...1. EXECUTIVE SUMMARY Dell was losing its chief advantages – direct marketing and power over suppliers. In 2005, the percentage of PC sale via the phone and Internet fell in US as the sale through US retails stores rose – a channel in which Dell was absent. And by 2006, Dell’s growth in PC sales had slowed to about 5% a year. So that Dell should adjust to its changing environment. So that, the aim of this report are analyzing the internal and external factors, which can affect to Dell’s business, defining the problems and assess Dell’s performance based on it standards and recommending Dell should take corrective actions in order to improve its poor quality of products and services to gain more the competitive advantages than it has now to increase profit, and create a new image about Dell in customer’s minds. 2. INTRODUCTION Dell, Inc. was established in 1984 by Michael Dell at age of 19 while he was a student of University of Texas. He started to earn stake of money from buying back personal computers from the excess inventory of local retailers, then added more features such as memory and disk drivers, then sold out. In 1985, he began manufacturing his own computers and marketed them through ads in computer trade publication. After that, the company kept growing up to be the world’s leading direct marketer of personal computers and one of the top five PC vendors in the world. In 1996, Dell offered its PCs via the Internet at dell.com. By 2001, Dell was...
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...Dell Computer Corporation was founded in 1984 by Michael Dell. The company sold high performance personal computers, initially purchased from IBM and then upgraded them, directly to businesses by mail order. Soon Dell began distributing its own brand by manufacture, sell, service personal computers. Dell took advantage of its core strategy of build-to-order model, yielded low finished goods inventory, which was very competitive in the industry. The build-to-order model made Dell can have much lower investments in working capital (Most in inventory) than its competitors. It also enables Dell can benefit from lower obsolescence risk and introduce new products more rapidly and less costly. Since then, Dell has grown rapidly and has been used its working capital and profitability efficiently to finance growth internally. The main working capital policies Dell used were build-to-order model, good customer service and low inventory management. These policies are very competitive. Dell used the build-to-order model that begins to produce only after the company receives customer’s order. Dell produce computers only when the customers wanted it. Therefore, Dell can make computers that can satisfy personal needs even without lots of inventory. Low inventory policy led to lower finished goods inventory, lower carrying cost and shorter cash conversion cycle. Furthermore, Dell is in an electronic industry and technology changes very fast. Because of lower inventory Dell can take less obsolescence...
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...Dell’s Buyout Dell has always been one of the largest PC makers in the United States. Recently, though its share of the PC industry has been declining. It went from the number one low cost provider of PCs in the world to number 3. Its inability to adapt to the new markets that have emerged has caused the company to fall behind other hi-tech companies such as IBM, Apple, and even HP. I feel this is an important topic because it is an example of a large company that has lost touch with what consumers want and is currently trying to restructure itself in order to gain back the dominance they once had. Consequently, Michael Dell has announced his decision to attempt a leverage buyout in order to retain control of his company. Furthermore, throughout this paper, I will present the pros and cons of a leverage buyout and analyze the decision of Michael Dell to buy back his company. Jeff Sommer from The New York Times attempts to explain the situation in his article “The Dice are rolling on Dell’s Legacy” from the New York Times and goes into detail of the largest leveraged buyout that is taking place in the US since the financial crisis in 2008. Michael Dell founded his own tech company known as Dell in his dorm at the University of Texas in 1984. He revolutionized the PC industry when he created personal computers that were more powerful, reliable, and inexpensive whose features were able to be customized by the buyers (Sommer). Technology has evolved exponentially since then with...
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...According to Chopra and Meindl, Dell’s supply chain has been very successful because “The online channel has proved very effective for the sale of computer hardware and by 2009 represented about half the sales in this category. After more than a decade of tremendous success selling its PCs only online, Dell started to sell PCs through retail stores such as Wal-Mart in 2007.” Dell’s online supply chain manages through supplier, Dell, and customer. In addition to the retail supply chain, Dell manages through the supplier, Dell, retail store, and customer. Therefore, they are hitting their targets on every end of the market share by being successful in every way. The main supply chain challenges that Dell is now facing is the low-cost hardware. Chopra and Meindl stated, “For low-cost, standardized hardware, however, the online channel is significantly less attractive because its main strength, inventory reduction through aggregation, is not as valuable for low-cost, standardized configurations.” Therefore, Dell is not strong in this area and they are aware of this. In addition, it appears that Dell is not focused in this area as well. Chopra and Meindl suggested, “Online sales allow Dell to significantly improve its performance for high-value, customized hardware in terms of both responsiveness and cost.” Dell is more focused on their success on what they are doing so well which is continuing selling their high-value customized hardware. In fact, if I was a part of their...
