing world, remained much higher. Global gross fixed investment fell about 4% year-over-year, or by roughly $800 billion. World trade and financial imbalances unwound: from 2008 to 2009 current account surpluses or deficits fell for 4 out of every 5 countries as lower commodity prices, tighter credit, and, to some degree, greater protectionism reduced demand for traded goods.
World external debt dropped more than 6% from the previous year, as new international lending disappeared. The global recession was a result of widespread uncertainties in the financial markets, bank failures, tighter credit, falling home prices, collapsing asset prices, lowered consumer confidence, and the drop in trade. In response to these conditions, many, if not most, countries pursued expansionary monetary and fiscal policies, and attempted to avoid protectionist policies. By the second half of 2009, the global economy appeared to be making halting, but forward steps”. CIA World Fact book) Technological Environment.
Technology and innovation are one of the most important factors in the constantly changing computer industry. Increased Research & Development have caused permanent innovation processes which lead to short product life cycles resulting in a faster depreciation of the products. (Dell pg. 6) The size of the computer industry and information technology industry has led to a differentiation among customers, technology, innovation, new services, business research etc (such is the size of the industry).At one point in time Dell was strictly selling PC’s and now has moved on to selling almost any type of electronic device. Thus the major manufacturers like IBM, lost market share and were a victim of cloning as other competitor companies are constantly trying to use the latest innovations in terms of software or microprocessors to maintain or increase their share. For example, Apple with all of its different types of iPods, iPhones, and now the new iPad are just a few good examples of how competitors keep using the latest innovations to increase and maintain their share.Social-Cultural Environment.
The Information technology sector has four customer segments: large firms, SMEs, individuals and educational institutions. (Dell pg 3) Initially only large corporations and some individuals who had enough money were able to experience computers and were passionate about them. But in recent years, individuals and educational institutions represent an increasingly important market; and computers in general are becoming a bigger demand due to the fact of that they are a lot cheaper now and all of the different things they can do for an individual and/or for a firm.
The national demand for computers is dependent on the educational level in that particular country. The higher the educational standards the more of a demand that country will have for computers. In today’s society children are getting very familiar with computers at a very young age. Many of these children are playing video games on computers, searching the web, and some children even have their own lap tops, which is not an uncommon thing these days in this society. These children represent a generation where no matter what type of job they end up having, they will be able hardly live or work without a computer.With the huge demand for the use of email along with the new thing of “Skype” where you can see each other’s face or body and talk like you are talking in person all through your PC or your laptop and now some companies even offer it through your cell phone. Also the popularity of the Internet and all the options, continue to give customers the multiple needs and reasons to buy a computer.
Political/Legal Environment. The political environment is one of Dell’s biggest threats in the computer market. Political factors include government regulations and legal issues determining the conditions under which companies have to operate.There seems to be a lot of red tape involved in securing government contracts. In this field, the computer industry has to face certain restraints. Problems can arise in countries where political stability is not guaranteed, no matter whether companies operate production facilities or if they do business with that country through exports.
For example, Chinas government regulates the usage of internet which is another type of threat to the internet. Since this happens it then causes a domino effect with computers because without computers there really is no internet.Many countries still have restrictive policies which are maintained to protect domestic manufacturers and production. Such policies often hinder foreign companies from entering into these markets. The only possibility to do business in those countries is to establish partnerships with local companies, where they are additionally forced to accept minority shares and to provide money and technological know-how. However, the computer industry sees great potential in those countries which lose their restrictions.
(Dell pg. ) In the course of globalization trade barriers decline and new markets emerge, allowing free trade to expand in all of these foreign countries with government regulations and restrictions. Competitive Analysis Industry Analysis. The PC industry is one of the most unique industries in the world. There is no other type of product that is as technologically advanced which is sold for as much money and yet is sold by so many companies for so little profit. Dell, Gateway, Compaq, HP, and Apple are the main rivals in this industry.Dell and Gateway have been the most innovative by including the just in time manufacturing methods to meet consumers specific wants and needs. The PC industry is a complex network of companies involved in different industry segments, from micro processors and other components to complete systems to operating systems and applications.
Depending on the industry segment, these firms specialize in different activities , from research and development to design, manufacturing, assembly, logistics, distribution, sales, marketing, service, and support.PC makers are having tendencies towards the integration across borders of markets for labor, capital goods and services. PC makers are using globalization to enter unsaturated markets, for cheaper production costs, faster growth, low labor costs, and overall need to stay ahead of competition. Most major corporations in this industry reach across national borders, international sales normally account for a large percentage of most hardware companies.
