dell vishal
DESCRIPTION
This was an ppt which we have done for the case study allotted us in the class.TRANSCRIPT
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
C o m p a n y R e p o r tC o m p a n y R e p o r t
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
PRESENTED BY
: DEEPA
: KADAMBARI
: ASHA
: VISHAL
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Mission & Strategy Statement
• Mission Statement:
“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.”
• Strategy Statement:
“To do business with its consumers one-on-one, through the phone or internet.”
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Timeline
1980 Purchased first computer and takes it apart1983 Wanted to beat IBM, Sells upgraded PCs out of UT
Dorm Room1984 Registers Dell Computer Corporation DBA PC’s Limited
Sells Direct to end users1986 12 mhz 285 based system. 30 day money back guarantee1987 International subsidiary in UK1988 Initial IPO $30 million1989 Accumulates excess inventory1990 First to sell through retail CompUSA, Best Buy, WalMart1991 Converts entire line to 486… high technology priority1993 $2 Billion in sales
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Timeline
1994 Launches Latitude Notebook Setting new records on battery life.
1996 Introduces Power Edge servers for small and mediumserver markets
1998 Solidifies internet market. $12 million per day from customers. Sets up supplier network.
2000 Revenue hit a record $25 billion. 2001 Sales topped $30 billion. 2004 Annual sales passed $40 billion. 2005 Dell launched XPS, a line of high-performance.2006 Annual sales hit a record $55.91 billion.2006 Dell shares fell 4.7 per cent.
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Company Overview
• Headquartered in Round Rock, Texas
• Founded in 1984 By Michael Dell
• Sells Wintel systems via the direct model
Key Statistics
Company Type Public (NASDAQ: DELL)
Fiscal Year-End January
2005 Sales (mil.) $49,205
1-Year Sales Growth 15.8%
2005 Net Income (mil.) $3,043
1-Year Net Income Growth 13.1%
Days supply in inventory 3
Source of all data is the Dell 2005 10-K
filing unless otherwise noted.
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
• Sales Of Computer Systems Directly To Consumers
• Elimination of Retail Middlemen• Computer System Construction
Based Upon Individual Customer Needs
Dell’s Strategy – Direct From Dell
• Quick Introduction of State Of The Art Technology
• Elimination Of Heavy Inventory Investment
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Effect On Working Capital
• Reduction Of Inventory
Dell’s Strategy – Direct From Dell
Inventories2005 2004 2003 2002 2001 2000
28-Jan-05 30-Jan-04 Jan-31-03 Feb-1-02 Feb-2-01 Jan-28-00
Days of sales outstanding 32 31 28 29 32 34
Days of supply in inventory 4 3 3 4 5 6
Days in accounts payable 73 70 68 69 58 58
Cash conversion cycle -37 -36 -37 -36 -21 -18
Cash Conversion Cycle
-40
-30
-20
-10
0
2000 2001 2002 2003 2004 2005
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell Strategy for INDIA
• Dell will understand the indian market and judge the sales performance before they take a decision on manufacturing unit.
• India is now the 13th market for DELL.• The $28.5-billion Dell Computer Corporation, a
computer systems company and provider of Internet infrastructure, will now sell its products and support operations in India.
• In both software and hardware as well we have outsourcing from India as well.
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Continue………
• Dell will initially deal directly with customers in major cities and set up a call centre at Bangalore to cater to the Indian market."
• Dell will concentrate on selling its products to the business houses.
• Big MNCs and business houses are our prime market.• Customers could place their orders either through the
company Web site or dial a toll free number, he said adding, this would help it to cut down distribution cost by 6 to 8%
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Continue………
• In the last few years, the company had sold about 60,000 units in India, but expects a triple digit growth over the next two years
• Dell plans to strengthen its service level and coverage by adding more service partners to the current arrangement with Tata Infotech.
• Dell is planning for local sourcing and merging of components, and working to virtually integrate the logistics provider into world-class supply-chain management system to enhance customer service quality.
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Continue………
• Dell is in the process of tying up with various local
companies for this purpose. • the products will be competitively priced as the price
of components have been going down drastically.• Dell believes that the tariff structure, which is a
problem right now, will go down eventually and the products will become much cheaper.
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Target Market
DELL have always been suppliers for businesses and that is the way it is going to be in India. DELL is No.1 in the businesses market, while number four in the consumer market.
