Dell’s activities are organized in each different customer segments.
- Relationship customers
- Home and small business
- Public sector customers.
Product development centralized in the U.S. Manufacturing processing are upgraded, Improvements developed for new plants.
Structural Element Source of power or weakness Relative Power
Microsoft has not real competitors for OS High
Suppliers Intel could integrate forward High
Parts suppliers are fragmented Medium
Buyers Fragmented not organized
Very low switching costs High
Slowing growth, declining margins, little
Intel has competition from AMD Medium
success of Dell is for the market segmentation and specialization strategies
Missions, Objectives, and Strategies
Dell marketing strategy was to convince individual and corporate to buy computers directly from internet .Dell targeted most marketing efforts in medium and large businesses. Dell began advertising in electronics shows, magazines and other mediums targeted corporate technology officers, who were responsible for purchasing computer companies. In marketing to these executives, Dell increased the ease of customizability, the simplicity of placing orders through Dell’s website and Dell’s rapid order fulfillment abilities. The company is promoted Premier Pages service that prepares corporate customers with 24-hour technical support services that this marketing allowed the company to become a dominant supplier of computers.
Dell’s Systems Management Strategy
Dell is driving simplicity to help you protect your IT investment
– Reduce the number of management consoles
– Embedded manageability
Dell is providing complete solutions so you can manage what matters to your business.
– Virtualization, Power, etc.
– Modular architecture– use only what you need
Dell helps you protect your investment by working with systems management partners and ISVs
– Out-of-the-box integration with over many of the top systems management vendors
– We don’t compete, we collaborate with leading systems management vendors
Dell management is heterogeneous and is supporting 3rd party hardware instrumentation and tools. Dell Management Console discovers and manages 3rd party HW
- Internet coupled with Direct Business Model
– sell directly to end customers instead of intermediate distributors, resellers.
- Virtual Integration
– using sophisticated CRM, SCM systems at respective ends as well their integration
– Internet, B2B (Premier Pages), Phone-calls, Mass catalog mailings
- Do not Just sell Products – sell Values
– client asked to put tags on their computers
– proactive in solving clients pain points – preloaded software
- Dell was much less mature compare to IBM and HP at time when Internet took off – required much less effort to adapt its systems to Internet technologies.
- IBM and HP’s core competency was product innovation and development, Dell’s expertise was in assembling and catering to business needs.
- Direct business-to-customer model
- Cutting out the cost of distribution
Selling through distributors and adding value resellers
Focusing on Personal Users
Dell tried to diversify its business by targeting personal consumers through direct email campaigns , television and print advertising and introduced a number of new products and add some features personal user’s value, including enhanced graphics and sound cards as well as multicolored laptops. It has promoted consulting services to corporate customers .Dell has focused direct-to-consumer marketing efforts in promoting both (personal and corporate products).
Dell’s Retail Strategy
Dell business is forcing to increase efforts to attract personal computer users. Dell declared partnerships with major computer retailers, including Wal-Mart, Best Buy and Office works. Dell continued direct-to-consumer marketing but sought to promote new partnerships in conjunction with retail partners. It has begun to compete on price, as retailers such as Wal-Mart (low-price shopping destinations), Dell’s marketing efforts have been less focused on product features and customizability and more focused on low price.
Dell’s global sales objective is to penetrate Chinese market and wanted to expand the importance of online direct selling model so that 50% of sales were from the Internet.
Most of Dell’s revenue comes from dominant business that all businesses share many product technologies, knowledge and distribution.
Established company striving to satisfy customers by meeting demands of quality, responsiveness, and competitive pricing.
Management and employees as a team for the purpose of profitability are committed.
Providing jobs in a clean, safe, environmentally atmosphere and be an active participant in community affairs.
The products that are produce shall meet all customer needs.
The response time to our customers’ inquires and requirements will meet customer’s needs.
Maintain sufficient profits
There’s always an opportunity to be a difference. It’s starting by building to customer’s order. It is smart and quick enough to listen to customer needs, it is succeed.
Sometimes it has made some mistakes, but it had enough strength to work way out.
Dell’s management principles are supply chain (including inventory) in fact it is Build-to-Order philosophy. Kept information customer orders, needs and forecasts. Manufacturing predicted what orders would be, announced suppliers of anticipated needed parts, and staffed up to meet demands. This gave Dell an advantage in the marketplace for several reasons.
Information was easier to store, to move, to discard and less expensive than inventory
Dell has two main philosophies Supply & Demand are never in balance, company strategy is to manage when they deviate always have enough, and have nothing left over
Build to Order
Dell’s business build-to-order strategy for producing and selling computers. The build-to-order process has been honed for years, and involves the entire production cycle and supply chain.Product quality, suppliers are physically integrated into production, and the entire order fulfilment process is managed by a sophisticated combination of internal and external information systems.
Lean manufacturing improves quality and reduce inventory, making production more effective and efficient. With working closely with suppliers, inventories of materials are minimized. Suppliers are required to keep inventory near or plants to support build-to-order production.
Description of the Sales Manager’s Position
Sales function operates
Over 15 years direct selling experiences in the PC market.Further extend its IT functions to supply chain and premier customers.The internet enabled system has led Dell become the #1 PC company in the States.
• Minimum 4+ years experience directly working at Dell with strong network of Dell professionals
• 10+ years of total sales and management experience
• Strong software background, or storage software sales experience.
• Strong working knowledge of core systems and storage software.