There are some key factors in the electronic computer manufacturing industry a company needs to have in order to be successful and remain competitive.A company needs to establish its brand name in order to gain a reputation in the industry; also a company needs to have effective cost controls due to the competitiveness of the industry. A company in the electronic computer manufacturing industry must have the latest innovations available to them and substantial technology in order to have products with a high demand from consumers. Internet usage as a part of people’s everyday lives is increasing abroad around the world; e-commerce is more than ever a part of everyday business.The rapid adoption of Internet-based electronic commerce has had multiple major impacts on the way companies do business worldwide. Selling directly through the Internet has accelerated the industry’s clock speed by shortening the communication distance between the PC vendor and the end customer to mere seconds away.
It also has further increased the demand for customization as customers can easily configure products and compare prices online. On the other hand, e-commerce and the Internet have made it easier for PC makers to respond to the pressures of clock speed and customization.By doing this online configuration systems have replaced telephone sales representatives, online support replaced call centers, and e-commerce technologies link PC makers with both suppliers and service partners in real time. Supply chain integration through electronic commerce responds to the industry’s product cycle and customization trends. These include changes in the internal organization of firms, helping to link all of the firm’s activities and allowing for better communication, sharing of information, and coordination of activities within the organization.
The expected impacts also include changes in the external organization of economic activities. As companies apply IT internally, they have also developed electronic linkages with suppliers, customers, and business partners to pursue similar improvements in performance in the entire value chain. The personal computer industry because it is a leading-edge user of e-commerce for business and consumer transactions and because it represents the cutting edge of a time-oriented business model that might have implications for other industry sectors. It is also a very homogeneous industry, with companies producing similar products based on common echnology standards and components for a well-defined market of consumers and organizations.
This helps to reduce the variance caused by environmental factors and allows close analysis of the interaction of firms’ business strategies, e-commerce strategies, and execution of those strategies, and the resulting performance outcomes (Ransford, 2003). Key Competitor Analysis The personal computers industry is having an interesting time this year. The global economy seems to be strengthening once again, consumer spending is rising and businesses are starting to invest in software and hardware.Industry giants Dell Inc. and Apple Inc. are working hard to reclaim their market share and if possible grab each other’s in the process.
One inherent fact about this industry that continues to be spot on is that products are evolving faster and competition is growing even fiercer. A leading new set of products is tablets. Companies have been hoping for years to achieve this and technology has finally caught up. There is now a flurry of activity in the market as competitors release their versions of the new desirable product.Some are trying to capture corners of the market by making their tablets suited to specific areas such as business or games while others are maintaining a broad approach in the hope of attracting the masses rather than just a niche market. Another expanding area is cloud computing. Cloud computing promises improved flexibility, reduced software and hardware costs as well as lower demand for management.
Companies and government offices are all looking to improve efficiency so cloud computing is proving to be an enticing option. Here too computing companies are battling it out to ensure their market share (Brooks, 2010).Dell Computers Limited, in its 20 years of its existence, is considered as a pioneer in direct marketing.
The company has always focused on improving its supply chain by reducing costs through direct selling. Dell’s mission is focused on the concept of the direct-to-market strategy. The company’s direct model has become a global benchmark in supply chain management, and many other organizations worldwide have incorporated it to improve their supply chains. Gateway Incorporated also started its business as a direct seller of computer systems. However, by the year 2000, the focus of the ompany shifted from ‘direct marketing’ to ‘research and development’ Finally, looking at the SWOT analysis of the company, it is evident that Dell does still hold a very strong competitive position. The strength of the company consists of single sourcing, efficiency, and relationship with customers and partners, after sales service, Internet leveraging, and product quality. Their weaknesses are new product market has hurt entry, and reliance on corporate clients. Dell has many opportunities, such as potential growth in overseas markets, the industry is still in a growth phase, and entering into new product markets.
Meanwhile the threats are technological changes that are expected since technology can only get better. Next, global economy and increased competition in which Dell’s financial ratios clearly identifies that they are no match for their competitors. Customer Analysis Dell’s growth relies mainly in part by keeping their customers satisfied, by meeting all of their needs when it comes to PCs. Because of this relationship with the customers, it allows the company to have an easier time to collect information.The results of this closeness allow for better market segmentation, for better forecasting, and for better value to a customer.