By Michael Dell
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
• Reduction of Accounts Receivable/Extension of Accounts Payable
Crediting (in millions of $)
2005 2004 2003 2002 2001
28-Jan-05 30-Jan-04 Jan-31-03 Feb-1-02 Feb-2-01
Accounts Receivable $ 4,414 $ 3,635 $ 2,657 $ 2,269 $ 2,424
Accounts Payable 8895 7316 5989 5075 4286
Allowance for doubtful accounts -78 -84 -71 -68 -69
Selected Working Capital
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2001 2002 2003 2004 2005
Effect On Working CapitalDell’s Strategy – Direct From DellCompany Value
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Problems & Issues of Case
Stagnant Sale of Computers
Stagnancy in Revenue
In the further course of presentation we will try to explain what dell did to overcome this issues
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Intangible Value of Dell
Intangiable$73,915
76%
Assets $23,215
24%
(in millions of $)
R & D Expenditures
% of Net Revenue
Dell $463 < 1%
Apple 489 6%
HP 878 4%Source: Dell, Apple, and HP – 10-K filings
Market Capitalization Breakdown
Company Value
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Server
Storage
POS
Software
NotebooksDesktop
Peripherals
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Performance
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Net Revenue(in millions of $)
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Performance
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Net Revenue Growth
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1997 1998 1999 2000 2001 2002 2003 2004 2005
PerformanceIndustry Analysis
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
What drives this industry growth?
• Technology• Internet• Applications• Pricing
Industry Analysis
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell’s Market Segmentation
US - Business
52%
Europe22%
US - Consumer
15%
Asia Pacific-Japan11%
Desktops50%
Enterprise21%
Notebooks29%
Revenue By Market Revenue By Product
Industry Analysis
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Competitors
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Key Numbers Dell HP IBM
Annual Sales ($ mil.) $49,205 $79,905 $ 96,293
Market Cap ($ mil.) $97,647 $58,026 $149,402
Profitability Dell HP IBM Industry Market
Gross Profit Margin 19.0% 28.5% 42.5% 19.9% 48.4%
Net Profit Margin 6.2% 4.3% 8.8% 4.5% 6.2%
Return on Equity 46.9% 9.3% 28.3% 23.3% 11.7%
Return on Assets 13.1% 4.6% 7.7% 8.3% 2.0%
Return on Invested Capital 43.5% 8.3% 18.9% 21.8% 5.7%
Competitors
Source: Hoovers
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Competitor environment Evolving
20062000
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell services business continues to rapidly expand
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Significant growth opportunity for Dell
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Vir
tual
Inte
gra
tio
n
Customer
Dell
Suppliers
Dell Supply Chain
PUSH
PULL
PC SUPPLY CHAINS
Typical PC Supply Chain(Compaq, HP, IBM, etc.)
Customer
DistributionChannels
Manufacturer
Suppliers
PUSH
PULL
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Supply Chain Management
FactoryHub
Customers
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Growth “A big jump”
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
For Loyal Customers
Medium Customers
New Market
Retailers
Pricing Matrix
High Medium Low
High
Medium
Low
Quality
Price
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell Product Mix
Owned Products Third Party Products
Desktops
Notebooks
Servers
Printers
Switches
Electronic software & Acc.
Storage
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Product Line
Desktop Dimension Desktop Opti-plen Desktop Dell precision Desktop Open source Desktop
NotebooksInspiron NotebooksLatitude NotebooksDell Precision Mobile NotebooksOpen source Notebooks
ServersPoweredge Tower serversPoweredge Pack Optimize ServersPoweredge Blade Servers
StoragesPower vault direct attached storagePower vault network storagePower vault tape backup storageEnterprise class storage
SwitchesPower over ethernet switchesManaged switchesWeb managed switches
Electronic Software & Acc.Desktop acc.Handheld Table PC’sNotebook acc.Notebook PowerMP3 playerMonitor etc.
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
DELL Customers
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors RecommendationsReasons For Stagnant sale
Tax
Late Entrant
Logistics
???
Competitors TechFactor
No Face to Face Comm.
Direct Support
Pricing Factor
Ishikawa Diagram
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Study & Survey
Survey of Companies:
• HDFC Std. Life Ins.
• BPL
• Godrej Lawkim
• Pantaloons
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
1)Which Company’s Server You use ?Dell Hp IBM Lenovo Others Plz Specify
2)Which Kind of Server you use?
3)What is the purpose of not Purchasing DELL products ?
4)Who are the support partners of DELL who looks after the service in India for you ?
5) Which Company Peripherals do you use ?
6)What are the applications for Dell products?
7) Do you feel DELL is successful in sale of computer and its peripherals in India ?
8) In future do you think DELL would be able to cater to your requirements keeping in mind the current scenario ?
DELL Questionnaire
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
• Maintain a moderate market share growth in the PC industry while sticking to low price, high quality strategy
• Grow business segment (servers)• Concentrate on global expansion• Pursue government contracts• Expand & grow lucrative printer and
computer peripheral products• Buy back stock
Recommendations
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
• Analysts are across the board on stock recommendations
• Dell has met or exceeded its projections for 16 straight quarters
• Slowing growth but not leveling out• No signs of industry collapse in the near future• Dell continues to gain market share and HP has
forfeited price competition
Recommendations
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
“Think Simple, Live Simple Life Will be Simple”