• Solid strategic business development, planning with strong tactical implementation sales skills
• Excellent Channel Sales forecasting and modeling skills
• Able to develop, implement, execute and manage an annual business plan
• Well written, oral communication and presentation skills
• Detail oriented, with excellent planning and skills
• Working with MS Office and Management activities through CRM
• A great deal of travel is required in the role
• Displays personal and business ethics and moral
• Minimum of a Bachelors Degree
The Sales Manager of Dell has responsibility for managing the strategic relationship and marketing activity. And developing and educating channel partners products, selected programs and sales & marketing that increase revenue and market share within the partner. They will be responsible for developing critical marketing strategies; ensuring execution plans and measuring effectiveness in sales and market penetration.
Dave Mallard he is the Director of Sales in Austin, Texas Area / Computer Software
Current: Dell Senior Account, in past he was Director of Sales at Data Storage Group, Education: University of Denver, he has worked in both direct and indirect sales for the 6 years
Kurt Wieland she is Inside Sales Account Manager in US Federal /Greater Chicago Area / Computer Software Current: Inside Sales Account Manager in Past: Inside Sales Manager Federal
Education: Keller Graduate School of Management of DeVry University, she has worked
Manager of Inside Software Sales team for U.S. Federal and Canadian accounts.
Marsia Farahmand she is Account Manager- Federal Sales at Dell in Austin, Texas / Information Technology and Services
Current: Account Manager- Federal Sales at Dell in Past: Sales Associate at Gap Inc.
Education: The University of Texas at Austin
She has highly productive and innovative professional in a fast paced environment
Sonya Banks she is Account Manager in Austin, Texas / Computer Hardware
Current: Federal Sales Account Manager at Dell. In Past: Senior Sales Specialist at Chartered Semiconductor Manufacturing,
Education: Southwestern University
She accomplished professional marketing experience for ten years in all phases of the business cycle.
In order to handle
– $ 1,000,000 per day in sales in 1996
– $15,000,000 per day in sales in 1999
– $50,000,000 per day in sales in 2001
– $31 billion annual sales in 2002 (82M/day)
Organization of the sales function
Dell is renowned for its direct sales to customers by phone, Internet and now through e-business enabling consumers to go through the whole sales process online. What is less well known is that Dell, in 2005, took on 150 salespeople to sell their products in United Kingdom/Europe.
The reason for this change from direct selling to personal selling is that the cost of a salesperson for an individual customer makes no economic sense, but if you are selling many computers, printers, servers and other products and ancillaries to one customer then personal salespeople are required to understand the customer’s needs, offer appropriate solutions and sell the correct package. In this regard, Dell must compete with HP and IBM for business customers on a more personalized service basis.
Yet Dell’s background is interesting as the company pioneered direct selling and mass customization. Founded in Texas in 1984, by 1992 Dell had made the Fortune 500 list and in 2004 was ranked 34 in Business Week‘s Global list of the world’s most valuable companies.In 1996, Dell began to sell computers on the Internet, and within 2 years, sales were exceeding $3 million per day. Much of this was due to the way Dell reduced transaction costs by cutting out expensive distribution and sales channels, including the high cost of personal salespeople.
The Dell direct selling model gave the company infrastructure leanness, market agility, minimal inventory and high customer differentiation. Although relatively weak compared with competitors in R & D (Dell 1.3% of revenues; HP 5.8%; IBM 5.9%), the financial discipline using off-the-shelf components and assembly technology gave it a market-leading performance, quality and price combination.
Revenue figures and projections are shown in Table 1.6. Anticipating low growth in the future PC market, the company has refocused as an Internet-centric company (see Table 1.7).
- Over 15 years direct selling experiences in the PC market, Dell’s infrastructure and relationship with customers have gained significant advantages over other competitors, although competitors tried to copy Dell’s model.
- The first step success in the direct selling also led Dell to further extend its IT functions to supply chain and premier customers. This again enhances Dell’s costs advantages and relationships with its corporate customers.
- The internet enabled system has led Dell become the #1 PC company in the States. Over 50% sales revenues are generated from internet selling. Moreover, most technical supports to customers can be conducted through internet. This has saved tremendous costs for the company. Finally, internet also implemented in Dell’s daily operation system such as production information or performance reports. Dell hence enjoys the benefits of the management efficiency.
- Fully utilize the modern information technology and implemented in the company’s entire organization levels is the key to Dell’s success. Most importantly, the company has foreseen the direct purchasing behavior and initiated the Dell Direct in the PC market has made the company leading in the industry.
More in-depth Summary
Something similar to what Jon Kea did in Value Disciplines
In Dell Direct case, we can find several similarities to Value Disciplines.
1) Operational Excellence – Dell’s comprehensive IT utilization from customers to suppliers, even inside its company organization has improved the company’s efficiency such as communication time, inventory level, and reduction of middle channel markup. All these have made Dell more efficient than other competitors.
2) Customer Intimacy– Dell’s direct selling to customers through electronic commerce system, and the technical supports conducted by internet system, and Premier Dell.com for those important corporate customers, all these are related to Customer Intimacy. In terms of communications with customers, Dell has found the fastest and effective channel to reach its customers. For important corporate accounts, Dell even assists them to improve operational efficiency. These are achievements of customer intimacy.
3) Product/Service Leadership– It might be difficult to say Dell’s PC is the product leader in the industry. However, it is easy to know that Dell’s technical services are leading in the industry. Through internet enabled system, Dell conducts 50% of technical services with its users. This definitely is the leader in the industry in terms of services and efficiency.
Case Discussion / Digest Questions
1. What are the main reasons for the success of the Dell Direct model?
I think there are several reasons attributed to the success of Dell Direct:
a) Company determination in implementing the direct selling PC model.
b) The needs from customers to reach PC suppliers in terms of prices and supports were strong.
c) The company’s infrastructure has adjusted to meet the model requirements.
2. What are the key differences between transaction and relationship customers?
The differences between transactions and relationship customers are:
Transaction customers – Focus on completion of one-shot order or sales
– The key factor between seller and buyer basically is Price .