Dell’s most competitive force is the direct-model concept, which has helped them to reach above average returns and still in business today. Though many competitors have tried to copy this concept, it doesn’t seem to be working as well as it does for Dell. By now customers have developed a brand loyalty to Dell because of their low cost differentiation strategy. Secondly, Dell’s culture is never to be satisfied, just happy when the firm does well.As Micheal dell has mentioned before “to be competitive, a firm must stay ahead of the game” to stay ahead of their competitors, this company always kept aware of what is happening externally. Internal Analysis For a strategy to be properly accepted in a corporation, one must analyze many different aspects of the company. The history, mission, objectives, performance, and resources of a company are all necessary in order to develop a strategic plan. Dell is a large corporation who stand for innovation, and being environmentally “Green”.
Brief History Dell traces ts origins to 1984; when Micheal Dell created PCs Limited while a student at the University of Texas at Austin. The dorm-room headquartered company sold IBM PC-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PCs Limited could better understand customers’ needs and provide the most effective computing solutions to meet those needs (Euro. dell.
com, 2010). Michael Dell dropped out of school in order to focus full-time on his fledgling business, after getting about $300,000 in expansion-capital from his family.In 1985, the company produced the first computer of its own design — the “Turbo PC”, sold for US$795(Koehn, 2010).
PCs Limited advertised its systems in national computer magazines for sale directly to consumers and custom assembled each ordered unit according to a selection of options. The company grossed more than $73 million in its first year of trading. The company changed its name to “Dell Computer Corporation” in 1988 and began expanding globally—first in Ireland. In June 1988, Dell’s market capitalization grew by $30 million to $80 million from its June 22 initial public offering of 3. million shares at $8. 50 a share. In 1992, Fortune magazine included Dell Computer Corporation in its list of the world’s 500 largest companies, making Michael Dell the youngest CEO of a Fortune 500 company ever(Lee, 2006). In 1996, Dell began selling computers via its web site, and in 2002, Dell expanded its product line to include televisions, handhelds, digital audio players, and printers.
Dell’s first acquisition occurred in 1999 with the purchase of Converge Net Technologies. In 2003, the company was rebranded as simply “Dell Inc. ” to recognize the company’s expansion beyond computers.From 2004 to 2007, Michael Dell stepped aside as CEO, while long-time Dell employee Kevin Rollins took the helm. During that time, Dell acquired Alien ware, which introduced several new items to Dell products, including AMD microprocessors.
To prevent cross-market products, Dell continues to run Alien ware as a separate entity but still a wholly-owned subsidiary. Lackluster performance, however, in its lower-end computer business prompted Michael Dell to take on the role of CEO again. The founder announced a change campaign called “Dell 2. 0,” reducing headcount and diversifying the company’s product offerings.
The company acquired Equal Logic on January 28, 2008 to gain a foothold in the iSCSI storage market. Because Dell already had an efficient manufacturing process, integrating Equal Logic’s products into the company drove manufacturing prices down(Gonsalves,2007). In 2009, Dell acquired Perot Systems, a technology services and outsourcing company founded by H. Ross Perot. On September 21, 2009, Dell announced its intent to acquire Perot Systems (based in Plano, Texas) in a reported $3. 9 billion deal.  Perot Systems brought applications development, systems integration, and strategic consulting services through its operations in the U.
S. and 10 other countries. In addition, it provided a variety of business process outsourcing services, including claims processing and call center operations. On August 16, 2010, Dell announced its intent to acquire the data storage company 3PAR. On September 2, 2010 Hewlett-Packard offered $33 a share, which Dell declined to match (Perot Systems, 2009). Mission “At Dell our Mission Statement is to provide customers with superb value, high quality, relevant technology, customized systems, superior service and support, and products and services that are easy to purchase and use. We consider our commitment to our planet, our communities and our people integral parts of our business strategy.
It’s a commitment driven by the types of goals, strategies and accountabilities that characterize every part of our business. And it’s one that persists through all business cycles. Each year we strive to be better, to create technology that can change the world, and technology that makes a positive difference in the lives of our customers. It’s our commitment to being a responsible corporation.In fiscal year 2010, we continued our corporate responsibility work to guide us in better understanding and balancing our needs as a business and our role in improving the lives of those around us (Reporting on Corporate Responsibility). Objectives * Contributing in Every Community Dell believes in contributing positively in every community that we call home.
Dell employees help their neighbors through our Neighbor to Neighbor program for volunteerism and personal giving. The Dell Foundation is focused on equipping youth for the digital economy. Dell also has a number of community partnerships that help address he needs of the community and the company. * Workforce Diversity Dell values the diversity of its global workforce.
