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The Dell Deal Explained: What a Successful Turnaround Looks Like
- Walter Frick
A case study of IBM in the 1990s points to what Dell must do to succeed.
You’re CEO of a once great company, now beleaguered on all sides by competitors and a rapidly changing industry. How do you get back on top?
That’s the question Michael Dell has been asking himself since 2007, when he retook the top job at the computer company he founded in 1984. And last year, he decided that the answer was to take the company private, to escape the hectoring of the public market. (For more background on the potential deal, click here .) But even if he succeeds in convincing shareholders to let him buy back his company, the real challenges lie ahead.
Luckily for Dell — both the man and the company — the history of corporate turnarounds provides clues as to what the company must do to get back on track.
A Short History of Dell
How Dell went from dorm room startup in 1984, to the world’s largest PC maker in 2005, and then saw its stock plummet precipitously the next year, is the subject of a lengthy Harvard Business School case study by HBS professor Jan Rivkin. The whole thing is a must read for anyone interested in the company’s future, and a quick summary of the history it recounts is worth repeating here.
Dell’s success can be attributed in large part to its “direct model.” While competitors like Compaq and IBM sold PCs through retailers, distributors, and resellers, Dell sold directly to its customers, offering highly customized PCs at a time when the cost of computers was high enough to still require significant tradeoffs. The bulk of sales came from business and government, as big customers appreciated the ability to customize a large number of PCs; Dell also offered these companies customized portals where employees could buy one of several company-approved computers directly.
This simple strategy proved wildly successful. Competitors like IBM and Compaq struggled with the politics of managing their various channel partners and lagged Dell in inventory management. When competitors tried to copy the direct model, their channel partners — fearing for their own businesses — objected, preventing other PC makers from fully going direct.
By the mid 2000s, much of Dell’s competition had faded. By 2007, most had merged (HP and Compaq) or sold some or all of their PC businesses to foreign competitors (IBM to Lenovo; Gateway to Acer).
In 2004, Michael Dell left the company, replaced by Kevin Rollins, a former Bain consultant who joined the company in 1996. Though Rollins held the job for just two and a half years, he presided over a brisk decline, attributable to everything from bad customer service to shoddy batteries to questionable accounting practices. Dell returned as CEO in 2007.
Do Tech Buyouts Actually Work?
Dell’s fortunes have not reversed over the past six years, owing in part to the recession, but more fundamentally to the decline of the PC market . It was against this background that Michael Dell last year hatched a plan to take the company private, with the help of the private equity firm Silver Lake Partners.
So will it work? To answer that, it’s important to first consider whether tech buyouts work at all. The data suggest that they do, and not just in the sense of creating returns for PE firms. In a 2011 paper , researchers from HBS, Columbia, and the University of Chicago looked at the success of 472 tech buyouts based on a novel measure: patents. Their aim was to determine if the companies in question became more or less innovative following the buyout. Their conclusion, as HBS’s Josh Lerner writes, was that “companies that are owned or controlled by PE firms tend to pursue more promising innovations,” and that those innovations tend to be in areas “that reflect the firm’s historical core strengths.”
Lerner has another paper relevant to the Dell case, which looks at the performance of buyout companies’ stock prices after they IPO, including public firms taken private in the deal. He and his co-authors find that these stocks outperform the market, with one exception — when companies are “flipped,” or taken public within one year of the buyout.
Taken together, this research suggests at least the possibility of a Dell turnaround. As Lerner summed it up for me in an interview, “There seemed to be a pretty positive track record in terms of technology companies after buyouts.”
The Case of IBM
That tech buyouts have worked in the past is, of course, no guarantee that it will work in Dell’s case. If Michael Dell and Silver Lake are to succeed, they should look to the case of IBM in the 1990s, what Rivkin calls “the gold standard for turnarounds in the computer industry.” IBM’s transformation under CEO Lou Gerstner is the subject of an HBS case study by Lynda Applegate, Robert Austin, and Elizabeth Collins. Two decades later, it offers hints at what Dell must do to succeed.
There are two basic patterns to a successful turnaround, Rivkin told me in a recent interview. The company must identify some assets from which it can squeeze more cash, in order to improve its short-term position. Then it must pick the right areas to reinvest in, to fuel the company’s longer-term success. Both strategies are evident in the case of Gerstner and IBM.
In 1990, IBM was the second-most-profitable company in the world, and “the world’s dominant player in the growing IT industry,” according to the case study’s authors. And yet by the next year, due to an overreliance on the mainframe computer market and a bloated cost structure, it began posting losses.
While it’s difficult to summarize the changes Gerstner initiated after taking the reins in 1993, a few decisions stand out. Amid aggressive cost cutting, Gerstner’s “One IBM” strategy included shifting resources to IBM’s consulting and services business, which grew rapidly as a source of revenue.
Yet the improved financial position came at a cost. Long-term investments were being de-prioritized, thanks to “the focus on flawless execution and short-term results [that] had intensified under the ruthless cost cutting necessary to survive the 1990’s.” And so, beginning in 1999, Gerstner began reorganizing the company to identify “emerging business opportunities” that could one day become billion-dollar businesses. Of the 18 areas selected, life sciences, business transformation services, Linux, and pervasive computing would each soon grow to over $1 billion in revenue.
Though the history of tech turnarounds suggests some optimism about the future of Dell, the specifics are far from certain. With the PC market in decline, Dell will need to look elsewhere both to improve its short-term financials and to invest in the future. “The markets that they have talked about publicly are all ones with established players that are pretty darned good,” Rivkin told me. “It’s not as if Dell is going to sneak up on IBM in services, for instance.” The tablet space is similarly competitive.
“The marvelous thing about Dell, historically, is that they found a different way to compete. A core lesson of the direct model was, ‘To be better, you first have to be different,'” said Rivkin. “That said, I find it hard to bet against Michael Dell, the guy. If you were to make a list of people who could make it work despite all the challenges, Michael Dell would have to be on your short list.”
- Walter Frick is a contributing editor at Harvard Business Review , where he was formerly a senior editor and deputy editor of HBR.org. He is the founder of Nonrival , a newsletter where readers make crowdsourced predictions about economics and business. He has been an executive editor at Quartz as well as a Knight Visiting Fellow at Harvard’s Nieman Foundation for Journalism and an Assembly Fellow at Harvard’s Berkman Klein Center for Internet & Society. He has also written for The Atlantic , MIT Technology Review , The Boston Globe , and the BBC, among other publications.
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International Business Machines Corporation (IBM) Vs Dell Technologies Inc (DELL) Stocks
This report compares the performances of International Business Machines Corporation (IBM) and Dell Technologies Inc (DELL) stocks. After reading this report, you will learn the differences in growth, annual returns, dividend payouts, splits, biggest gains etc.
The timeframe of analysis is between '03-05-2013' and '03-03-2023'.
In total, there are 7 sections in this report. Below is a table of contents to help your navigation.
- Returns of International Business Machines Corporation (IBM) Vs Dell Technologies Inc (DELL)
- Growth of IBM Vs DELL
- 10 Biggest One-Week Gains Compared
- 10 Biggest One-Week Losses Compared
- Volume of Activity: International Business Machines Corporation Vs Dell Technologies Inc
- IBM Vs DELL Dividends
- International Business Machines Corporation (IBM) Vs Dell Technologies Inc (DELL) Splits
Note: *This tool uses adjusted close prices.