– Short-term relationship.
– Very few follow-up activities such as services.
Relationship customers – Focus on long-term relationships connection.
– Customer’s needs are key to supplier.
– Technical services are always included.
– « Total costs » concepts is applied instead of « single price » concern.
– Look very much on product standardization, reliability, services.
3. In what ways does the Internet enhance the Direct Model? What benefits does it create for Dell and for its customers?
The internet enabled system really speed up Dell Direct’s growth and success. Through internet, Dell hence developed its website; provide customers variety of services through internet in addition to PC orders. It also provides opportunities for Dell to communication with customers in depth through FAQ. Customers can track their orders through internet; ask technical services, download software, and purchase of new device drivers. Dell also developed a Premier Dell for its important accounts. This website offers various benefits to its customers such as automated purchasing, integration, facilitated access, centralization control, and management report.
For Dell, the internet enabled system offers the company even more significant benefits. Dell not only enjoyed big growth, but also utilized the system with its supply chains. Internet was also applied in Dell’s internal management system. All these have saved a lot of costs and enhanced its management efficiency.
4. What is happening to growth in the PC Industry at large in the twenty first century? What are the implications for Dell, and its strategy for the future?
The PC industry moved from vertical blocks to horizontal structure allowed most PC companies to create their own PC based on a common silicone platform. This change also created a costs advantage on the PC manufacturing, and stimulate the PC demand, and grow the industry. Dell was born to meet the growth opportunity. With its success in direct strategy, the company hence achieved a tremendous success by employing the modern IT and internet enabled systems.
In looking into the 21st century, PC industry is continuing to grow especially in the electronic commerce direct selling model. Most other PC companies were also getting into this model. But they were not as successful as Dell. It is expected the direct model selling in PC will become a major channel in PC industry. Dell should fully utilize its advantages and experiences in this direct selling model. In my personal opinion, Dell also needs to create « more feature services and benefits » in its website for its customers. Although it might be difficult for competitors’ to reach the level as Dell in the short period, still there is possibility that some day other companies may become real competitors in the direct model. The strength Dell has created is the channel advantages and experiences not product inventions or innovations. We can see from Dell’s website that Dell has started to carry other electronics other than PC products, such as printers, digital cameras.. I perceive this is the side benefits from its direct selling channel. For long-term, I believe Dell must innovate more attractive and unique features or services for its customers. Otherwise, the competitions are still keen and strong from the company like HP and Japanese companies like Toshiba, Sony.
- 5. In what specific ways does the Internet enhance Dell’s (i) operational excellence, and (ii) customer intimacy?
The internet system does enhance Dell’s operational excellence in the following areas:
1) Make its Dell Direct electronic commerce more effectively.
2) Most technical services can be conducted through website with its customers – save time and costs significantly.
3) Over 50% of sales are generated from internet sales
4) Internet is also applied inside the internal management system such as performance reports, information announcement.
5) The internet enabled Dell to manage its supply chains including inventories and production schedules – reduce costs and time.
In enhancing customer intimacy, Dell achieves this through internet:
1) Dell’s website establishment and communications with its direct customers.
2) Over 50% technical services can be conducted through internet – immediate services to customers.
3) Premier Dell website for the important large accounts. Dell was able to provide these customers with in-depth supports through internet.
Sales Planning and Forecasting
Dell Inc. listens to customers and delivers innovative technology and services they trust and value. Uniquely enabled by its direct business model, Dell sells more systems globally than any computer company, placing it No. 34 on the Fortune 500. Dell’s climb to market leadership is the result of a persistent focus on delivering the best possible customer experience by directly selling standards-based computing products and services. Revenue for the last four quarters totalled $58.2 billion and the company employs approximately 90,400 team members around the globe.
Strong brand value
Dell enjoys a strong brand image supporting its growth. The company is among the top 100 brands in the world, with a brand value of $10,291 million, according to Interbrand annual ranking 2009. It was ranked 35 in the list of top 100 brands. Dell was ranked ahead of some of its competitors such as Acer, Toshiba and Lenovo. Dell’s brand image generates a large percentage of intangible earnings. Strong brand image makes Dell a preferred hardware provider over its competitors. In addition, strong brand image promotes greater trust in the company’s product and services, which boosts the demand for them.
Robust market position
Dell has a robust market presence in IT systems market. Despite losing market share to other players in the recent past, Dell continues to remain a strong player in the IT systems market. Dell was the second largest player in the in the worldwide PC market with approximately 13.1% share, with the volume shipments of 38.4 million in 2009. In the US, the company is the second leading player in PC market with approximately 11.9% market share of the volume shipments in 2009. Moreover, the company achieved the number one position in the rapidly developing Indian PC market, surpassing Hewlett-Packard during the second quarter of 2010 with a market share of 15.2%. It is also a leading player in the computer peripheral equipment and software wholesaler market.
According to the industry sources, the company is also the fourth largest player in the worldwide disk storage systems market with a market share of over 12.3% during the second quarter of 2010. The company is the leading player in the NAS domain with share of 32.9%. Further, Dell is the third largest player in the worldwide servers’ segment with a market share of approximately 15.3%. Dell’s strong market position in the IT systems market provides it with a competitive advantage.
Diversified customer base
Dell serves a diversified customer base globally. The company offers a range of IT products including mobility products, desktop PCs, software and peripherals, servers and networking, and storage to a wide customer base, which ranges from large scale businesses to small organizations of various sectors. It provides customized products to all size of clients according to their needs. The company’s customers are categorized as: large enterprise, public, small and medium business (SMB), and consumer.