The company’s approach to diversity is defined by a recognition of both similarities and differences, inclusiveness, respect, and a company culture that allows each individual to contribute to his or her fullest potential. * Respecting Every Nation’s Laws, Values and Cultures Dell adheres to laws regulating wages, hours, and working conditions, and requires by contract that all partners and suppliers also comply with all applicable laws and regulations where they conduct business.In addition, Dell’s partners and suppliers are expected to embrace high standards of ethical behavior and treat their employees fairly and with dignity and respect in accordance with Dell’s Code of Conduct and Supplier Principles.
* Integrating Environmental Sustainability Dell’s mission is to fully integrate environmental stewardship into the business of providing quality products, best-in-class services, and the best customer experience at the best value. Dell strives to be a careful steward of its communities’ natural resources and build its products with sensitivity to the environment (Global Citizenship).PerformanceOver the last 10 years our company has grown in revenue from $12 billion to $61 billion – a remarkable achievement by any count. In fact, in terms of organic growth we stand apart as the fastest-growing technology company in history.
But it is also fair to say that as we got to the end of that 10-year period, our strategy wasn’t working as well as it had previously. Moreover, as we evolved we lost focus and allowed our cost structure to become non-competitive. As I returned as your CEO just more than a year ago we undertook a thorough process to reevaluate every element of our business.We listened hard to our customers, employees and partners. And we began a significant evolution that is delivering positive results. Last year, we generated $61 billion in revenue and grew our earnings per share by 15 percent to $1. 31.
At the end of the year, we were again the No. 1 supplier of personal computer systems in the United States and the No. 2 supplier worldwide. Unit shipments were up nearly 19 percent in FY08 Q4, and according to industry estimates we have begun the current year growing faster than the industry.We continued to maintain strong liquidity with cash flows from operations of $3. 9 billion, and we believe our ability to generate cash flow from operations on an annual basis will continue to be solid. During fiscal 2008 we invested $4 billion on share repurchases and a net $2. 2 billion on strategic acquisitions.
We ended fiscal 2008 with $9. 5 billion in cash and investments compared with $12. 4 billion at the end of fiscal 2007. We are committed to a long-term share repurchase program as part of an overall capital allocation plan to support growth and to return value to shareholders.In December 2007, our Board of Directors approved an additional $10 billion for share repurchases (Financial reporting, 2008). (Picture 1 Market Share Analysis) ResourcesTo deliver effective solutions that meet customer challenges, Dell focuses on pivotal standards that drive future technology innovation. Dell’s industry leadership places it in a unique position to help establish the core building blocks for the future innovation – in the home, the office and the enterprise.With a long track record of pioneering work and wide network of strong industry alliances, Dell can drive adoption of open standards that give customers more choices, lower costs and complexity, and interoperability.
Working collaboratively with leading suppliers and standards organizations, Dell has driven standards that not only benefit customers, but often result in industry-changing developments such as: * Display Port digital display interface to support high-performance, high-resolution digital flat panel displays and application. Standard formatting for sorting RAID configuration information to enable interoperability between different RAID suppliers. * Standard systems management instrumentation on managed nodes, such as servers, storage, switches, client systems and printers (Dell Corporation. 2010). Dell is uniquely positioned to impact industry trends. We maintain strong internal development capabilities. We partner, rather than compete, with top industry technology suppliers and original development manufacturers. We steer enabling industry standards and technologies through industry groups and strategic partners.
In this way, Dell spurs innovation and delivers value to customers. SWOT Analysis SWOT Analysis of Dell Strengths| Weaknesses| * Direct Model * Supplies directly to customer * Award winning customer service| * Absence of retailers * Institutional recognition| Opportunities| Threats| * Global Markets * Rising demand for computers| * Price wars * Technological Advancement | Table 2 SWOT Analysis Strengths Direct Model The model itself could be considered one of the company’s greatest assets. The direct Model allows consumers to fully customize their PC.The market is becoming more educated, and now more than ever individuals want a product that can target their specific needs. In the case of laptops, this means that customers want more options in terms of both performance and portability. By cutting out the retail seller as a distributer, Dell has made it possible for each buyer to order directly from the factory, thus giving them the opportunity to fully customize their product (Euro.
Dell. com2010). This extensive range of products and services is definitely one of Dell’s strengths. Supplies directly to customer Dell cuts out the retailer and supplies directly to the customers.It uses information technology, and Customer Relationship Management approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer’s own specification.