1 Returns of International Business Machines Corporation (IBM) Vs Dell Technologies Inc (DELL)
The primary interest of any investor is the expected returns of a stock. This section compares the average annual returns of International Business Machines Corporation (IBM) and Dell Technologies Inc (DELL) for different time periods. Below table summarizes the average annual returns of IBM and DELL over 1-year, 3-year, 5-year and 10-year periods.
Disclaimer: In some cases, the returns of a stock for a particular period (1, 3, 5 or 10-year periods) may be unusually higher or lower compared to other periods. The reason could very well be a "stock split". Check stock split report of IBM and DELL .
Recommended Reading: For a comprehensive analysis of 10 year returns and other performance parameters, visit the report of International Business Machines Corporation (IBM) .
2 Growth of IBM Vs DELL
The growth of a stock is directly proportional to the capital gains one will achieve by holding a stock. The percentage growth of a stock is a key metric for investment decisions. Let us compare the growth of International Business Machines Corporation and Dell Technologies Inc stocks over 1-year, 3-year, 5-year and 10-year periods.
Table1: Growth of International Business Machines Corporation (IBM)
Table2: growth of dell technologies inc (dell), table3: comparison of growths of ibm and dell side by side.
3 10 Biggest One-Week Gains Compared
This section compares the biggest one-week gains of International Business Machines Corporation (IBM) and Dell Technologies Inc (DELL).
Note: For the computation of gains, we have used weekly average prices. For example, let's say we want to calculate the gain of a stock for a particular week. We will first compute the average stock price for that week (P1) and the average stock price of the previous week (P2). Then we will find the difference in percentage. The formula used is P1-P2/P2 x 100%.
Table1: 10 Biggest Weekly Gains of International Business Machines Corporation (IBM)
Table2: 10 biggest weekly gains of dell technologies inc (dell), table3: biggest gains of international business machines corporation (ibm) vs dell technologies inc (dell).
Recommended Reading: You may want to have a look at the analysis reports surrounding the timing/context of the highest prices in 10 years. Access those reports for International Business Machines Corporation (IBM) and Dell Technologies Inc (DELL) .
4 10 Biggest One-Week Losses Compared
Let us now observe the biggest one-week losses of International Business Machines Corporation (IBM) and Dell Technologies Inc (DELL). The graph in this section will help you visualize the relative downward price movement.
Table1: 10 Biggest Weekly Losses of International Business Machines Corporation (IBM)
Table2: 10 biggest weekly losses of dell technologies inc (dell), table3: biggest losses of international business machines corporation (ibm) vs dell technologies inc (dell).
5 Volume of Activity: International Business Machines Corporation Vs Dell Technologies Inc
Volume is a measure of total buying and selling activities combined. Volume is an important metric that many investors use to assess the strength of a trend. Let us check which of the two stocks enjoyed higher volume for different time frames.
6 IBM Vs DELL Dividends
Dividends are a key metric in evaluating stocks. This section compares the annual dividends paid out (if at all any) by the stocks.
Note: By annual dividends we mean the sum of all dividends (usually quarterly) paid out during a year.
Table: Dividends of International Business Machines Corporation (IBM)
Table: dividends of dell technologies inc (dell), 7 international business machines corporation (ibm) vs dell technologies inc (dell) splits.
Stock splits are corporate level decisions that split an existing share for various reasons. For example, if a stock is split in the ratio 2:1, stocks held by an investor will be doubled in number (not necessarily in price).
This section compares the stock splits (if any) of the stocks International Business Machines Corporation (IBM) and Dell Technologies Inc (DELL).
Table: Splits of International Business Machines Corporation (IBM)
Table: splits of dell technologies inc (dell), conclusion:.
Analysis, by comparison, is a common tactic used by many investors. (This kind of analysis especially helps at times when someone is confused on choosing one stock over the other.)
We have validated the data to the best of our knowledge. If you find data inaccuracies kindly let us know using the contact form so that we can act promptly.
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Full Case Study: IBM’s Extensive Marketing Strategy & Top 8 Competitors
By Aditya Shastri
The International Business Machine Corporation was established in 1911 as a Computer Tabulating Company. It changed its name to IBM in 1924. IBM largely deals in Hardware, Software, Consultancy, and Hosting services. IBM has had an extensive journey so far, having managed to stay in the market for almost a century now.
In the IBM case study, we shall talk about IBM’s marketing strategy, marketing mix, competitors’ analysis, BCG matrix, marketing campaigns, and social media marketing presence. So without further ado, let’s get started by getting to know the company a little better.
IBM is a multinational technology corporation that specialises in hardware, software, cloud-based services, and cognitive computing. It is headquartered in New York, United States, and has five strategic business units – Financing, Systems and Technology, Technology service, Business Services, and Software.
IBM is a top producer and manufacturer of computer software and hardware. It is also behind great innovations like:
- Automated Teller Machine (ATM)
- Floppy Disk
- Magnetic Strip Card
- Hard Disk Drive
- Relational Database
- UPC Barcode
- SQL Programming Language
- Dynamic Random Access Memory (DRAM)
IBM has consistently identified the upcoming technological needs and come up with innovative solutions that always leave a mark. Let’s start delving into the IBM case study by first learning about its marketing mix.
IBM’s Marketing Mix
The marketing mix refers to a company’s range of tactics strategies, for promoting its product or service in the marketplace. Price, Product, Promotion, and Place are the four Ps that make up a traditional marketing mix. Following is IBM’s Marketing Mix:
IBM’s Product Strategy
IBM offers a diverse range of goods and services. Cognitive solutions, global business services, technology services & cloud platforms, systems, global financing, distributed computing, psychological registering, information and analysis, IT framework, and Internet of Things are some of IBM’s offerings. IBM’s Cloud Data Encryption Services (ICDES) is a one-of-a-kind solution that uses sophisticated technology to secure client data.
The Technology Services & Cloud Platforms product section also includes infrastructure services, technical support services, and integration tools. Global Finance also provides customer financing, industrial financing, and remanufacturing and remarketing facilities. The emphasis on these core product lines is reflected in IBM’s organisational structure. In the organisational structure of the company, each product line is represented as a division.
IBM’s Place Strategy
This part of the marketing mix identifies the channels, or places, by which IBM’s products are distributed. These locations have an impact on the company’s strategic success in targeting customers. In this case, IBM transacts with consumers and distributes its goods through the following networks:
- Official Website
- Business Partners
- Delivery Centers
- Warranty Service Providers
Customers can find useful information about IBM’s products on the company’s official website. The website is an easy way to connect with potential clients all over the world. Customers may also use the official website to build and pay for accounts to use the company’s cloud-based services. Business partners, on the other hand, are the company’s standard method of reaching its target market. Some of the company’s products, such as Global Process Services, are delivered via delivery centres. In addition, the company has warranty service providers for existing customers’ device repair and servicing needs.
IBM’s Pricing Strategy
For its information technology products, IBM uses the following pricing strategies:
- Market-oriented pricing strategy
- Value-based pricing strategy
The market-oriented pricing strategy aims to set prices that are comparable to current prices in the information technology industry for certain goods. For example, IBM’s online products, such as cloud platform services, are competitively priced, owing to the high level of competition and price sensitivity that other products in the cloud-based services market.
The value-based pricing approach, on the other hand, is seen in some of the company’s product lines. The aim of this strategy is to assess appropriate prices and price ranges based on how IBM’s goods are perceived and needed by customers. For example, the value-based pricing approach is used to price the company’s customised business machines for restaurant chains. This part of the marketing mix is influenced by the cost leadership strategy and the market penetration intensive strategy.