The company’s large enterprise customers include the business from large global and national corporate companies. The public customers comprises of educational institutions, government, health care, and law enforcement agencies, operate in communities. For SMBs, the company offers the simplest and most complete standards-based IT solutions and services, customized for their needs. For consumers, the company markets products through an on-line store at www.dell.com, over the phone, and through retail. Wide range of customer base provides the company with diversified revenue streams. During FY2010, the company generated 27% of the total revenues from large enterprise, 27.4% from public clients, 22.8% from SMBs, and 22.8% from consumers. Diversified revenues from wide range of customers shields the company against demand fluctuations in a specific market by dispersing its business risks.
Dell Perot Systems’ position in healthcare business
Dell Perot Systems is a leading provider of healthcare IT services in the US. The company provides services to more than 1,000 hospitals and five of the top 25 systems in the US. It serves about 70 health insurance organizations and more than 30,000 doctors as members of physician groups. It is a leading systems integrator of Tier I clinical systems.
The company’s healthcare business was also recognized by several agencies for its capabilities. In May 2010, it was ranked number one for the fourth consecutive year in Annual Data monitor Black Book of Outsourcing 2009 survey of Healthcare ITO vendors. The survey positioned Dell Perot Systems as the highest rated overall vendor in the areas of applications development and maintenance, revenue cycle management, and clinical data initiatives. Dell Perot Systems strong position in healthcare IT segment provides a competitive advantage to the company and allows it to achieve new contracts.
Violation of laws
Dell was involved in the violation of federal securities laws and is paying the civil penalties. A complaint was filed against the company alleging that Dell and some of its staff have violated the federal laws. The company also faced investigations from the US Securities and Exchange Commission (SEC) regarding these violations including the antifraud provisions of federal securities laws, relating to certain accounting and financial reporting matters during 2001–06.The company also faced allegations regarding certain aspects of its commercial relationship with Intel. As a part of this, the company reached a settlement with SEC resolving the investigations during June 2010. Under its settlement, the company has consented to a permanent injunction against future violations of such federal securities laws and SEC rules.
The company also agreed to perform certain undertakings, including retaining an independent consultant, to enhance its disclosure processes, practices and controls. According to the settlement, the company is required to pay a civil monetary penalty of $100 million. Also Mr. Michael S Dell, the Chairman and CEO of Dell, has to pay a penalty of $4 million regarding the alleged failure to provide adequate disclosures with respect to the company’s commercial relationship with Intel prior to Fiscal 2008.Violation of laws, investigations and paying penalties impacts the company’s reputation and affects the investor’s confidence.
Relatively weak R&D capabilities
Dell has relatively weak research, development and engineering (R&D) capabilities compared to its major competitors. The company employs a collaborative approach to product design and development, where it works with a network of technology companies. It uses original design manufacturing (ODM) partnerships and manufacturing outsourcing relationships for manufacturing. However, it undertakes essential manufacturing processes including assembly, software installation, functional testing and quality control. As a result, the company’s R&D spending has been lower than its competitors. Dell’s R&D expenses were $624 million, $663 million, and $610 million, respectively, during FY2010, FY2009 and FY2008. By contrast, its main competitors such as HP reported R&D spending of $2,819 million, $3,543 million, and $3,611 million, respectively, in FY2009, FY2008, and FY2007; and IBM reported R&D spending of $5,820 million, $6,337 million and $6,153 million, respectively, in FY2009, FY2008 and FY2007. Furthermore, the company’s R&D spending as percentage of total revenues was 1.2% in FY2010, compared to HP (3%), and IBM (6.1%). As a result, the company had lesser patents than its competitors. At the end of FY2010, it had a worldwide portfolio of 2,577 patents and additional 2,418 patent applications pending. By contrast, HP had a worldwide portfolio of over 33,000 patents, and IBM achieved over 4,914 patents only in 2009.
Although, the company’s business model was not highly dependent on R&D over years, changing industry dynamics with increasing competition and commoditization of PC market call for differentiation though innovation. Furthermore, the company’s relatively weak R&D makes it depend on licenses for third-party patents, and it may affect its ability to introduce innovative products. Dell’s relatively weak R&D capabilities affect its competitiveness as well as make it dependent on third parties for patent licenses.
Entry into Smartphone business
Dell has entered into the Smartphone business with the launch of Dell Mini 3 smart phones in November 2009. The company also partnered with China Mobile, the largest telecommunications company in the world with more than 500 million customers; and Claro, which serves more than 42 million people in Brazil as part of the America Movil network, to distribute its Smartphone offerings. Further, the company also formed Smartphone agreement with AT&T as a carrier to offer Dell Mini 3 smart phone in January 2010. The company’s entry into the Smartphone business demonstrates its continued expansion into mobile internet products.
Moreover, the smart phone market is projected to grow significantly, poising the growth opportunities to Dell. According to the industry sources, the smartphone market is forecast to grow at a compounded annual rate (CAGR) of 32% between 2010 and 2014. More than 50% of this growth in handsets is forecast to come from the developing markets of Asia-Pacific, including China and India, and Central and Latin American states. Also, the Smartphone’s are expected to represent 26% of all handsets in 2014, compared to 14% in 2009. The company’s expansion into growing smartphone business will provide it with additional revenues.
Growing PC market
The global PC market is expected to grow in the coming years. According to the industry sources, the global PC market is forecast to record a growth of 20% in terms of volume in 2010, compared to 2009. The demand is being driven by increased customer adoption and the growth of notebooks. The notebook market is expected to record 25% growth in shipments in 2010, over 2009. In addition, the Asia Pacific PC market is expected to grow significantly, both China and Indian markets driving the demand. The PC shipments in China and India are forecast to grow around 20% during 2010.