Components are made by suppliers, never by Dell. PC’s are assembled using relatively cheap labor. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain( Advantages of Dell. 008). By cutting out the middle man, Dell has become more successful at targeting its markets wants and needs, and also the ability to quickly process and deliver completely customized orders.
Award winning customer service Dell’s direct customer service allows it to provide top-notch customer service before and after the sale. Dell has prided itself on its superior customer service and has won many awards for this achievement. Undoubtedly Dell has captured a segment in the market for those who seek the best tech support offered by a manufacture in the computer industry.
Weaknesses Absence of retailers As one of Dell’s strengths to not allow its products to be sold at retail stores this also becomes a weakness as well. In terms of the home user, there is a segment of the market that would prefer to physically go to a store a try out a product before purchasing it. Also a consumer cannot go out and purchase a Dell computer and bring it home with them the same day. The very thing that differentiates Dell from its competitors, customization, also creates a problem in that consumers can’t go out to buy a Dell as simply as they could some other brands.Institutional recognition Dell’s biggest weakness is attracting the college student segment of the market.
Dell’s sales revenue from educational institutions such as colleges only accounts for a measly 5% of the total. Dell’s focus on the corporate and government institutional customers somehow affected its ability to form relationships with educational institutions. Since many students purchase their PCs through their schools, Dell is obviously not popular among the college market yet ( Dell Analysis. 2008). Opportunities Global MarketsWith the rise of the market share in Asia and many countries around the world gives great opportunity for Dell to enter into untapped markets. With the amount of outsourcing drastically increasing the way it is means that all these companies are opening up in a market that has not yet needed a high demand in computers.
Many places in Asia the internet is just becoming available to people, this presents dell with many opportunities to expand their global marketing position. Rising demand for computers The necessity for computers is growing every day.From technological advances in computers and the ease of today’s internet, computers are in higher demand than they ever have been. Customers are getting more and more educated about computers.
Second-time buyers would most likely avail of Dell’s custom-built computers because as their knowledge grows, so do their need to experiment or use some additional computer features. Threats Price wars One of Dell’s primary threats is that price difference between brands is getting smaller all the time. Dell’s Direct Model benefits the consumer in many ways, one of which is saving money.Now that other companies are finding ways to compete with the low prices of dell computers. Price difference is becoming less of an issue for buyers which could result in Dell’s competitors to become closer substitutes.
Technological Advancement The quick pace of technological advancement, while generally being a tremendous opportunity, is also a great threat. Now that the low cost leadership strategy is becoming less applicable to computer companies, brand names must differentiate themselves from their competitors.In the laptop market, this is largely based on technology and product design. The newest, fastest, most efficient technology, and most durable, user friendly product is going to sell. If a company fails to keep up to date with innovations in technology, they will quickly see a decline in performance (Dell analysis.
2008). For dell to succeed in such a fast paced industry they must stay ahead of the innovation curve and continue to supply excellent state of the art products and customer service. Marketing StrategyMarketing ObjectivesDell Computer’s strategy was built around a number of core elements: build-to-order manufacturing, mass customization, partnerships with suppliers, direct sales, market segmentation, customer service, and extensive data and information sharing with customers. Through this strategy, the company hoped to achieve what Michael Dell called “virtual integration” a stitching together of Dell’s business with its supply partners and customers in real time such that all three appeared to be part of the same organizational team.
Dell will introduce its new flat panel computer to rival the newly introduced Apple iPad. This new flat panel computer will operate on Windows giving consumers who are more familiar with this operating system a product similar to the recent introduction of the iPad. In addition to the flat panel computer, Dell will also introduce a new media MP3/ Video player. Dell will be able to capitalize on creating a better product by seeing what customers did not like about Apple’s products and making one that satisfies their customers’ needs.A firm can best implement an integrated cost leadership/differentiation business level strategy when a company can “adapt quickly to environmental changes, quickly learn new skills and technology, and effectively leverage its core competencies while competing against rivals. Dell successfully meets these criteria.
Dell’s direct model allows it to communicate directly with customers, which eliminates intermediaries and provides Dell with real-time feedback and market information. This rich information allows dell to respond quickly to changes in consumer demand or overall market conditions. Picture 2 Dell Trim Costs) Dell’s recent marketing strategies involve the development of partnerships with major computer retailers, including Wal-Mart, Best Buy and Officeworks. These partnerships ended Dell’s historical reliance on the direct-to-consumer channel and allowed the company to access the mass merchandise distribution channel, which is an enormous potential business opportunity for the company. Dell continued its direct-to-consumer marketing initiatives but also sought to promote its new partnerships in television and print advertising, often in conjunction with its retail partners.In doing so, Dell has begun to compete more heavily on price, as retailers such as Wal-Mart are known as low-price shopping destinations for all types of goods. These retailers have seen very positive results from selling Dell products in their stores while sales and revenue continue to increase (Global Retail).