IBM’s Promotion Strategy
Following are the tools IBM uses for promotion:
- Advertising (primary)
- Direct marketing (primary)
- Sales promotion
- Personal selling
- Public relations
IBM’s products are primarily promoted through advertising. The business advertises in both print and online media, including famous news websites. Direct marketing, on the other hand, entails direct contact between a company and its corporate customers, especially when delivering new goods to existing customers. For example, IBM sends emails to companies who already use its systems and services about new products. Furthermore, sales promotion is used on occasion to maximise the company’s share of the information technology industry. Discounts and free trials, for example, are provided to entice more consumers to try out any of the company’s offerings, such as cloud-based services.
Personal selling is used to cater to the needs of individual consumers, such as those in small towns. This communication strategy is often used to promote direct marketing. Sponsorships of activities are a part of public relations. These promotional activities show that IBM relies heavily on advertisements, but also on other forms of communication for this part of the marketing mix.
The marketing mix, thus, shows the company’s comprehensive 4Ps strategy. Next up in the IBM case study, we take a look at its competitors.
IBM works in an industry that has a huge number of competitors and constant entrants. Below are some of IBM’s biggest competitors:
- Hewlett-Packard (HP): Information and Technology Company in California
- Xerox: Producer and seller of print and digital products in Connecticut
- Accenture: Computer Services and Solutions Company in Dublin, Ireland
- Oracle: Advanced Technology Solutions in California
- DXC Technologies: Modernizing IT processes, ensuring system security, scalability, and cloud optimization
- Dell Technologies: Provides the latest computer and technology solutions
- ODM Direct: Provider of cloud services
- Inspur: Provider of cloud computing, big data, key application hosts, servers, storage, artificial intelligence, and ERP
As we can see from the above infographic from 2018, IBM has the highest share (9.2%) in the AI services industry amongst its biggest competitors worldwide. This shows us that IBM is on the right track and holds a huge chunk of market share, indicating its competitive success.
Now that we thoroughly understand the company, its business, and market position, let us finally get into its marketing strategy.
IBM’s Marketing Strategy
IBM’s marketing strategy includes significant investments in both conventional and online advertisements, as well as promotional budgets. All of which are used to keep prospective consumers informed about the company’s constantly changing product lines and to strengthen brand recognition. Equally significant is their track record of investing millions in hiring, building, and compensating one of the most experienced sales teams in the industry.
Talking about IBM’s STP (segmentation, targeting, and positioning) strategy, which is a huge part of a company’s marketing plans, IBM’s market segmentation variables include psychographic, spatial, and demographic factors. IBM employs a differentiated marketing strategy to target specific products and services available to their customers based on their needs. The company positions itself as an organisation that generates value for its stakeholders through the value distribution chain by employing a user benefit-based positioning strategy. IBM has always emphasised on differentiating themselves through their consistent value proposition and innovation.
Another analysis that helps in understanding a company and its success, is the BCG matrix. Let’s take a look at IBM’s BCG matrix.
IBM’s BCG Matrix
Boston Consulting Group’s (BCG) product standing matrix is also known as the growth-share matrix. It helps to know how the products are doing in the market and how they could be improved. The BCG matrix has 4 quadrants as shown in the picture below. The products in the star quadrant have high industrial growth and a high market share.
The products in the question mark quadrant have high industrial growth but low market share. The products in the cow quadrant have a high market share but low industry growth and in the end, the pet/dog quadrant has products with low market share and low market growth. After understanding what a BCG matrix stands for, let’s discuss IBM’s BCG matrix.
IBM offers different plans to simplify the various set of processes, with the help of its five Strategic Business Units (SBUs), as we’ve learnt before.
- The Technology services offer IT infrastructure and integrated technology services. It is in the Stars category in the BCG Matrix
- The Business segment deals in consulting and application management services. This also is in the Stars category in the BCG Matrix
- The other segments are still in the question mark category in the BCG Matrix as there is a lot of competition in these industries
A large part of a company’s marketing involves delivering successful marketing campaigns. Let us talk about some of IBM’s marketing campaigns.
IBM’s Marketing Campaigns
Over the many years of its long journey, IBM has produced an extensive number of marketing campaigns. In this segment of the IBM case study, we talk about two of its most memorable ones.
IBM’s “Code and Response”
Earthquakes, floods, cyclones, etc, there are many cases of natural disasters around the world and similarly in South America. IBM hence wanted to create a center that deals with nature’s protection and security. Developers were selected from all over the country to take action and create creative solutions that help avoid damage. Community advocacy, open-source support, and innovation were the heart of the enterprise and the campaign. This campaign increased IBM’s brand awareness by 908 million people on World Humanitarian Day. With 100,000+ programmers from 156 nations, the campaign was a definitive success.
IBM’s “Smarter Planet”
The world is getting smarter with new technology and AI. Today, technology is a part of almost everything we do. IBM came up with its campaign “Smarter Planet” which had the same idea. Its vision was to make healthcare, retail, finance, transportation, cities, and other fields ‘smart’ and hence, better with digital technology.
Following are some of its Smarter Planet ads:
Following were the few results of this campaign:
- IBM worked with the Stockholm city authorities to design and implement a congestion-management system. Within 4 years, it substantially reduced traffic congestion at peak- and non-peak times, vehicle emissions, and driver delays; and increased the use of public transportation.
- IBM developed Syracuse University’s Green Data Centre (GDC). It aimed to use advanced techniques in buildings design and management, energy generation, cooling technologies, and IT system management. The GDC uses half the energy consumption from before and produces outstanding results.
- A telemedicine initiative was made to provide advanced healthcare to patients in rural Louisiana, whose access to healthcare services has been limited. It reduced duplicate testing by 93%.
These were two of IBM’s most successful campaigns that have brought about the exact outcomes they aimed to achieve. In the last segment of its blog, we shall discuss IBM’s social media marketing.
IBM’s Social Media Marketing Presence
It is imperative for a technology company to have an active digital presence. This not only aids its marketing efforts but also establishes a distinct brand image in the consumers’ minds. Let’s analyse IBM’s social media marketing presence.
- IBM has been an early user of social networking platforms, even before the spread of Twitter.
- IBM today has several Twitter accounts to serve different types of customers.
- The company is also very active on Facebook. Their primary page keeps posting general information and the latest news on IBM. The other pages talk about more general topics like social business and career development.
- IBM’s Instagram page highlights its creative imagination. It basically gives us a peek into the “behind the scenes” of the organization. Not only do they post gorgeous pictures showing their products and corporate culture, but also they post pictures of their different offices from all around the world. The audience is encouraged to caption the page’s photos and to give a message to their employees. This ensures interactive and engaging content.
- IBM has several YouTube channels, a Vine account, and a LinkedIn page. It has 37,000+ followers on Google+ and has a collection of Pinterest boards on topics like Women in Tech, Big Data, and IBM History.
Clearly, from IBM’s first encounter with social media to their crafty use of all the newest platforms and features today, IBM has carved its own unique presence in the social arena.
IBM is an organization centered around innovation, not only with its products but also with its marketing and organisational structures. It has correctly identified its target markets and worked to provide them with quality services. All in all, IBM has correctly identified the needs of the people and organizations, made breakthrough products accordingly, and marketed them in such a way that they’re doing exceptionally well even today.