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...Dell’s Working Capital 1. How was Dell’s working capital policy a competitive advantage? Dell had very unique working capital policy compared to its competitors. The most important characteristic of Dell's working capital policy is that they were using build-to-order manufacturing system, meaning that they would not build the product until a confirmed order for product is received. This system gave them a competitive advantage because of several reasons: * Low finished goods inventory balances * Low WIP * Less costly to move quickly and improve (Dell was able to bring new coponents technologyto the market within an average of 35 days, a third of the time it took competitors to move a new product through indirect channels) * no excess stock taking up space and absorbing capital (Dell had 10% - 20% stock while competitors had 50% - 70%) Another characteristics of Dell's working capital policy is that they were selling directly to customers. They would contact the customers, receive the order and start manufacturing cycle. Dell was able to deliver a customized order within few days while his competitors were not able to do that. 2. How did Dell fund its 52% growth in 1996? Dell was using its internal resources to fund its growth. First thing we have to do to figure this out is determine how much fund did Dell actually need to fund its growth. The sales increased from 1995 to 1996 => 5296 – 3475 = $1,821M Increase in Current Assets (excluded...
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...DELL'S STRATEGY IS AN UNCONVENTIONAL APPROACH. • 1984 The company becomes the first in the industry to sell custom-built computers directly to end-users, bypassing the dominant system of using computer resellers to sell mass-produced computers. • 1986 Dell unveils the industry's fastest-performing computer, pioneers the industry's first thirty-day money back guarantee, and offers the industry's first onsite service program. • 1996 The company's quiet bid to sell custom-built computers over the Internet quickly becomes a public revolution when the company announces that sales over www.dell.com have exceeded $1 million per day. Dell introduces also its first custom custom-made web links for customers. Called "Premier Pages", the links allow customers to tap directly into the company's own service and support databases. 1998 Dell establishes web-based connections with its suppliers to speed the flow of inventory and quality information ================================ THE THREE GOLDEN DELL RULES Disdain inventory Always listen to the customer Never sell indirect ===================================== DELL COMPETITIVE STRATEGIES • Speed to market • Superior customer service • A fierce commitment to producing consistently high quality, custom-made computer systems that provide the highest performance and the latest relevant technology to the customers An early exploitation of the INTERNET. ========================================== ...
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...Globsyn Business School) under whose guidance I completed this project report. I wholeheartedly thank him for giving his valuable time & attention & for providing me a systematic way for completing our project report in time. THANK YOU. CONTENTS Index | Page No. | Introduction | 4 | Supply Chain | 8 | Channel Strategy | 10 | Market Perspective | 11 | Cycle of Order | 12 | Information | 13 | Conclusion | 14 | INTRODUCTION DELL Computers, a leading PC supplier to corporate and government customers, today is now among the first companies to provide its customers with the next level of industry-standard Pentium processor power, while many vendors are still struggling to broaden their processor-based product lines. Dell's unique ability to take a market strategy position during important technology transitions because of its build-to-order manufacturing process. This build-to-order approach allows the company to maintain low inventory levels and integrate emerging technologies into systems. Today's customers are reducing their supplier bases, providing the opportunity for the most capable suppliers to seize huge market share gains as Dell needs to redefine its strategy to make business capabilities within the core of the business model as it requires creating a new strategy and bringing the company's core activities into alignment with its business model in customer operations strategy, core operations capabilities and organization structure. In...
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...Working Capital at Dell 1. How was Dell’s use of working capital a competitive advantage? Dell minimized its working capital as a result of its made-to-order manufacturing process. Dell focused on building computers to fit the orders placed by actual present and already-committed buyers. By building to order, Dell was able to significantly reduce its inventory on hand (in components, work in process and finished goods), accounts payable, and sunk labor costs thus reducing its working capital. By reducing those costs, Dell freed up funds not necessary to run the day-to-day business for other purposes such as expansion or investment. Those funds could also be used to ease/speed purchasing from suppliers as new technology, such as the Pentium chip, developed. Dell’s competitors, meanwhile, repetitively built several lines of stock computers in advance of any customer being identified, let alone committing to buy. As they compiled ever-aging/obsolescing inventory, labor costs, and accounts payable costs, in anticipation of customers that may or may not actually ever present to the company to make a purchase, Dell’s competitors tied up significant funds in working capital. By committing those funds, Dell’s competitors were prevented from using that cash for other purposes. Additionally, as technology improved, these firms were slowed from incorporating the new technology into their products due both to a lack of cash and an inventory of out-of-date products...