The company is the second largest player in the worldwide PC market, offering desktop PCs and notebooks under various brands: Allienware, Studio, OptiPlex, Inspiron, Vostro and Precision. Further, the company is investing in the emerging BRIC regions including Brazil, Russia, India, and China to design and manufacture products and support its customers. Growing PC demand and the company’s focus on emerging markets ensures steady revenues to the company from PC segment.
Positive outlook for global IT spending
The global information technology (IT) spending is expected to grow in the near future. A steady improvement in the macroeconomic environment in 2010 will enable modest growth in overall IT spending. According to Datamonitor, the global IT hardware and equipment is projected to record a CAGR of 6.3% during 2009–14. Further, the global IT consulting and other services market is forecast to grow at a CAGR of 2.4% during 2009–14.
Being one of the leading provider of mobility products, desktop PCs, software and peripherals, servers and networking, storage and IT services, Dell is poised to capitalize on the global IT positive outlook. Increasing adoption of cloud computing services The worldwide demand for cloud computing services is forecast to record strong growth in coming years. Cloud computing is a computing infrastructure model, which enables delivery of software-as-a-service (SaaS), platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS). This reduces the upfront royalty or licensing payments, investment in hardware and other operating expenses. As result of its benefits, the global cloud computing services market is forecast to grow at a CAGR of over 20% during 2009–14.With the growth of cloud computing services, the enterprises are expected to gain significant savings from SaaS, PaaS and IaaS during the next five years. Dell is increasing its presence in cloud environments and also launched new offerings in this domain.
In 2009, Dell and salesforce.com, the enterprise cloud computing company, together launched certified Dell-salesforce.com solutions, joint offerings for small and medium businesses, that offer customer relationship management applications through the cloud. Further, Dell in collaboration with Intel launched a cloud-based learning management platform during May 2010. As a part of expanding its cloud strategy, Dell formed a strategic partnership with Microsoft to use the Windows Azure platform appliance as a part of its Dell Services Cloud for developing next-generation cloud services. The company’s focus on cloud computing services will enhance its revenue and market share in coming years.
The company faces intense competition in all its business segments. It competes in terms of price, quality, brand, technology, reputation, distribution and range of products, among other factors. Dell faces stiff competition in enterprise PC and server markets from Acer, Apple, HP, Lenovo, IBM and Toshiba, among others. In some regions, the company faces competition from local companies and from generically-branded or white box manufacturers. In the consumer market, Dell faces stiff competition from HP, Acer, Apple, Sony, Lenovo and Asustek. Furthermore, in the European and Asian notebooks markets the company faces intense competition from Asustek. In addition, with the launch of smartphone in FY2010, the company’s mobile business competes with Apple, RIM, and HTC. Intense competition may affect the company’s operating performance and market share in coming years.
Dell’s products are highly complex and sophisticated. As a result, they may occasionally contain design defects, software errors or security problems that may be difficult to detect and correct. In addition, implementation of the company’s products may involve customer-specific configuration. In particular, it is common for complex hardware products to contain undetected errors when first released. They are discovered only after the product is used over time with different systems and in a variety of applications and environments. Despite extensive testing before release, the company may experience errors in the products, which may affect the market acceptance of the products.
For instance, the company faced product defect issues and recalled several products in the recent past owing to quality issues. In August 2006, the company announced the recall of 4.1 million notebook batteries owing to fire risk. Additionally, in October 2008, Dell updated its battery-replacement program based on additional information it received from lithium-ion battery supplier, Sony. Product defects resulting in recalls may undermine the faith of consumers in the products, benefiting the competitors of the company.
The company is based on a simple concept: by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. This direct business model eliminates retailers that add unnecessary time and cost, or can diminish Dell’s understanding of customer expectations. The direct model allows the company to build every system to order and offer customers powerful, richly configured systems at competitive prices. Dell also introduces the latest relevant technology much more quickly than companies with slow-moving, indirect distribution channels. By cutting out retailers and selling directly to its customers, Dell is in a far better position to forecast real customer demand.
Dell is planning to make twitter its main online sales channel in a move that will see social media replace much of the computer giant’s email, search and affiliate marketing activity. The PC manufacturer has already sold $3 million (£i.8m) worth of products via Twitter through its’ experimentation’ with the site, but this is just the tip of the iceberg, according to Michael Buck, Dell’s director of global SMB online business. Dell’s plan to boost its investment in social media will see it shift spend away from other online sales channels, including email, search and affiliate marketing, which have long been the mainstay of its digital strategy. « We need to look for vehicles that are popular with customers and cost-effective, » said Buck. « Social media fulfils these requirements and will help drive demand for Dell products. » Dell already has over a million Tvritter followers, whom it provides with product updates. « Twitter has huge potential to make money, « added Buck. « We have lofty ambitions and expect explosive growth in the next three years. » Dell has a history of testing out new platforms, but the computer giant admits that it doesn’t always get it right. « We’ve got our fingers burnt but have learned from it, » said Buck.
Partnering with GE Capital
The deal comes just short of three years after Dell bought out CIT Group’s 30 percent interest in Dell Financial Services. Now Dell is partnering with GE Capital, and rival Lenovo has partnered with CIT Group. Dell is partnering with GE Capital to provide end-user financing for Dell’s channel partners. The new deal applies to sales of technology solutions through Dell’s channel partners in the United States and is in response to requests from Dell’s Partner Direct channel partners. « Partners told us they wanted the ability to deliver financing solutions to their customers, » said Greg Davis, vice president and general manager, Dell Global Commercial Channels, said in a statement. « This program is in response to their request and is specifically designed to address the need to offer financing for their end-user customers. » GE Capital is one of the known names in the technology financing business and works with several vendors. The company says its Vendor Finance business currently operates several technology-related finance programs involving software, hardware and accompanying services.