(Table 3 US PC Market Share) Financial Objectives:Dell has performed extremely well since it was created in 1984. Since then Dell has had a high magnitude of continuous growth.Dell’s equities are growth stocks, meaning Dell has never paid dividends to shareholders. Its strong returns have prompted investors to trust and invest in the company regularly over the years, and therefore Dell has not had to utilize long-term debt as a primary capital financing tool. Most of Dell’s revenue comes from its dominant business, that is many product technologies, knowledge bases, and distribution linkages. Dell has remained focused on its core competencies and builds upon those to offer related services.Dell therefore demonstrates related diversification to maximize its value.
Diversification for Dell means increasing revenues through the delivery of new products to existing markets, increasing market power, and identifying new markets to serve. Dell is making a big push to cut costs and improve the environment by changing its packaging techniques. In its effort to make product packaging more convenient for customers and less impactful on the planet, Dell has eliminated the use of more than 18. 2 million pounds of packaging material since 2008.In November 2009, Dell was the first technology company to integrate bamboo into its packaging portfolio. Bamboo is a strong, renewable and compostable material that serves as a great alternative to the molded paper pulp, foams and corrugated cardboard often used in packaging. While highly renewable and compostable, bamboo packaging isn’t yet accepted by many municipal packaging programs today.
Dell is teaming with Georgia Pacific, Unisource Global Services and Environmental Packaging International in an effort to certify its bamboo packaging for recycling.Dell aims to make “being green” easy and cost-effective for its customers. Using product packaging that is curbside recyclable is part of that commitment. To reach its goal, Dell increasingly selects recyclable materials for its packaging, including PCR plastics and molded paper pulp.
* Technology Business Research (TBR) announced late 2009 that Dell took the number one position in its inaugural corporate sustainability index report. A report that measures environmental initiatives of 40 computer companies (TBR) (Table 4 TBR Corporate Sustainability Index)A Dell mantra is that today’s technology is tomorrow’s commodity. Dell waits until the cost of that technology falls low enough for it to be integrated into computers at state-of-the-art factories and then sold direct at a cheap price, which allows the company to drive for increased share earnings. Dell uses direct distribution that tends to significantly affect the company’s performance in terms of sales. The company uses a JIT inventory system which allows Dell to reduce wastage and added cost of storing and moving products.This also places added efficiency on the operations of the company given that both logistics and sales have been coordinated into a unified operation.
Over the past 10-15 years Dell Corporation has been one of the top computer companies. They have been able to offer customized specifications on hardware and other equipment for very reasonable costs. Dell has chosen the internet and telephone lines as its main business channels. This places the company in direct contact with its customers.
At a certain degree, this is one of the competitive advantages of Dell as it is apparently designed to take on these marketing objectives.The use of the internet as one of its medium inevitably provides the company is a considerably wide range and variety of clients. (Table 5 Global PC OEM Ranking) Positioning Statement: One focused vision made Dell the world’s leading direct computer systems company. Dell uses its bold concept of direct customer contact to make it one of the most successful companies in the world. Dell puts a great deal of emphasis on understanding what drove customer satisfaction, whether it was response times on the telephone, quality of products, valuable features, or the ease of experience in using the product.Engaging the entire company from manufacturing to engineering to sales to support staff, the process of understanding customer requirements became a constant focus of management, energy, training, and employee education. One of the main things to incorporate is feedback from customers.
Michael Dell actually goes into various support and dell chat rooms to listen to customers likes and dislikes. “Dell’s mission is to be the most successful computer 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 accountability * Best-in-class service and support * Flexible customization capability * Superior corporate citizenship * Financial stability” Marketing implementation Over the years we have been proudly offered premium computers at a competitive price while keeping our customers highly satisfied. We at Dell Corporation will like to proudly announce our new strategy that will put us back on top of the entertainment market. From this day forth Dell corp.
will be divided into two separate categories, Dell Home and Student, and Dell Professional.With this new innovation in Dell Corp. we will be able to market ourselves to more focused market groups and finally be able to draw the line between customizable entertainment and the needs of a professional working society. With these two separate paths we will be offering several new innovations to our market. Within Dell Home and Student we will offer what we have always offered, quality computers and laptops at a competitive price.