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...Dell’s Supply Chain Sheila Aninipok Capella University Dell’s Supply Chain is one of the leading computer companies who cater to customer specifications on an instantaneous basis in the world with respect to its personal computer products. The organizations success has been because of its capacity to decrease costs and create a streamlined supply chain management system. Dell is able to offer effective personal computers to customers at a lowered cost plus gives the customers the ability to build a computer with a personalized customer’s specific requirements. This is a direct business model that ensures that computers can be configured according to the buyers’ specifications and directly delivered to them. This strategy helped Dell to become an industry leader for many decades (Chopra & Meindl, 2013). Dell’s model created the conditions for loyal customer base and ensured its success in a competitive industry. One strategy that works for Dell is their online selling system. When a customer goes online and searches for specifics on a computer to fit their application needs, one of the criteria they search for is of course affordability, reliability, and speed (RAM). One of the first computers I purchased myself in college is a Dell. Dell utilizes colleges or universities as one of their marketing outputs. The University collaborated with Dell to give discounted prices to students and for every computer purchased the student received a 15% offer (Chopra & Meindl...
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...SEMINARIO DE CASOS AVANZADOS EN FINANZAS PROFESOR: JOSE GOMEZ VILLARREAL EGADE BUSINESS SCHOOL “Dell’s Working Capital” La compañía Dell ha demostrado ser un caso de éxito como modelo de negocios ya que reduce el capital de trabajo mediante la implementación de la una política “build to order”. En donde no hay inventario de producto terminado ya que todo se fabrica de acuerdo a las órdenes de los clientes. De la misma manera, Dell mantiene un nivel de inventario de materia prima muy bajo en comparación con el mercado, lo que le permite aprovechar mejor los recursos y aumentar el flujo de efectivo. La ventaja competitiva de Dell son sus bajos días de inventario, 32 días de ventas, comparado con 48 de IBM, 54 de Apple y 73 de Compaq. Esto lo logra debido a una alta integración de sus proveedores, muchos de estos reparten componentes de manera diaria. La siguiente tabla muestra los días de inventario de materia prima para Dell y sus principales competidores: Lo anterior, le proporciona a Dell una ventaja en el uso de sus recursos. Al invertir menos capital en inventario, se crea un excedente para poder invertir en distintos proyectos como nuevos productos, nuevos canales de venta y demás que le dan a Dell mayores ventajas competitivas y una mayor habilidad para atacar el mercado. Además de las ventajas a nivel de flujo de efectivo, la agilidad en la cadena de producción de Dell le permite minimizar costos por productos defectuosos y obsoletos. Por ejemplo...
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...個案探討： 背景簡介 ■關於 年，在其就學的美國德州大學奧斯汀分校的宿舍裡，用 一千美元創設了「電腦公司」。短短五年後，營業額就突破五億美 元；目前名列全球第二大電腦系統公司，更是全球 直銷電腦的第一品牌。銷售對象從家庭個人消費者拓展到 一般企業公司行號，甚至政府單位、教育機構等都囊括在 其服務的範圍。 成功將其首創的「直銷」模式與電子商務連 結，將引人讚譽的服務特質藉由網路媒介加強影響 力，進而在網際網路版圖發揮行銷全球的能量。所有與網 路電子商務的調查都指出，在電子商務經營類型品牌排 名上，榮登「電腦軟硬體」類第一知名品牌，連全 球電腦銷售量高達第一的公司，其網際網路的表 現也只能遠遠向俯首稱臣。的設計、研發、製 造、行銷、服務及技術支援囊括整個個人電腦系統，包括 筆記型電腦到工作站。該公司所提供的每個系統都是依照客戶規格所量身訂做 的。 ■簡單的概念與通路 透過其「直接銷售」的經營理念，已與眾多大型跨國企業、政府機 構、教育機構、中小型企業及個人發展出直接的關係。也是第一家提供客 戶免費線上技術諮詢與隔日到府服務的公司，而此項服務現亦成為一企業標 準。的客戶可以直接經由與設計者及科技建立者所發展出一對一的關係中 獲得好處。經由每天與約萬名客戶做直接溝通，可以獲得客戶需求的第 一手資料。 目前的企業已無法坐在家裡等客戶自己上門了！而企業在面對這麼多的 競爭中，其成功關鍵就在其是否有能力去取得、建立與維護一個長期、有貢 電腦創始人： 獻且關係良好的客戶群。面對這種客戶，企業不僅是提供他們想要的，更進 而提供「隨時隨地」的服務，取而代之的是利用顧客關係管理（ ；）去選擇業者所要的目標客戶，且不斷地成 長和維持這些客戶群。 