« We have a legacy of service to technology customers and a dedicated focus on the IT reseller channel, making us uniquely positioned to deliver exceptional service, » said Jim Kelly, general manager of GE Capital, Vendor Finance, in a statement. « We stand ready to provide Dell’s partners with innovative online resources to manage their portfolios, timely decision-making and a streamlined sales process to help them grow and succeed. » Dell Financial Services was founded in 1997 as a partnership between Dell and financial services firm CIT Group, which is one of the firms that saw its fortunes change during the financial crisis of 2008 and recession of 2009. Dell exercised its right to buy out CIT’s 30 percent share of Dell Financial Services in December 2007.
Since FY2008, Dell started offering products through indirect sales, such as leading retail chain stores. It offers select products through strategic relationships with a various major retailers like Wal-Mart and Best Buy in the Uv] S;Wal-Mart and Pontofrio in Latin America; Carphone Warehouse, Carrefour, Tesco and DSGi in EMEA region; and Gome, HiMart, Courts and Bic Camera in Asia Pacific region. With its entry into indirect sales channel model, Dell’s visibility among the individual customer in the retail space is increasing, which further increases its brand value.
Becoming more diversified
Dell says the company is indeed becoming more diversified, and wants to be a major player in both data centre equipment and the fast-growing mobile market. « Five or 10 years ago people would say Dell is a PC company. Well, news flash — most of our margin and profit doesn’t come from PCs. I don’t think people get that, »
Dell said in a rare, exclusive interview on Thursday. »Margins are going in the right direction, the mix of the business is shifting in a pretty considerable way, the picture is starting to emerge more clearly what Dell is becoming. » Asked what the Dell of the future might look like, he downplayed the role of individual product categories, which he called « ingredients » in a broader IT menu. Once the world’s top PC maker and a mainstay of business-school case studies, Dell has shed market share and now vies with Acer Inc for second place.
More than half its business still comes from selling low-margin, commodity PCs. But Michael Dell has made no secret he is determined to diversify the company into more profitable areas — such as software, services and storage. The CEO who started out upgrading PCs from his college dorm room acknowledged that plenty of work still lay ahead to compete with rivals like IBM, HP and Apple Inc. « It takes time, but clearly the company is changing, » he said. Dell was presiding over an event at corporate headquarters to promote what he sees as a major opportunity selling equipment and services to small- and medium-sized businesses, a segment often overlooked by investors but which makes up roughly a quarter of sales and a third of operating income.
« Dell has an enormous channel that can sell to these customers, and this is also where all the growth is, » said Dell, who founded the company in the 1980s while still a college student. Steve Felice, who leads Dell’s mid-market business, said such companies are the largest group of spenders on IT. « They’re often ignored from a technology standpoint, » he said. « It’s early stages for us. We’ve got a lot more products planned next year, particularly as the tablet comes into the mainstream here, » he said. He noted that the company has been acquiring around eight companies a year, a big change from a decade ago, when the company did not engage in M&A.
« We’re absolutely changing our role in the industry, » he said. « At the extreme, you could have said Dell started out as more of distributor, and now you see Dell as an IP owner, » he said, referring to intellectual property. The company’s purchase of storage company EqualLogic in 2008 is widely deemed successful. But the jury is still out on last year’s acquisition of services company Perot Systems, it’s biggest-ever purchase. Dell lost out to HP this year in a dramatic bidding war for Storage Company 3Par.
Dell Windows Phone 7 Smartphone
Dell Dumps BlackBerry for Dell Windows Phone 7 Smartphone’s (2010-11-06) – Contributed by Reuters Dell will move 25,000 of its employees who carry Dell-issued BlackBerry smart phones to it’s own Dell Smartphone’s which run Microsoft Windows Phone 7. The company also plans to urge its business customers to switch, too. (Reuters) – Dell Inc will shift thousands of its employees off Research in Motion Ltd’s BlackBerry and over to Dell’s Smartphone’s, the company said on Thursday. The money-saving switch affects the roughly 25,000 Dell employees who carry a company-issued BlackBerry. Dell employs around 100,000 people worldwide.
Dell is also launching an effort to convince its business customers to switch to the company’s Smartphone. News of the company’s plans was first reported by the Wall Street Journal, and confirmed by Dell spokesman David Frink. Frink said the switch will begin soon, but said it will take some time to complete. RIM did not immediately respond to a request for comment. Dell’s BlackBerry users will be shifted over to use the new Dell Venue Pro, which runs on Microsoft’s new Windows Phone 7 software and operates on the network of T-Mobile USA, the U.S. arm of Deutsche Telekom AG. Dell’s decision to move its employees off BlackBerry may come as little surprise, given its aspirations in the mobile device market.
Tablet & mobile
The company has frequently talked about using handheld devices as a gateway to sell and promote a broader suite of services. Dell formally entered the smart phone market only late last year, and launched its first device in the U.S., the Aero, earlier this year. The Aero runs on Google’s Android software, as does Dell’s new 5-inch tablet, the Streak. RIM has long been the dominant player in the corporate Smartphone market, but has seen its market share erode as companies such as Apple make gains.
The king of the bland box
Its new product launch is intended to revitalize the brand with sleek styling, up-to-the-nanosecond features, and a rich palette of colours Will computers in ruby red and bubble-gum pink lend some badly needed zing to Dell, the king of the bland box? On June 26, Dell is unveiling a line of personal computers it hopes will mark the first step in revitalizing its struggling consumer business. To promote the notion that a rainbow of colours will make its PC’s hip, Dell is launching the new line at an icon of mainstream fashion: Macy’s department store in Manhattan’s Herald Square. But it may be a little late for Dell (DELL) to distinguish itself from the pack in terms of looks. The move from dull grays and blacks comes years after Apple charted a colorful new course in computer design, prompting many of Dell’s Windows-based rivals to follow suit.