These computers will be able to be customized from head to toe in our factory and as always our products can be ordered from our online store.Our company will also proudly introduce our new MP3 player the Yeebo. It is compatible with any computer and is automatically linked to Amazon music store via Wi-Fi. Our goal at Dell Home and Student is to bring the average household any computer they wish, you design it and we will deliver it free of charge. In Dell Professional we will offer a high quality computer for the working man in the world. While our computers offer less customizability than Dell Home and Student, they are offered at a lower price to get more bang for your buck. In this branch of our company we will be offer specialized computers for specialized fields f industry. Our business computers and workstations are specially designed for whatever a business man may need.
We are also designing a custom virus security software that will be unmatched by anything else on the market. With these new innovations we hope to re obtain our rightful place at the top of the computer industry. We are also proud to introduce our new store fronts opening soon in a mall near you. In these outlets you can consult experts who can walk you through designing and ordering your computers and they can also be an area to bring your computers for repairs.As always in Dell Corp. we strive to be the best in customer service helping you out from design to delivery and after.
Products With these two separate directions Dell will be offering several new products and technologies. For Dell Home and Student customers we will be providing fully customizable home computers and laptops. By just simply logging into our webpage, you can scan through all of our options and variations of your favorite types of personal computers. Our computers can be ordered in any style, any level of performance and in any color that you can think of.
Our new company motto of Dell Home and Student is “You think it, we do it. ” For Dell Professional we offer both standard and specialized computers for today’s working man. All of our computers will have a standard operating system, full network and full office capabilities.
For specialty workers we will be offering computers specially designed for specific professions. For example for architects and engineers we offer a rugged flip laptop that comes with AutoCAD standard on it for a much lower price than if you were to buy the program yourself.If you are a photographer we will be proud to offer a laptop with Photoshop standard and a mini projector in the bundle for both tweaking and reviewing your work in the field. For our office workers we offer a small simple computer at a much lower price than our competitors it will have Microsoft office Professional and full wireless network capabilities and be ready for any situation a proper business man can need. (Picture 3 Dell Rugged Tablet) Dell Home and Student will begin its launch in summer of this year with an aggressive ad campaign including commercials, sales, and other promotional deals.We will be offering flyers at all universities and at all Dell retail outlets that offer our products. Our prices will still remain competitive but with the higher degree of customization, leads to higher prices. All of our computers will be running with a standard 64 bit operating system and Microsoft Office Home and Student preloaded onto each computer.
We will be making a deal with both Windows and Microsoft to be able to provide these standard software systems for a rock bottom price. For the first time ever we are proud to introduce discounts of up to 50% for eligible students, pending proof of enrollment.Dell Professional will be introduced at the 2011 Business Technology Expo in Las Vegas In October of next year. There we will be introducing all of our specialty computers and deals for today’s working man. Our products will be of moderate quality with limited customization but they will be offered at a lower price than any other in the market. We also realize the substantial need for computers in modern day businesses we will be offering discounts for bulk orders. We will also be demonstrating our new products at numerous other conventions in almost every industry.How will we do it? Fort Knox, our new virus security software, will be designed by Encompix, one of the top design to manufacture software companies in the world.
It will be able to block even the most advanced spyware, worms, and adware. It will consist of a highly integrated firewall and an array of protective algorithms to protect a computer from nearly any threat. It will come standard with any computer that we sell and the designers of Encompix will be continuously offering updates to ensure the maintaining of the highest security possible.Our specialty computers will be designed by our team of computer designers while working close with the professionals of the industries they are trying to design for. We will be incorporating all of our resources and technologies to design these computers. Each project will be working very closely with the customer they are designed for. We will be partnering with numerous software manufacturers to be able to offer the highest quality software for the workers that need them most and offer them at a fraction of their original costs.
These companies include Adobe, Autodesk, Microsoft, and Windows. With these new partnerships we can ensure that we can offer these software for the lowest price in the market. We will be offering a each company a contract in profit sharing and a share of our marketing campaign. In the next 3-4 years we will be opening 50 new outlet stores in order to have somewhere our customers can actually come to for help and questions about their computers. Our new stores will be placed in highly trafficked malls and market places all over the country.