所謂「顧客關係管理」，指的是透過整體客戶關係提供產品或服務的企 業經營策略。透過最適合的時間、最適合的通路，把最適合的產品與服務提供 給最適合的客戶，並創造最大的利潤與降低營運風險。 ■直銷模式 在直銷模式上，主要為機關團體、企業用戶與學校，個人或是家庭用 戶。是最早跨入電子商務的大企業之一，電腦即成功的運用網際網路 的優勢，將電子商務機制導入整個配銷環節中，並進而創新直銷模式與提昇經 營績效。 ■整合價值練 不同於將產品透過層層配銷體系鋪貨的傳統模式，電腦是直接將產 品販售給客戶，直接與供應商進行交易，同時也直接和員工溝通這種直銷手 法，省下沒有效率的中間成本，藉由此種方式，將上游的供應商及顧客整 合成一條各個環節都緊密結合的價值鏈。除此之外，為滿足顧客需求，於是發 展了加值服務，這是一 種「量身訂做原廠整合」的 服務方式，係所獨創， 此方式提供下述整體解決方 案，讓客戶自行訂定配置， 並經工廠直接安裝。 美國德州製造中心的生 產線，直接製造、安 裝、配送的直銷模式 個案探討： ■電腦專利 首創技術支持熱線，並使之成為業內標準。電腦分別於年 月日提出「先接單後生產電腦系統的軟體設定程序」美國專利申請案，該案 隨即於年月日核准項申請專利範圍；年月日提出「用以促進 先接單後生產電腦系統之軟體安裝測試的資料庫」美國專利申請案，該案隨即 於年月日核准項申請專利範圍；年月日提出「先接單後生產 電腦系統的軟體安裝與測試」美國專利申請案，該案隨即於年月日核 准項申請專利範圍；年月日提出另一件「先接單後生產電腦系統的 軟體安裝與測試」美國專利申請案，該案隨即於年月日核准項申 請專利範圍。 領先的服務與支援 ...
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...1 Introduction A supply chain may be defined as an integrated process wherein a number of various business entities (i.e., suppliers, manufacturers, distributors, and retailers) work together in an effort to: (1) acquire raw materials, (2) convert these raw materials into specified final products, and (3) deliver these final products to retailers. This chain is traditionally characterized by a forward flow of materials and a backward flow of information. For years, researchers and practitioners have primarily investigated the various processes of the supply chain individually. Recently, however, there has been increasing attention placed on the performance, design, and analysis of the supply chain as a whole. From a practical standpoint, the supply chain concept arose from a number of changes in the manufacturing environment, including the rising costs of manufacturing, the shrinking resources of manufacturing bases, shortened product life cycles, the leveling of the playing field within manufacturing, and the globalization of market economies. The current interest has sought to extend the traditional supply chain to include ìreverse logisticsî, to include product recovery for the purposes of recycling, re-manufacturing, and re-use. Within manufacturing research, the supply chain concept grew largely out of two-stage multi-echelon inventory models, and it is important to note that considerable progress has been made in the design and analysis of two-echelon systems...
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...Dell's Rebooted Asian Strategy The computer maker can't expect instant results from its decision to sell its products in retail stores Earlier this month, the company broke a 23-year tradition when it unveiled plans to sell its products at retail outfits across the Asia-Pacific region. The announcement is significant for a company that had long marketed itself as the golden child of a direct sales model. According to analysts ZDNet Asia spoke to, it was a move that was inevitable particularly in the Asia-Pacific region, where consumers like to physically handle a product before they buy it. Bryan Ma, IDC's Asia-Pacific director of personal systems research, described the move as "necessary" because Dell was often criticized for pushing its direct model in a region where consumers prefer to "feel and touch" their products and pay in cash. "[The direct model] worked very well for them in the past because the bulk of their business has been in the enterprise and public sectors," Ma explained. However, Dell has had limited success in the Asia-Pacific consumer market, where its lack of physical retail presence was a disadvantage particularly against competitors such as Hewlett-Packard (HP) and Acer. Diptarup Chakraborti, Gartner India's principal analyst of Asia-Pacific client computing markets, said Dell has been facing some resistance from users who do not buy or make advance payments for expensive products such as a notebook, without first seeing the product. Chakraborti noted...