The new Inspiron products are designed to look and feel sleeker, thinner, and lighter than the existing lineup. The laptops are available in eight colors with a satinlike finish on the lid. The machines are available with high-end features including fingerprint recognition and built-in modems compatible with the wireless Internet services offered by cell-phone companies. The new products also include an XPS laptop that Dell sees as direct competition for Apple’s (AAPL) popular MacBook. By Dell’s calculation, the XPS M1330 is thinner and about a pound lighter than the MacBook, says Gruzen. The new Dell models aren’t among the handful being sold at Wal-Mart Stores (WMT). The big retailer began carrying two inexpensive Dimension desktops on June 10, marking Dell’s first major breakaway from its long-time business model of selling directly to consumers only over the phone and Internet [see BusinessWeek.com, 5/24/07, « Dude, You’re Getting a Dell — at Wal-Mart »]. While the new computers, aimed at the back-to-school crowd, will be on display at Macy’s for a few days, consumers won’t be able to buy any on the spot. Instead, they’ll need to place orders by phone or on Dell’s Web site. Gruzen hinted that the new models may be sold at another retail chain in the future but wouldn’t elaborate.
Financial sales plan
For fiscal 2012, Dell expects revenue growth of 5 to 9 percent, translating into revenue of $64 billion to $67 billion, mostly higher than the average forecast for $64.4 billion according to Thomson Reuters I/B/E/S. PC maker Dell saw its quarter earnings and margins exceed Wall Street expectations as companies upgraded older technology, and the company forecast a 5 to 9 percent rise in current fiscal year revenue.
SAN FRANCISCO, Feb 15 (Reuters) – Dell Inc’s (NASDAQ:DELL) quarterly earnings and margins blew past Wall Street expectations as component costs slid and corporations replaced aging technology, propelling its shares 6 percent higher. Its forecast for a 5 to 9 percent rise in current fiscal-year revenue also modestly surpassed Street targets. With roughly $14 billion in cash and investments, Dell has a considerable war chest at its disposal, and still plans to be aggressive in adding pieces to its business. But Michael Dell saw some froth in valuations, and the company will be disciplined. « We don’t have to go buy companies, and if the valuations aren’t reasonable, we’re not going to buy them, » he said.
Shares of Round Rock, Texas-based Dell slipped 0.2 percent to close at $13.65 on Thursday. (Reporting by Gabriel Madway; Editing by Edwin Chan and Matthew Lewis) However, the company was also forced to battle industry wide declines in computer prices that squeezed profit margins, as well as the shift of consumer preference to laptops. That last development posed a substantial manufacturing challenge. Dell made its name selling low-cost, custom desktops that are cheaper and easier to assemble from components than laptops, which take more time and skill on the assembly line.
To operate with close to zero inventories, Dell communicates constantly with its suppliers. It sends out status updates three times a day from its assembly plants; every week it updates its quarterly demand forecasts. By making communication its highest priority, Dell ensures the lowest possible inventory.
« We are at our best when we are hearing directly from our customers. We listen, learn, and then improve and innovate based on what our customers want. »6 (Michael Dell, CEO, Dell6 « Dell Invites Customers to Share Ideas and Original Video Via Dell IdeaStorm and Studio Dell, » Inc.) Launch and Growth of Idea Storm In January 2007, Dell was facing a difficult situation. PC users were beginning to express negative feelings toward Dell’s direct-buy business model, and news media were highlighting Hewlett-Packard’s ascension to the top PC manufacturer in the world for two consecutive quarters.7 As a result, the then CEO of Dell, Kevin Rollins, resigned, and Michael Dell, the founder, re-assumed command of his struggling company. In an effort to realign its business model under Michael Dell’s vision, Dell introduced Idea Storm to its customers in February 2007, with the explicit statement that Idea Storm was a place « Where your ideas reign »
Within the first five months, Idea Storm users worldwide submitted over 6,200 ideas to help Dell become a better, more innovative organization. Several hundred of these gained immediate popularity, and Dell initially implemented 11 One year after its inception, Dell had listed 35 ideas (including the initial 11 adopted) contributed by Idea Storm users on the Ideas in Action page, signifying some level of adoption. These user ideas covered a wide variety of areas, such as reinstalling the Linux operating system to introducing a new Tablet PC. As of August 2010, over 14,500 ideas with roughly 730,000 votes and almost 90,000 user comments were posted to Idea Storm, and 417 ideas, approximately 3% of all ideas, were marked as implemented by Dell. Dell and Idea Storm have received several public acknowledgements from IT news magazines, professional bloggers, and organizations for embracing crowd sourcing and adopting a user-driven innovation process.
A Brief Description of Idea Storm
Idea Storm is built on Salesforce.com Consultant’s Sales force CRM platform. Through Idea Storm, users can submit, vote, and comment on ideas. Users must create a username and account to post their ideas about new innovations. They provide an idea title and description and have the option to classify the idea from over 30 categories (e.g., Linux, Desktops, and Sales Strategies). Once posted, other users in the Idea Storm community are able to promote or demote the idea (vote), signalling whether it should or should not be adopted by Dell. Highly promoted ideas are given « most popular status, » which enables them to be accessed directly from the Idea Storm homepage (the default option). Users can also access ideas from the homepage by recent ideas, top ideas, and comments. They can also search by idea title or keywords. Each user has an individual profile page These pages are maintained by Dell and contain information about users’ Idea Storm activities (e.g., the number of ideas contributed, voted on, and commented on). This information is provided in both aggregate form and as a running timeline to show recent actions by a user. Idea Storm does not allow users to contact fellow users directly. Users are only able to communicate via the ideas’ comment fields or blog postings made by the Dell moderators.
