Presented by :Girdhar Adhikari

Hitesh Brahmabhatt Manish Sharma

Nikhil Raut Vinit Rokde

Managerial Economics

A Presentation On

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Agenda

About the Company

Dell Products

Strategy

Brand Ratings & Market Share

Demand Analysis

Supply Analysis

Demand Forecasting

Case Study

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Michael Dell

Founder, CEO & Chairman, Dell Inc.

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About The Company

1983 - Michael Dell starts Biz. of pre-formatting IBM PC HD’s on weekends

1985 - $6 million sales, upgrading IBM compatibles for local Biz

1986 - $70 million sales, focus on assembling own line of PC’s

1990 - $500 million sales, with an extensive line of products

1996 - Goes online, $1 million/day - online sales, $5.3B - annual sales

1997 - Online sales at $3 million/day, 50% growth rate - 3rd consecutive year, $7.8B in total annual sales

2005 - $ 750 million sales ; with high technology innovations

2009 - $52.2B sales

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Dell Products Range

OptiPlex: Office desktop computer systems Dimension: Consumer Desktop computer systems Latitude: Commercially-focused laptopsInspiron: Consumer laptopsPrecision: Workstation systems & high-performance laptopsPowerEdge: Larger corporate serversPowerVault: Direct-attach & some network-attached storage (NAS) Dell EMC: Storage area networks XPS: Enthusiast/high-performance systems Axim: PDAs utilizing Microsoft's Windows Mobile Dell On Call: Extended support services

Dell Digital Jukebox (DJ) MP3 Players (discontinued, August 18 2006) Dell monitors LCD/plasma TVs and projectors: HDTV and monitor use

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Dell’s Global Presence

AustinTexas

NashvilleTennessee

Eldorado do Sul Brazil

LimerickIreland

XiamenChina

PenangMalaysia

Sales Offices in 43 countries Sales presence in 170 countries

6 Manufacturing Sites

The Americas EMEA Asia Pacific China

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Strategy

Can Dell computer’s

Conquer the world ?

Risks Involved

Analysts Conclusion

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Brand Ratings

Company Performance DesignTech

Support

Value For

MoneyCustomer Reviews Innovation

Total Points

Apple 15 13 15 9 3 3 58

Lenovo 12 10 13 11 4 3 53

Sony 11 12 10 10 5 3 51

Dell 8 10 7 14 4 3 46

Samsung 10 8 12 8 4 3 45

Acer 10 7 8 12 3 2 42

HP 11 8 8 10 2 2 41

Gateway 9 10 7 9 3 1 39

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Market Share

HP18%

Dell13%

Acer13%Lenovo

10%Toshiba

5%

Asus5%

Others36%

2010 Q2 PC Sales

HP Dell Acer Lenovo Toshiba Asus Others

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Demand Analysis

Nature Of Demand

Direct / Derived Demand • Consumer / Capital Goods

Recurring/Replacement Demand • Durable/Consumable

Complementary / Competing Demand• Jointly Demanded• Substitutes• Decisions on Price, Output

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Factors Affecting Demand

Direct to Customer • Eliminates retail mark-ups• Customization – “Customer Experience”

Price of the Product• Law Of Demand• Discounts

Customer Service and Customer Satisfaction• Web based Support• Next day on site support

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Income of the consumer

Price Of Related Goods

Substitutes Demand

Complementary Demand

Taste And Preferences

Expected Future Income / Price

Growth Of Economy

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Elasticity Of Demand

Price Elasticity Of Demand

D2C Low Inventory (3days) Cheaper Components (1%/Week) Slash Prices Low operating margins

( 7% )

Higher Volumes Rebuild Profitability

High Retention Higher yield

• Worships Numbers, Temp. discounts• Slash Prices to make competitors inventory valueless• Mature Industry – Unit Elastic Demand w.r.t Price

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Income Elasticity Of Demand• Normal Goods vs Inferior Goods• Positive Income Elasticity of Demand

Cross Elasticity Of Demand• Substitutes – Apple, Lenovo, Asus• Positive Cross Elasticity Of Demand

• Complementary – Internet Connection etc• Negative Cross Elasticity Of Demand

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Supply Analysis

They Will Come And We Will…

Revolutionize

Build What They Need

Deliver Direct To Consumer

Build-to-order Processes

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Price Elasticity Of Supply

How Responsive Is Supply To Price Changes?

Elasticity Of Supply Of Factor Inputs. - Are raw material, machinery & labour available ? - At what cost? - Time

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Factors Affecting Supply

Price Of Related Good.

State Of Technology.

Future Price Level

Political Disturbance.

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Demand Forecasting

What is Demand Forecasting ?

A Demand Forecast is the prediction of what will happen to your company's existing product sales.

Types Of Forescasting :• Short Term• Medium Term• Long Term

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Objectives Of Demand Forecasting

1. Helping for continous production

2. Regular supply of commodities

3. Formulation of price policy

4. Arrangement of finance

5. Labour requirement

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Method Of Demand Forecasting

 

Year QuarterTotal Sales (In Lakh

Units)

Dell Sales (In Lakh

Units)

Average Dell Sales (In Lakh

Units)

  2009 Q1 650 104  

Period 1 2009 Q2 681 93 95.06

  2009 Q3 694 88.2  

  2009 Q4 760 91.2  

Period 2 2010 Q1 817 103.5 100.56

  2010 Q2 822 107  

Semi Average Method

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Dell Demand Forecast

Laptop sales to exceed Desktop sales by 2011

Mobile computing power

Software Upgrades

Change in organisation mindset

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Dell In China