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...1. Why has Dell been so successful in the PC industry of low average profitability? 戴尔公司能取得今天的成功，跟它长期以来所采用的运作模式密不可分。人们把这种神奇的模式称为“戴尔模式”。 “戴尔模式”的核心是：低成本、高品质、标准化、多元化 低 成本：戴尔通过建立一个超高效的供应链和生产流程管理，大大降低了生产成本。 （1）直接模式：戴尔的直接模式不等同于直销模式，后者只不过是销售的扁平化尝试而戴尔的直接模式有两层含义：一是直接面向原材料供应商，二是直接面向客户。 ——按单生产：戴尔根据顾客通过网站和电话下的订单来组装产品，这使顾客有充分的自由来选择自己喜欢的产品配置。公司则根据订单订购配件，无需囤积大量配件，占用资金。 ——直接与顾客建立联系：戴尔通过直销与顾客建立了直接联系，不仅节省了产品通过中间环节销售所浪费的时间和成本，还可以更直接、更好地了解顾客的需求，并培养一个稳定的顾客群体。 （2）科学生产管理流程 低成本一直是戴尔的生存法则，也是“戴尔模式”的核心，而低成本必须通过高效率来实现。戴尔的生产和销售流程，以其精确管理、流水般顺畅和超高效率而著称，有效地将成本控制在最低水平。 力求精简是戴尔提高效率的主要做法。公司把电话销售流程分解成简单的8个步骤，其自动生产线全天候运转，配件从生产线的一端送进来，不到两小时就变成成品从另一端出去，然后直接运往客户服务中心。戴尔在简化流程方面拥有550项专利。分析家们普遍认为，这些专利也正是其他公司无法真正复制貌似简单的“戴尔模式”的最主要原因。 高 品质：在戴尔，只有客户认同的东西才值得戴尔去做。 论技术，戴尔身后有微软、英特尔、以及很多拥有高品质技术的合作伙伴撑腰。但是，高品质在戴尔有其独特的含义。在业界，很多厂商热衷于追求核心技术，其实核心技术只不过是竞争的一个区隔，于客户来说毫无价值。在戴尔，他们并不一味追求技术含量，只有客户认同的东西才值得戴尔去做。 戴尔公司拥有一个良好的质量保证体系。戴尔装配产品实行个人负责制，即每个工人负责整个产品的全部组装和调试工作，这一个人负责制是戴尔质量管理的一个重要组成部分。一件戴尔产品如果出了问题，公司只要向投诉顾客索取产品的序列号，就马上可以查出该产品的责任人。因此，戴尔员工都十分敬业，一丝不苟地确保质量。 标 准化：戴尔所经营的技术产品多是标准化的成熟产品，因此该公司总是能 让顾客分享到有关行业进行大量技术投资和研发而取得的最新成果。 注重树立产品品牌和提高服务质量是戴尔的另一个法宝。戴尔不仅拥有一个严格的质量保证体系，而且还建立了一个强大的售后服务网络。戴尔的工作人员不仅通过网站和电话为顾客提供全面的技术咨询和维修指导服务，而且在售出产品后会主动向客户打电话，征求意见。 多 元化：能精确地找到高技术产品市场的切入点，迅速抢夺对手的市场份额。 戴尔通常会在市场开始成熟、行业标准已经形成和配件供应比较充分的情况下介入某一市场，并以低价格迅速抢占地盘。罗林斯说，实践证明，在一种新产品走向成熟时，“戴尔模式”总是能让该公司在相应市场上占得有利地位。 根据这个“市场介入”理论，戴尔在巩固个人电脑市场的领导地位后，又雄心勃勃地提出了一个让同业吃惊的“多元化”扩张战略。近年来，戴尔加快了扩张步伐，陆续涉足高端便携电脑、服务器、网络存储系统、工作站、交换机、掌上电脑、打印机、收银机等多种产品。 ...
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...Case Study of Dell’s Working Capital Jianduo Guo, Shihao Qi, Michael, Yitsik 1. Big picture: With or Without external financing to meet the need of rapid growth Timeline of Dell is showed as follows: Calendar Year Fiscal Year Note 1990 1991 Expand indirect distribution channels 1993 1994 August: loss from sell-off of excess inventory September: growth to liquidity & profitability 1994 1995 July: exit low margin indirect channel 1995 1996 Inventory control, notebook market, new tech 2. Analysis Benefit and Cost of just in time manufacturing system Thanks to just in time manufacturing system, Dell built its brand as an efficient and flexible company which keeps pace to leading technology. As Dell’s competitive advantages, this system benefits Dell a lot, along with some costs and limits. Internally, in time manufacture lowers inventory, which benefits in many ways. Smaller amount of inventory takes less space for storage, thus lower the PP&E. And computers are easy to depreciate just like groceries, so less inventory leads to reducing expenses of depreciation. Also, it shortens DSI and then indirectly shorten Dell’s CCC performance, benefiting its liquidity. In addition, this enables Dell to simplify its supply chain by cutting off some suppliers. This system at the same time brands Dell as a flexible company to the customers. Without the burden of large amount of inventory, Dell is able to shift flexibly...
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