Thank you for reading our IBM case study. We hope you found what you were looking for and learnt more about IBM and its marketing. If you did, kindly comment down below and let us know!
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Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]
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Dell Technologies vs IBM
Apple's Macs are better than PCs, says IBM? Well, of course
Better? More productive? More loyal, too.
These weird gadgets are actually super useful
I get a lot of weird and sometimes wonderful gadgets across my desk, and some end up impressing me by actually being extremely useful.
It's the argument that never dies.
Even when those involved in it do.
Some believe PCs are real computers, while Apple's Macs are souped-up toys.
- CNET: The new 16-inch MacBook Pro gets a bigger screen and a brand-new keyboard
Others look at PCs and just don't know where to start. Or why.
Can we ever, though, find objective evidence that PCs are better than Macs? Or vice-versa?
Well, here is a startling headline that may cause a reenactment of several scenes from Game of Thrones.
It reads: "IBM announces research showing Mac enables greater productivity and employee satisfaction at IBM."
As my colleague Larry Dignan observed , this study, presented by IBM's CIO Fletcher Previn, may be a case of correlation masquerading as causation.
However, as soon as I read that 22% more MacOS users than PC users exceeded IBM's expectations in performance reviews, I confess to emitting guffaws.
You see, then I read that those who use MacOS closed deals that were 16% larger than the poor Windows types.
My innate sense of Apple-seeded superiority reared its ugly parts and twerked toward the world's PC users.
I've used Macs ever since I learned they existed. They've always been reliable -- until my latest, infernal MacBook Air -- and, more importantly for us creative types, understandable.
I could always make them work. Whenever I was forced into a corner and made to use a PC, I was more confused than I last was listening to Kanye West .
I know that PCs have improved over the years. By becoming more like Macs.
Some of them have done a very good job. Then again, when I went to Best Buy not long ago and asked which was the best Windows laptop, a salesman told me it was, oh, a MacBook.
I'm sure that so many Apple fanperson types are exalting in these IBM results and preparing to lord it over what they see as less enlightened PC colleagues.
It's understandable. PC people can be excessively worthy and strident.
I should point out, however, that there's one finding from this study that does rather dampen the buccaneering Apple spirit.
You see, Previn also revealed that MacOS users are 17% less likely to leave IBM compared to PC types.
I'm sure IBM considers this another note in favor of Mac users. But is it?
Also: See more computer coverage
I can't help thinking that working for IBM isn't, perchance, the apogee of employment these days. Or even tech employment.
Where once IBM used to be (a certain sort of) sexy, now it seems a rather more staid place.
Could it be, then, that Mac users have become conventional types who work their way up gray corporate organizations, while PC users are more adventurous? Could it be that PC users are more prepared to strike out into the scary world of startups, apps, and, who knows, making the world a better place?
Once, Apple users were rebels. Now, they're just like everyone else, trying to keep their heads down, eke out a crust and survive the madness.
Yes, they may be more productive. But what if it's only fear that's making them so?
MacBook Pro vs. Hard rocks
The best Microsoft Surface PCs make me forget Apple exists
An M3 MacBook Air already? Oh, Apple, are people getting bored of new iPhones?
This laptop with a programmable touchbar is what the MacBook Pro should've been
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Case study: Dell—Distribution and supply chain innovation
Read the highlights
- Cutting out the middleman can work very well.
- Forgoing the retail route can increase customer value.
- Re-examine & improve efficiency for process/operations.
- Use sales data and customer feedback to get ahead of the curve.
In 1983, 18-year-old Michael Dell left college to work full-time for the company he founded as a freshman, providing hard-drive upgrades to corporate customers. In a year’s time, Dell’s venture had $6 million in annual sales. In 1985, Dell changed his strategy to begin offering built-to-order computers. That year, the company generated $70 million in sales. Five years later, revenues had climbed to $500 million, and by the end of 2000, Dell’s revenues had topped an astounding $25 billion. The meteoric rise of Dell Computers was largely due to innovations in supply chain and manufacturing, but also due to the implementation of a novel distribution strategy. By carefully analyzing and making strategic changes in the personal computer value chain, and by seizing on emerging market trends, Dell Inc. grew to dominate the PC market in less time than it takes many companies to launch their first product.
No more middleman: Dell started out as a direct seller, first using a mail-order system, and then taking advantage of the Internet to develop an online sales platform. Well before use of the Internet went mainstream, Dell had begun integrating online order status updates and technical support into their customer-facing operations. By 1997, Dell’s Internet sales had reached an average of $4 million per day . While most other PCs were sold preconfigured and pre-assembled in retail stores, Dell offered superior customer choice in system configuration at a deeply discounted price, due to the cost-savings associated with cutting out the retail middleman. This move away from the traditional distribution model for PC sales played a large role in Dell’s formidable early growth. Additionally, an important side-benefit of the Internet-based direct sales model was that it generated a wealth of market data the company used to efficiently forecast demand trends and carry out effective segmentation strategies. This data drove the company’s product development efforts and allowed Dell to profit from information on the value drivers in each of its key customer segments.
Virtual integration: On the manufacturing side, the company pursued an aggressive strategy of “virtual integration.” Dell required a highly reliable supply of top-quality PC components, but management did not want to integrate backward to become its own parts manufacturer. Instead, the company sought to develop long-term relationships with select, name-brand PC component manufacturers. Dell also required its key suppliers to establish inventory hubs near its own assembly plants. This allowed the company to communicate with supplier inventory hubs in real time for the delivery of a precise number of required components on short notice. This “just-in-time,” low-inventory strategy reduced the time it took for Dell to bring new PC models to market and resulted in significant cost advantages over the traditional stored-inventory method. This was particularly powerful in a market where old inventory quickly fell into obsolescence. Dell openly shared its production schedules, sales forecasts and plans for new products with its suppliers. This strategic closeness with supplier partners allowed Dell to reap the benefits of vertical integration, without requiring the company to invest billions setting up its own manufacturing operations in-house.
Innovation on the assembly floor: In 1997, Dell reorganized its assembly processes. Rather than having long assembly lines with each worker repeatedly performing a single task, Dell instituted “manufacturing cells.” These “cells” grouped workers together around a workstation where they assembled entire PCs according to customer specifications. Cell manufacturing doubled the company’s manufacturing productivity per square foot of assembly space, and reduced assembly times by 75%. Dell combined operational and process innovation with a revolutionary distribution model to generate tremendous cost-savings and unprecedented customer value in the PC market. The following are some key lessons from the story of Dell’s incredible rise:
1. Disintermediation (cutting out the middleman): Deleting a player in the distribution chain is a risky move, but can result in a substantial reduction in operating costs and dramatically improved margins. Some companies that have surged ahead after they eliminated an element in the traditional industry distribution chain include:
- Expedia (the online travel site that can beat the rates of almost any travel agency, while giving customers more choice and more detailed information on their vacation destination)
- ModCloth (a trendy virtual boutique with no bricks-and-mortar retail outlets to drive up costs)
- PropertyGuys.com (offers a DIY kit for homeowners who want to sell their houses themselves)
- iTunes (an online music purchasing platform that won’t have you sifting through a jumble of jewel cases at your local HMV)
- Amazon.com (an online sales platform that allows small-scale buyers and sellers to access a broad audience without the need for an expensive storefront or a custom website)
- Netflix (the no-late-fees online video rental company that will ship your chosen video rentals right to your door)
2. Enhancing customer value: Forgoing the retail route allowed Dell to simultaneously improve margins while offering consumers a better price on their PCs. This move also gave customers a chance to configure PCs according to their specific computing needs. The dramatic improvement in customer value that resulted from Dell’s unique distribution strategy propelled the company to a leading market position.