Users are not given a financial incentive for participating, but they can benefit in other ways. They may have their idea adopted, making Dell products better suit their needs. Top users are honoured on the Top Idea Makers list. This list identifies the 20 most popular users and contains information about the number of ideas each has posted, the number of comments posted, and the number of votes made. Users that have ideas adopted or make particularly helpful contributions to the community are recognized by name in status updates on the Idea Storm blog.
Recruiting and Selection
Our discussion of planning is based on what company emphasize on it. In Dell Company they follow this structure to design selection and planning process.
First the number of people they had to recruit must be determined with analysis of their sales job for that sales manager had to description. The company culture and their duty on job and the qualification report.
- 1. Who performs the recruiting function?
It is general question through all companies, normally human resource department (HR) take this duty and responsibility in order to recruit sales people. In Dell Company also this department has responsibility to selection and evaluates performance of employee.
So Dell Company has specified strategy to plan their process especially when we consider direct marketing as their core competency.
First of all company must determined how many new salespeople they need? The number depends on several factors, sales growth targets, distribution strategies, changes in sale force in an organization and sales force turnover.
Company Culture and job analysis:
For design process Dell considered their cultures in different part and country for example to identify what is their culture we gather some sample trough internet that it will show their cultures.
Bob in Dublin, Ireland: I have worked for dell for just under year at the server support department. I would recommend that you run from this job, I have been in the IT field for 10 years and it is the worst job that I have had. The working conditions are a constant for of harassment. They don’t care about the customer just the numbers. So if you would like your first interview get it someplace else. I will be gone the first chance I get.
David in Corpus Christi, Texas:I was an engineer/architect consultant for DELL in Round Rock – Balding. 2. Dell’s 3200 man IT department is filled with incompetent managers who believe process is more important than making a decision. The contact canter group is filled with no direction and frustration. Dell has had programs which have to do with customer avoidance and in the past they turned off customer service switches to certain sites when there was heavy call traffic. There was a law suit over this. Internally, their CRM systems are still by TANDEM computers that are from H.P.! They have had 10+ years to move from Tandem to DELL based servers yet they still can’t migrate over. DELL’s Project Managers are more important than technologists. Process before all and ignorance prevails. It is without question the most idiot group of people to work with. Departments take control over one part of a server while others take control over yet another. Those who actually have a real brain (free thinkers) are stifled and tend to be upset over the « system ». DO NOT WORK THERE if you have a mind! NOW: if you are a type « A » person AND love PROCESS…..maybe you might like it.
According to this example we can say their focus is more on task management and we can see low flexibility in Dell but they are very happy for working in Dell. Therefore character of people and discipline could be one of the main factors.
- How are candidates identified?
The goal of recruiting is find out the best-qualified applicant fore sales position. Dell Company chooses different tools in order to their resource.
- Classified and On-line Advertisement
Dell company try to focus on this part because one advantage of this type of ads is their ability to attract a large number of applicants and would help candidate to choose relevant job and disadvantage is produce a high cost which each hire and low cost for each applicant.
- Present employee
Dell Present employees often make good candidates for sales job because they are familier with the job and company training.
It becomes top ten conduits for effecting recruitment in today’s workplace. Well-informed student use this entry level position rather than other sales professional members, executives and so on and the advantage of this factor is they can gather a lot of information about companies, recruitment their responsibly and environment of their workplace.
- Employment agencies
Dell Company uses this for low level sales people.
- College and university
Perhaps the best source for dell is educational institute because it is easy to learn and train them especially for such company like dell with customer specialist strategy.
Thereforethis process is important to be investigated in Dell Inc. because it is evident that the company places such high value to its employees as seen in the progressive status. This is manifested through the high level of loyalty shown by its staff and the recruitment of new employees by recommendation of the existing staff members. The recruitment process of the company, though not entirely wrong because it has yielded such good results, can be aligned better as to compare with other companies in the same industry and its HR practices.
After recruiting a pool of sales candidates, manager must screen out candidates who do not meet the hiring criteria. The process for selection process is sequential filtering process.
Selection is the college of recruitment in HR planning. It is a vital process for the organization because good selection decisions ensure the company of their financial investments in their employees (Dean & Snell 1993). The wrong selection process can lead to frustration, repetitive training, documentation, low morale and a waste of time and financial resources. Moreover, an effective selection also decreases the risk of lawsuits of either discriminatory or criminal in nature. Each organization has a selection plan, wherein the applicants are subjected to both the basic factor of an employee in the organization and the specific criteria for the job description.
- Application form:
Provide information, gathered in standardized manner, that it is useful in making a selection decision and to obtain information that may be needed during an individuals employment.
Sales managers interest in these three type of information in Dell.
1- Educational background
2- Past employment record
- Personal interview:
Dell personal interview is crucial part of dell for selection sales position because of that interviewer must have skill for that. First interview look for knockout factors that would remove people from further consideration such as poor knowledge, personal characteristic and lack of appearance.
Dell has three type of interview first pattern interview they will give to interviewee question and they want to answer it. The advantage is that they can compare each candidate with each other when they have a lot of candidate. Second semi structured interview it is useful when they want veteran salespeople for a major account sales position and field observationfor shown the prospects what the job entail, those who feeling they are not suitable from this job they can reject it.
- Background and credit checks:
How often are candidate are honest about their educational and employment histories? Web based tools allow to firms investigate an applicant’s job history.
- Testing :
There is three type of test one intelligence test that measure the minimum mental capability of candidates’ second personality test to evaluate each personality characteristic andaptitude test to understand that employee interested to do task and this type activates.
- Physical examination:
When candidate accept they will do some physical examination in terms of using drug and something like that.
Generally it is useful for large samples when company collect a lot of information.