We are convinced that if we can put a friendlier face on our company and a place to come to for instant repairs our sales will be increasing and we will be having a much higher percentage of returning customers. Our new Mp3 player design will be Focusing on affordability and customizability. The Yeebo will be given away with all Dell Home and Student computer sales over 750 dollars. We will also be making an exclusive deal with the Amazon Mp3 online marketplace and Shazam.
With our Mp3 players they can recognize a song and wirelessly download it for a lower price than our competitors.With Dell Home and Student we will be offering student discounts to qualified students enrolled full time in a college university. Proof of enrollment and cumulative GPA of 3. 0 is required for our 30% discount and proof of enrollment and a cumulative GPA of 3. 5 is required for our 45% discount. It is our opinion that a customer lifetime business relations are more important to us than our current profits.
Financials For the 50 new retail store locations it will cost an estimated 250,000 per new store for the new opening and training costs.This will total a 12. 5 million for the entire operation and the estimates average sales of each store will be 120,000 weekly. With a 14% margin for revenue each store will be earning a profit of 18 thousand per week. The estimated tie to retire the total debt based on these results will be 14 months, with the possibility for expansion in 2 fiscal years.
By doing this the estimated sales for the first year across the total company is increased by 25%. For the new student discounts program the projected total costs are 3 million annually.By doing this the probability of customers to return has been increased from 60% probability to 75 percent probability.
With the current information the total revenue and time to retire total debt is undeterminable. The creation of the new virus security program, Fort Knox, will be 5 million for the initial design. The projected annual costs of the program are 6. 5 million annually for miscellaneous claims and upgrades. The research and design costs of the specialty computers in Dell Professional are 10 million with the advertising costs of this product are 2 million annually.The projected revenue is 4 million dollars annually. Estimated time to retire the total debt is 3 years with possibility for expansion in 4 years time.
Research and development fee for new developments in Dell Home and Student are estimated to be 12 million. Estimated yearly advertising costs are 2. 5 million. By doing this the projected annual increase in revenue is 7 million. With these costs it is estimated to retire the total debt in 2.
7 years. The new Mp3 player, Yeebo, research and design costs are estimated at 6 million.The potential advertising costs are 3 million with the gift with purchase costs totaling 8 million per year. The increase in potential return customers has been increased from 60% to 74% and the potential sales from this device are 16 million annually. Given the current information and the purpose of the gift with purchase option the estimated time to retire full debt is undeterminable at the moment. Controls and contingencies For our new products and software we will be obtaining patents and copyrights as needed.
This will be duty of the Chief operating officer Thomas Jackson.Royalties will be paid to each company for their software on top of a sum to be announced. Each contract will be up for revision at the end of each fiscal year. We will be assigning a total of 4 district managers over the 50 stores and they will each have their own sales goals and objectives independent of the others. Reaching these goals will equal a substantial bonus for these individuals and failure to do so will consequent restructuring of their duties. Subsequently each store will have a manager a shift supervisor, and a sales manager.
The employees will be receiving a commission rate of 3% on top of a minimum salary.With this high pay they are expected to adhere to the highest standards of conduct and be expected to have a basic to general knowledge of the computer systems. A four week training course will be provided. We will be offering financing all of our computers for a small down payment of 25% of the principal and a monthly charge of 5% and a yearly interest rate starting at 7% for qualified customers. We will not offer any financing to any customer with a credit score under 400. With our new virus security software we will be withholding 6. 5 million dollars annually for miscellaneous lawsuits and potential upgrades as needed.
This software will be offered for a minimal monthly fee of 29. 99 and offer standard identity theft protection as well. This service will be subcontracted out to Encompix and we will be working very closely with our team as well. A director of security will be appointed when the product date is announced. All of our computers will be offered with standard software automatically loaded onto them, any customer that wishes to have a previous OS can be available but a disk copy of the current OS will be provided to them free of charge, no exceptions.
To maintain an edge in the technological world, up to date software is required.We will also be installing an update program that installs new updates to any software at a time of the users preference. All of this will also be monitored by Encompix and they will be compensated by an amount to be determined.
Our Student discounts will be handed out as needed and enrollment verification is required by the National Student Clearinghouse. Only one discount is offered per student per 4 years. A minimum of 12 hours will be required to become eligible; summer enrollment requires 6 hours and a minimum of 3.
0 GPA or ACT score of 23 for beginning freshmen.ACT score is dismissed after a student’s first semester at a college university. Discounts apply to any computer or software offered by Dell Home and Student Tax discounts is not available.References The Dell Company – A Strategic Analysis Authors: Natalie Schmid, S. Kelber, S.
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