3. Process and operations innovation: Michael Dell recognized that “the way things had always been done” wasn’t the best or most efficient way to run things at his company. There are countless examples where someone took a new look at a company process and realized that there was a much better way to get things done. It is always worth re-examining process-based work to see if a change could improve efficiency. This is equally true whether you’re a company of five or 500.
4. Let data do the driving: Harnessing the easily accessible sales and customer feedback data that resulted from online sales allowed Dell to stay ahead of the demand curve in the rapidly evolving PC market. Similarly, sales and feedback data were helpful in discovering new ways to enhance customer value in each of Dell’s key customer segments. Whether your company is large or small, it is essential to keep tabs on metrics that could reveal emerging trends, changing attitudes, and other important opportunities for your company.
See additional learning materials for distribution .
Summary: Dell combined operational and process innovation with a revolutionary distribution model to generate tremendous cost-savings and unprecedented customer value in the PC market.
Read next: customer discovery: identifying effective distribution channels for your startup.
Strickland, T. (1999). Strategic Management, Concepts and Cases . McGraw Hill College Division: New York.
Should startups build distribution channels or sell products directly?
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Matching Dell (A)
- Format: Print
- | Language: English
- | Pages: 31
About The Authors
Jan W. Rivkin
Michael E. Porter
- January 2004
- Faculty Research
Matching Dell (B): 1998-2003
- Matching Dell (B): 1998-2003 By: Jan W. Rivkin and Simona Giorgi
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this is a rough presentation on dell's supply chain and inventory model. Hope it Helps.
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- 1. • Started by Michael Dell (19 at that time) in his dorm room at the University of Texas in 1984 with $1000. • Company headquartered in Round Rock, Texas, U.S.A. • Its revenue is around US$ 63.07 billion in 2012. • In 2001, became the No. 1 computer systems company in the world. • At present (2013), it is the third largest PC vendor in the world after HP and Lenovo.
- 2. • Dell has grown by both increasing its customer base and through acquisitions since its inception; notable mergers and acquisitions including Alienware (2006) and Perot Systems (2009). • Notable Acquisitions: - 2006 – Alienware 2009 - Perot Systems 2010 - KACE Networks 2010 - SaaS 2012 - Sonic Wall 2012 - Wyse
- 3. PRODUCT LINE • Desktop computers • Notebook computers • Network servers • Workstations • Storage products • Dell offers a total of 1.6 million different possible product configurations for all its product lines SUPPLIERS • MICROSOFT - for Windows • INTEL - for micro processors • NVIDIA - for Graphic chips • SONY - for monitors
- 4. Customer places an Order (By phone or through the Internet on www.dell.com) Dell processes the order Financial evaluation (credit checking) Configuration evaluations (checking the feasibility of a specific technical configuration) Sends the order to assembly plant (any one in Austin, or any other) Plants build, test & package the product (about eight hours) Dell typically ship all orders (no later than five days after receipt) 2-3 days SUPPLIERS REVOLVERS CUSTOMERS
- 5. Dell’s success is a combination of: • Direct Sales. • Inventory Management • Supplier Integration Together these allow for maximum effectiveness with minimum cost.
- 6. • Mass customization (end result: Delivers exactly what the customer wants) • Partnerships with suppliers • Just-in-time components inventories (Quick Introduction of Latest Technology) • Direct sales • Market segmentation • Customer service • Extensive data and information sharing with both supply partners and customers.
- 7. • New Value Chain: Dell had no in-house stock of finished goods inventories unlike competitors using the traditional value chain model • Pull Mechanism: It did not have to wait for resellers to clear out their own inventories before it could push new models into the marketplace (typically operated with 60-70 days stock) • Personalization: Customers got the satisfaction of having their computers customized to their particular liking
- 8. Component Manuf. PC Manufactu rer Distributor /Reseller Order ProductProduct Forecast Component Components MicroAge, CompuCom Corporate customer
- 9. Component manufacturer DELL Comp Corp Distributor Final customer Components Order Product
- 10. • Dell Computer’s direct model departed from the industry’s historical rules on several fronts: The company outsourced all components but performed assembly. It eliminated retailers and shipped directly from its factories to end customers. It took customized orders for hardware and software over the phone or via the Internet. It designed an integrated supply chain linking Dell’s suppliers very closely to its assembly factories and order-intake system
- 11. Always listen to Customers Never Sell Indirect Disdain inventory
- 12. INVENTORY MODEL
- 13. • BUILD-TO-ORDER MODEL • DIRECT TO SELL • INVENTORYMANAGEMENT is primarily about specifying the size and placement of stocked goods. 1. Just-in time inventory management - 3 days. 2. Focus on speed of inventory delivery process. MICHAEL DELL – “8 days of inventory competitors 40 days, if Intel comes out with a new chip, I am going to get that to the market 32 days sooner”
- 14. Build-To-Order Model Value Chain Program Revolver or SLCs (Supplier Logistics Centers)
- 15. BUILD TO ORDER • In contrast to others who produce –to stock, dell first receives the order and the money and only then starts to build, using that money to purchase from supplier • Therefore there is customization of products for each and every customer. • While other companies had to guess, DELL knew exactly what its customers wanted before manufacturing the product • Others had to maintain inventory as there existed middlemen, so to support reseller and retail channels.
- 16. Supplier Manufacturing (SLC) Warehouse Factory / Merge Center Material Transfer • To compensate for long lead times & buffer against demand variability, Dell requires its suppliers to keep inventory on hand in the revolvers. • Revolvers or supplier logistics centers (SLCs) are small warehouses located within a few miles of Dell’s assembly plants. • Each of the revolvers is shared by several suppliers who pay rents for using their revolver. • Dell does not own the inventory in its revolvers; this inventory is owned by suppliers & charged to Dell indirectly through component pricing.
- 17. • Dell has a special vendor-managed-inventory (VMI) arrangement with its suppliers • Suppliers decide how much inventory to order & when to order while Dell sets target inventory levels & records suppliers’ deviations from the targets. • Dell withdraws inventory from the revolvers as needed -- on average every two hours. • It uses a quarterly supplier scorecard to evaluate how well each supplier does in maintaining this target inventory in the revolver.
- 18. Customer Local Suppliers Dell Factory Revolvers (SLCs) Suppliers 3 days of inventory - Inventory turns of 122 per year Delivery Supplier Owned Dell Owned
- 19. • Value Chain is intended to extend Dell’s successful direct-sales approach back into the supply chain • The goal of it is increasing the speed and quality of the information flow between Dell and its supply base • The portal, valuechain.dell.com acts a secure extranet for Dell suppliers to collaborate in managing the supply chain • Dell envisions using this site to exchange with suppliers current data, forecasted data, new product ideas, and other dynamic information
- 20. SELECTION i. Quality ii. Price iii.Delivery iv.Response to feedback. EVALUATION - to measure performance uses suppliers score • Cost • Delivery • Availability of technology • Velocity of inventory • Ways in which they did business with dell over the internet.
- 21. • Returns grew disproportionately as the carrying costs and obsolete stock is avoided. • Saves enormous amounts of money on purchasing components because the component prices drop by 3 percent per month. • Reduces handling cost. Common factors that drive up holding costs include opportunity costs, increased rent required for the space of the inventory, higher premiums to insure the inventory, and cost of obsolete goods.
