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Matching DELL Case

The PC industry was attractive in the mid-late 1990s due to strong economic growth and the emergence of new services driving high demand for PCs. While entry barriers like economies of scale presented challenges, competition was fierce between major players like IBM, Compaq, and HP. Dell found success through direct sales to customers; tailored, build-to-order production; and an infrastructure supporting just-in-time delivery and customer service. Key factors in Dell's success included direct marketing to relationship and transactional buyers, production processes based on actual customer orders, and seasoned managers tracking detailed performance metrics.

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Kee-yong Chung
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2K views8 pages

Matching DELL Case

The PC industry was attractive in the mid-late 1990s due to strong economic growth and the emergence of new services driving high demand for PCs. While entry barriers like economies of scale presented challenges, competition was fierce between major players like IBM, Compaq, and HP. Dell found success through direct sales to customers; tailored, build-to-order production; and an infrastructure supporting just-in-time delivery and customer service. Key factors in Dell's success included direct marketing to relationship and transactional buyers, production processes based on actual customer orders, and seasoned managers tracking detailed performance metrics.

Uploaded by

Kee-yong Chung
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Matching Dell

5/23/12

1. Is the PC industry attractive in the mid to late 1990 ?


Strong Economy Growth, Emergence of New Services

High Demand for PC High Entry


Barriers
Economics of scale Capital requirements Cost disadvantage

Not PowerFierce Competi ful Bartion gaining (IBM, Compaq, HP, Power of Gateway) Suppliers
Many H/W components companies Basic 5/23/12 Assem

Attractive !

Powerful Bargaining Power of Buyers

Customization Four Categories

No Substitutes

Calculating Machine PDA

2. Why do you think it become this way ? (1)


A. History
World Wide Web, E-mail, less than $ 1,000(97), 45.5% of household in the USA(98), etc.

Declined PC prices (numerous global manufacturers) - Housing, keyboard, monitor, modem, etc. - Microprocessor (Intel, 80~90%) Sub-$1,000 market by AMD (50%) Soft Ware Bundled PC - Operating system : Windows - Application s/w : office productivity applications Large & midsize businesses, governments C. Customers - MIS Dept. (highly knowledgeable staffs) U.S. PC Sales (97) Small business and offices - Lacked MIS staffs (reliability, performance, brand, etc.) Individual consumers - Independent org. such as Consumer Reports Sensitive to price and brand name Educational institutions (3~6%)

B. Products

5/23/12

2. Why do you think it become this way ? (2)


D. Channel
Retailers (Circuit city, CompUSA 14.1% margin, etc) Distributors (Ingram Micro 5~7% margin) Integrated resellers (MicroAge, Vanstar) Direct distribution (telephone, Internet, shipper) Basic assembly-line techniques The Cost at $1,000 Components prices declined by 25~30% - Roughly 1% per week (98)

E. Manufacturing

F. Marketing

Apple, HP, IBM - 2~3% of sales on advertising - 25,000 sales staffs of IBM White-box PCs - No AD. & nonexistent sales forces North America 23%, Europe & Asia 50%, China 90%

5/23/12

3. What were the key success factors for Dells success ? (1)

6 KSFs

5/23/12

3. What were the key success factors for Dells success ? (2)
A. Sales marketing
Direct order from customers Finer classification of buyers - Relationship buyers (repeated orders) Large companies, institutions Outside rep. and Inside rep. Relationship buyers : Premier Pages - Transaction buyers (publications, catalog, etc.) S&M sized businesses, Home (the educated) Transaction buyers : www.dell.com

B. Production

Tailored to customer needs - Based on actual orders No finished goods inventory Production process : a day and a half Just-in-time delivery of parts Co-location : Suppliers, Production, Assembly, etc.

5/23/12

3. What were the key success factors for Dells success ? (3)
C. Products
Two lines of desktop computer and notebook After sales service - 50,000 pages of customer support info., - 1,300 rep. hot-line, problem solving over the phone - Out-sourcing for on-site visit - Service providers

Seasoned D. Infrastruc- managers Performance metrics ture

- Inventory days receivables, payables - Margins, selling price, overhead Customer, product, country segment FY 1998 ROI 186%

5/23/12

Thank you for hearing about our presentation


5/23/12

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