- 22. • Service became a feature of Dell's strategy in 1986 • It provided free on-site service for a year after sale • Contracted with local service providers to handle customer requests for repairs • On-site service was provided on a next-day basis • Technical support via a toll-free number, fax, and e-mail
- 23. Global PC Market Share by Units, Percent. 2001-2005 Rank 2001 2002 2003 2004 2005 1 Dell 13.3 HP- Compaq 16.2 Dell 15.0 Dell 16.4 Dell 16.8 2 Compaq 11.1 Dell 15.2 HP 14.3 HP 14.6 HP 14.5 3 HP 7.2 IBM 6.0 IBM 5.1 IBM 5.5 Lenovo 6.9 4 IBM 6.4 NEC 3.4 Fujitsu 3.8 Fujitsu 3.8 Acer 4.6 5 NEC 3.8 Toshiba 3.2 Toshib a 2.9 Acer 3.4 Fujitsu 3.8 Other s 58.1 56.0 58.9 56.4 53.3 Global PC Market Share - 2001-2005
- 24. Global PC Market Share by Units, Percent. 2006-2011. Rank 2006 2007 2008 2009 2010 2011 1 Dell 15.9 HP 18.2 HP 18.4 HP 19.3 HP 17.9 HP 17.2 2 HP 15.9 Dell 14.3 Dell 14.3 Acer 13.0 Dell 12.9 Lenovo 13.0 3 Lenovo 7.0 Acer 8.9 Acer 11.1 Dell 12.2 Acer 12.0 Dell 12.1 4 Acer 5.8 Lenovo 7.4 Lenovo 7.2 Lenovo 8.1 Lenovo 9.7 Acer 11.2 5 Toshiba 3.8 Toshiba 4.0 Toshiba 4.5 Toshiba 5.1 Toshiba 5.4 ASUS 5.9 Other 51.6 47.1 44.5 42.3 42.1 40.7
- 25. Limitation of direct sell model in emerging market Buying habit Not access to internet Lack of online payment (i.e. credit card)
- 26. INTHE PAST TODAY PC customizability was highly appreciated by customers Surplus stock lost value quickly Demand was typically low for each product variant Assembly-to-order more effective than selling pre-configured PCs in retail stores Customers are willing to choose from a few standardized PCs model. Inventory of standardized models moves fast Demand was relatively high for each standardized model PC became a popular commodity, price has dropped significantly Direct sell model is less effective in today’s more standardized market
- 27. Direct sell Retail stores Hybrid business model “The direct model has been a revolution, but it’s not a religion.” - Michael Dell in April, 2007 memo to employee - In Jun 2007, Dell offered two PC models through Wal-Mart stores sell Inspiron notebook computers through Wal-Mart’s Sam’s Club outlets. In Oct 2007 Dell sold its PC through, China’s largest electronics retailer fifty Gomez Electrical Appliances stores Later Dell also extended its international retail strategy by opening its first retail store in Russia
- 28. Strength: 1. Direct Model Approach, it provides Dell a way to interact to customers directly 2. Customization of products 3. Reliability, Service and Support 4. Latest Technology Weakness: 1.Market share growth is slow due to competition; Fake products/ imitations affect sales 2. Overdependence on Suppliers. 3. Lack of Dell Stores, can be an issue for some customers. Opportunity: 1. With increase in e-commerce the online retail stores of Dell provide them better framework to tap new business 2. The Direct approach Model of Dell would help them there existing to sell the other IT products, so new product development opportunity is for Dell 3. Tablet and Smart phone Market. Threats: 1. With the increase in innovation in the market the computer systems are becoming outdated, so Dell should constantly come out with new products 2. People need the quality products at low price which was Dell strength due to it’s customize solution, but now its competitors are coming up with products in same price range
- 29. • It’s bad news for a PC manufacturer (Particularly if it don’t also produce tablets or mobile phones.) A new study predicts that the rise in sales of tablets and cell phones will directly, and negatively, affect the sales of PCs, which have already been steadily slowing down. • Many people attribute the decline of PC sales to various factors, like the growing popularity of smartphones and tablets. • Last year, tablet sales totalled around 116 million units; this year it’s expected to jump up to 197 million, a nearly 70 percent increase. The reason for the increase is largely due to decreasing prices, love of the cloud, and addiction to apps. On the other end of the spectrum, while PCs sold 341 million units last year, anticipated sales will drop to 315 million this year.
- 30. • DELL, literally has no market share in tablet and smartphone segment. It solely depends on Laptops and Desktops in consumer market for its revenue. • Due to decline in PC sales, Dell Profits plunged by 47% in 2012. • The much hyped Windows 8 didn’t play any part in increasing the PC sales.
- 31. • Dell in $24 Billion Deal to Go Private in 2013 (biggest by far since the days of the recession) • Microsoft helped with up to $3 billion loan as part of the financing. (This is not the first time for Microsoft. In 1997, It rescued Apple with a $150 million investment from Bankruptcy) • Reason - Dell's in the midst of a complex restructuring, realigning its focus to become more of a full-featured, enterprise-oriented company. (By going private, it has NO stress from share holders to generate profits)
- Customers are willing to choose from a few standardized and smaller number of off-the-shelf PCs, and are less concerned with customization.The power of the direct channel to deliver customization is less relevant in today’s more standardized market
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IBM – The market in 2020 was driven by tech stocks like Apple and Amazon, but their sky-high valuations and political pressures may make it difficult to repeat this performance in 2021. That’s why investors should considers traditional tech companies such as IBM (IBM) and Dell (DELL) for next year.
Tech was the bullish bomb in 2020
IBM could shine next year- Value with a capital V
Dell’s earnings trajectory is impressive
Think traditional for 2021- IBM and DELL will not experience the same political pressures as the technology leaders
As we head into 2021, identifying value in the stock market is more than a challenge. The best performing sector during one period often turns into the worst in the next. In 2020, the leading sector of the stock market has been technology, hands down.
Anyone holding shares in the leading technology companies at the end of 2019 experienced lots of indigestion from mid-February through late March 2020. If they held on and bought more shares, the results were nothing short of a home run. The global pandemic set the stage for extraordinary earnings growth as it allowed communication, working, shopping, and entertainment during lockdowns and social distancing.
The virus expanded the addressable market for technology companies as technotards , like me, had to get with the program or risk contact with the outside world. The pace of earnings growth pushed stocks like Apple ( AAPL ), Alphabet ( GOOG ), Facebook ( FB ), Amazon ( AMZN ), and others to incredible heights.
It is a challenge for these companies to continue the earnings growth pace to support share the price appreciation experienced in 2020. Meanwhile, the market cap growth and overall wealth of the leading technology companies created new problems for the coming year.
International Business Machines Corporation ( IBM ) and Dell Technologies ( DELL ) are also technology companies. IBM and DELL are not expensive stocks. Meanwhile, as we move into 2021, these two companies could be the best bet as technology will continue to provide cutting edge solutions. At their share prices at the end of 2020, IBM and DELL offer something lacking in the technology sector, value.
The tech-heavy NASDAQ closed 2019 at 8,972.60; at the end of last week, with one week to go in 2020, the composite was trading at the 12,804.73 level, 42.7% higher.
Big tech led the bullish charge this year as:
- APPL moved from $73.41 to $131.97 or 79.8% higher
- AMZN rallied from $1847.84 on December 31, 2019, to $3,172.69 on December 24, 2020, a gain of 71.7%.
- GOOG rose from $1337.02 to $1738.85 or 30.1%
- FB shares increased from $205.25 to $267.40 or 30.3%.
All of these companies were already trading at sky-high valuations at the end of 2019. The total market cap of the four stood at almost $5.8 trillion. Apple’s market cap was north of $2 trillion, Amazons’ was over $1.5 trillion, Google’s was nearly $1.2 trillion, and Facebook was worth over a cool three-quarters of a billion.
As we move into 2021, many tech leaders could find themselves in the crosshairs of regulators and politicians. The US and European systems encourage growth and profits but punish dominance and anti-competitive behaviors. Moreover, in a world where access to data provides advantages, the sheer size and market penetration of the leading companies make them targets. Many legislators favor breaking up the most prominent companies into small parts to foster competition and avoid predatory dominance.
Litigation and a more aggressive regulatory environment could increase costs and weigh on profits for the tech leaders in 2021 and beyond, but that will not stop the innovation that comes from the sector. Two companies with small market caps that have been around for a long time could continue to rally in the coming year even if the high-flyers in the trillionaires club stumble.
IBM has been around for over a century; all of the leading technology companies date back to the late 1970s in AAPL’s case, 1990s in GOOG and AMZN’s cases, and after the turn of this century, in FB’s.
IBM provides a broad range of integrated technology solutions and services worldwide. The company stands on the cutting edge in blockchain and AI platforms and development. IBM consistently reports profits.
Over the past four quarters, IBM has met or exceeded consensus EPS forecasts. The market expects the company to earn $1.79 per share in Q4 2020.
The chart shows that revenues and earnings have been steady over the past four years. IBM was trading at just below the $125 level on December 24. A survey of sixteen analysts on Yahoo Finance has an average price target of $137.13 for IBM, with forecasts ranging from $115 to $165. Many Wall Street companies rate the shares buy or outperform.
Meanwhile, of the group of AAPL, AMZN, GOOG, and FB, only Apple pays its shareholders a dividend. As of December 24, AAPL’s yield was around the 0.62% level. IBM pays its shareholders $6.52 per share, translating to a 5.2% on December 24. IBM’s market cap was just over $111 billion, putting the company off the regulatory and political radar. The stock is trading at a price to earnings ratio of under fifteen times earnings, which is a sign of value.
The strong financial indicators have not helped IBM post a gain on the year. The stock closed 2019 at $134.04. At the $124.69 level, IBM offers value with a capital V going into 2021.
DELL designs, develops, manufactures, markets, sells, and supports IT hardware, software, and services solutions worldwide. The company has been around since 1984.
The earnings trajectory over the past three quarters has been impressive, beating EPS estimates consistently. The consensus forecast for Q4 is for DELL to earn $2.13 per share.
Revenues have grown from 2017 through 2019 and have been consistent in 2020. DELL is a profitable company with a market cap just above $54.5 billion.
DELL shares closed 2019 at $51.39 and were trading at the $72.99 level on December 24, a rise of 42%. The earnings growth and market cap could lead to more share appreciation in 2021
Innovation through technology will continue in 2021. The leading companies in the sector could experience a challenging landscape regarding regulation and challenges because of their size and access to data. Those challenges could weigh on earnings and share appreciation in the coming year.
IBM and DELL are traditional businesses that are likely to fly below the government’s radar. The two companies’ combined market cap is under $170 billion, which is a far cry from the technology leaders.
Technology will continue to change our lives over the coming years. When looking for value in the sector, IBM and DELL could offer investors more stability and growth as we move into the new year.
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IBM shares were trading at $125.49 per share on Monday morning, up $0.80 (+0.64%). Year-to-date, IBM has declined -1.47%, versus a 17.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Andrew Hecht
Andy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
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Perfect Model Case Study On Dell Case Study
Type of paper: Case Study
Topic: Dell , Technology , Company , Market , Business , Computers , Customers , Time
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Most Dangerous Thing for Dell to Extrapolate
Dell has for a long time used trend extrapolation in focusing on historical data on technological requirements since its inception for projecting future trends. If they will assume that the demand for their computers will continue like in the past. This assumption to quantify any change in performance of computing technology based on either straight line trend extrapolation, that is, on the continuation of the past behavior oblivious of whether there might have ever had some regular rate of change in the past of functional capability. It is probable this trend can only be sustained for a limited period ( Mars Library, 2011).Michael Dell in 1981founded a computer company that provided hard-drive upgrades to corporate customers. Soon the company grew and later changed to Dell Co. Inc. Today Dell is multinational company competing with other computer based companies for space in the world technology market. The technological machine industry has not remained static and steady influxes of the newer companies are in play, and especially with the Republic of China developing fast and cheaper gadgets from its Silicone Valley. There is a technological shift from the much hyped Japan-Made technological products to more affordable gadgets. For this reason, in changing market trends, Dell can no longer sit pretty and do business as it used to be. New and the existing companies in the technological industry are adopting new methods into the already existing ones to edge one another out of the market share. In the last decades when Dell and other computer based companies, such as Compaq, Toshiba among others is gone. Now new technology that includes a smart phone, IPads and Tablets have flooded the market and almost serve the same purpose as the mainstream computers. Dell favored disintermediation and eliminated all the middle players in the distribution chain which initially worked to their advantage but not for a long time. This way they thought they were substantially reducing operating costs and improving margins. Though Dell for a long time has repeatedly and with notable success adopted do-my-self means as a direct contact with its customers, this method is fraught with some short and long time inadequacies. It is a risky method since opportunistic companies emerge in the time to cushion the gap left after eliminating an element in the traditional distribution chain, for example, many young companies like IBM (International Business Machines) and HP (Hewlett- Packard). This opportunistic company poses a great threat by enlisting the support and franchise of already existing companies selling similar products with additional products utilized hand in hand for example computers and Operating Systems to the Internet providers. ( Mars Library, 2011)
Dell had for a long period continued to offer cost- saving services through highly discounted rates while forging a close contact with their customers. They thought this was a more effective way while eliminating middlemen. With the advent of internet services present in today’s market, Dell can still achieve same and better results by adopting this technology with a broad spectrum effect in information distribution in assessing the demand, knowing the market trends, product improvements. This new technology gives an unparalleled advantage in comparing one company performance, intention and some of their intended market strategies. With the coming of web administrations present in today's business sector, Dell can, in any case, accomplish same and better results by receiving this innovation with an expansive range impact on data dissemination in evaluating the interest, knowing the business sector patterns, item changes. This innovation gives a definite advantage in contrasting one organization, execution, aim and some of their expected business sector procedures. Rather than Dell using its accrued profits and sharing with its customers through undercutting, the company should instead franchise and encourage external shareholding in the face of the ever-growing market competition. Also, away from its unique way of costly direct models the company should make use of present technologies for example online marketing. A survey carried by a firm known as Gartner suggested that by the year 2017, with the rise of the related consumer, and the significance of exploration and social media in the making of their decision, the traditional path to purchase has been obliterated. The research recommends the use of the available channels which includes search engines, web pages, blogs, digital advertisements and emails included (Akhtar, 2014). The companies that already have adopted digital marketing have shown significant growth within a short span of time while cutting down unnecessary costs and still maintaining their profit margins. Adobe, for example, has the distinction as the first to join an integrated digital marketing hub. IBM had for a long time as well played with the idea of creating a digital platform of their own. In 2009, Adobe with its acquisition of digital marketing and an analytical platform Omniture, which currently works as Adobe Analytics, is at the digital market core solutions. It is a big data tool that enables marketers not just to see who is visiting their website and using their substances, but also to segment those visitors into the particular set based on their demographics as well as online fashions (Akhtar, 2014). The complexity of reaching many customers through digital options grows up. Dell should adopt this technology and spend on technology, which is a more accurate way to increase their returns in comparison to the traditional way of relying on probabilities. Automating their operations still will have the much-desired way with their valued customers in a more frequent and cost-effective through the existing modern technological channels. With the technology, they can form specific programs to meet their tailor-made customer desires in a cost effective manner. For instance, HP has adopted merger methods to weather some of the seasonal economic challenges bedeviling Dell; behind the scenes it has been working with large telecommunications and telecom to create a converged communication solution, that is, networking and telecom. This mode of sweeping adoption effectively meets customer’s communication and technological needs (Enerle, 2013). Industry pioneers such as Apple Computer Inc. for a long time has been using distributors and dealers to gain leverage and gain a wide base of customer. I.B.M. has had one of the most sophisticated field sales organization worldwide, and they chose to sell the PC (Personal Computer) through the channel because it was a preferred way of doing serious business. Compaq market infiltration is equally through following the same channel. Cisco Systems(an American Multinational IT skills and career building program), is another success story in communication saw virtualization technology as a way to bridge its data center networking dominance in computing and storage area. It adopted the SAN(Storage Area Network), it provides enhanced data storage network by connecting to the servers, the market then later the server market, widely adopted a way of running storage of data(Duffy, 2011).
Akhtar,O.(2014). Who is Winning the Marketing Cloud Wars. The HUB. http://www.thehubcomms.com/marketing-cloud/who-is-winning-the-marketing-cloud-wars/article/336854/ Enderle,R.(2104). Why HP’s Successful Turnaround is Closer than Than it Looks. http://www.cio.com/article/2382517/tablets/why-hp-s-successful-turnaround-is-closer-than-it-looks.html Duffy,J.(2011). Cisco Vs. HP Vs. IBM Vs Dell. Cisco Invades the Data Center Server Market and Former Partners Respond by Acquiring Rival. Networld.(2011).http://www.networkworld.com/article/2182529/lan-wan/cisco-vs--hp-vs--ibm-vs--dell.html
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Comparison Of Dell 's Business Model
Dell working capital case.
Dell uses a just in time order fulfillment policy and accurate forecasting of sales to minimize inventories. This allowed Dell to hold inventory of finished products far below levels of their competitors (10-20% compared to 50-70% industry level) and furthermore allowed them to quickly implement changes to their product lines as new technologies became available. This quick inventory turnover also allowed Dell to retain more capital. Finally, this policy enabled Dell to respond immediately to technological progress in components and deliver state of the art new finished products (e.g. Pc’s holding the newest Pentium microprocessors) while competitors
What Are The Strengths And Weaknesses Of Dell
Elimination of the mark ups added by the reselling party through the direct sales to end buyer resulting in lower costs to consumer without cutting down margins for Dell
The Mission And Mission Statement Of Dell
“To understand what makes Dell so great, you need to understand the power of Dell's Mission Statement, as well as its history, growth, and entrepreneurial founder Michael Dell.” (Farfan, 2017) Today Dell forms partnerships with retailers on a global scale while adding online ordering and customization. With Dell’s variety of services coupled with its desktop, laptop, and other products, Dell has become a large company
Dell Case Study
Dell’s build-to-order manufacturing strategy is one of the main areas that differentiate it from its competitors in the IT industry. By introducing this strategy Dell were able to keep inventory to a minimum of six to seven days which enabled the company to operate as efficiently as possible and pass on the cost savings they made to the customer.
Summary of Dell Computers Value Chain Analysis
The company was based on a simple concept: that Dell could best understand consumer needs and efficiently provide the most effective computing solutions to meet those needs by selling computer systems directly to customers. This direct business model eliminated retailers, who added unnecessary time and cost, and also allowed the company to build every system to order, offering customers powerful, richly configured systems at competitive prices. Dell introduced the latest relevant technology much more quickly than companies with slow-moving, indirect distribution channels, turning over inventory an average of every four days. In less than two decades, Dell became the number-one retailer of personal computers, outselling IBM, Hewlett-Packard, and Compaq (2002).
Fedex Form 10-K
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Dell is able to sustain a competitive advantage over competitors in the computer industry because of an extremely efficient supply chain/distribution system and its JIT inventory system. Since inventory and labor are the highest liabilities of a firm and Dell operates with a few days of inventory, they are able to cut costs on warehousing, hiring people to track and maintain inventory, and avoid holding on to obsolete technology.
Dell is pursuing a diversification strategy by introducing many new products to its range. This initially has meant good such as peripherals including printers and toners, but now also included LCD televisions and other non-computing goods. So Dell competes against iPod and other consumer electronics brands.
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The advantages of Dells model are: The internet allows Dell an extensive scope and reach for its products at a relatively low price (Dedrick and Kraemer 2001). Using the internet Dell has been able to automate many of its business functions, such as product configuration, order entry and technical support (Dedrick & Kraemer 2001), therefore the company can achieve higher revenues without customer service costs increasing greatly. Online configuration ensures that the customer gets exactly what they want. Dells build to order strategy means that inventory levels are low, they only hold approximately 4-8 days of stock, therefore inventory costs are low (Breen 2004).
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Dell case study (management) May. 04, 2013 • 59 likes • 111,012 views Download Now Download to read offline Business Technology this is a rough presentation on dell's supply chain and inventory model. Hope it Helps. Vineeth Kamisetty Follow Software Developer Advertisement Advertisement Recommended Dell case study aaaa Alaa Hameed 7.9k views •
The Export Development Bank of Egypt (EBank) launched its own retail banking business by u0003working with IBM Business Partner Sumerge. They built a banking-as-a-service (BaaS) platform using IBM® Cloud Paks running on a single cluster of the Red Hat® OpenShift® container platform. Read how they accelerated services and gained the ...
The Prospects for IBM And Dell in 2021. IBM - The market in 2020 was driven by tech stocks like Apple and Amazon, but their sky-high valuations and political pressures may make it difficult to repeat this performance in 2021. That's why investors should considers traditional tech companies such as IBM (IBM) and Dell (DELL) for next year.
Dell favored disintermediation and eliminated all the middle players in the distribution chain which initially worked to their advantage but not for a long time. This way they thought they were substantially reducing operating costs and improving margins.
2023 Words. 9 Pages. Open Document. Essay Sample Check Writing Quality. Show More. Introduction This case study is about Sam Palmisano's, IBM Chairman and CEO, vision to establish IBM as a Globally Integrated Enterprise (GIE) where "Global integration is the new game. Innovation is the way to win. We must be out there connecting across the ...
Background (General Facts from Case Study) Dell is a computer corporation recognized for manufacturing computer systems through parts assemble. In 1983, Michael Dell saw an opportunity in using IBM compatible computers for a new assembly line that can be sold to local businesses. The idea as explained by Michael Dell, in an interview with Joan ...
dell case colon dr. bhowmick 24 september 2019 dell case study colon construct the positioning map for this industry using the information presented in the case. 📚 ... (Dell at -1 and Lenovo (IBM) at - 1). Furthermore, based on the research it is clear that Lenovo ranks higher in performance attributes than Dell does (Lenovo ranking at 2 ...