Dell Corporate Plan and Situation Analysis or Market Background.

Dell. Dell’s products—computers, servers and printers—are commodities. Dell tends not to develop the technologies underlying these products. Instead, it purchases the components from firms that develop the technologies (semiconductors and computer software). Dell’s direct-to-customer marketing strategy is not unique, but the extent to which Dell performs this strategy better than anyone else in the industry gives it a competitive advantage. Its size, purchasing power, quality control, and efficiency permit it to operate as a low-cost provider.

By grafting its system of custom direct sales onto the Internet infrastructure, Dell has transformed these activities, creating an innovative and efficient procurement, production, and distribution network. The innovative advance made by Dell in deploying Internet communication as the foundation of its production network, is a process innovation. Although to some extent, the Internet has enabled Dell to create a new product -- a PC custom-configured through Internet communication -- it is the process of organizing flows of materials and information within its network, from customer order to procurement, production and delivery, by means of Internet communication, that defines the innovation at the Firm. The case supports this notion by stating “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. 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

Michael Dell is the founder and CEO of Dell Computer Corporation. He took Dell Computer public and the stock became “the number one stock of the 1990’s, soaring almost 90,000 percent” (Krames, 2003, p. 58-59). Michael Dell expanded the direct selling model because he believed a very close relationship with the customer and vendor would lead to success. His philosophy basically said, “Managers hoping to create successful brands cannot do it by imposing their own views on the marketplace … there needs to be a mechanism in place whereby the company learns to make the products that its target customers actually want” (Krames, 2003, p. 59). With this philosophy, he built a company that continuously attempts to interact with the customer at as many levels as possible to provide the customer with what they want at the price they want.

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

What is Dell’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proposition? What evidence supports your conclusion?

The business model of dell which concentrates on a built to order framework where the middleman is removed and PCs are sold directly to the end buyer

These are customized products at low prices, plus fast delivery and perfect customer service. With the direct business model, all of Dell's products are manufactured by customer’s order. This approach help Dell Computer Corporation become the world's largest leading manufacturer and direct distributor computer systems. A customer can call to branch or access to www.dell.com Dell to order your computer which you want. Within 5 days the computer will be delivered to the customer with the same computer configuration, Dell offers lower price about 10-15 % than the prices of competitors. Besides, a maintenance service of Dell is considered perfect. Dell is a leading company with reliable products and perfect service with 40% of world PC shipments in U.S’s owned computer makers. Distribution form one - one from customer’s needs helps Dell does not get bogged down with the computer that nobody wants. With direct model sale, Dell should not have to pay for intermediate distributor. Thus Dell offer prices below the average up to 12 % compared to competitors. Nearly 2/3 of Dell’s products are sold to government, large corporations and educational

Dell is a leading technology company that offers a wide range of products including desktop computers, networking products, servers, mobility products, storage, peripherals, software as well as general IT services. The company mainly operates in the United States and is headquartered in the city of Round Rock, Texas. In the financial year ended 2011, the company recorded a revenue of $61,494 million, a figure which indicated a 16.2 percent increase over the FY2010 figure. Its FY2011 operating profit was about $3,433 million, an amount which marked a 58.1% increase over the FY2010 value. Its FY2011 net profit was $2,635 million, a value which represented a 83.9 percent increase over the FY2010 value (Datamonitor,2011).

Michael Dell was the founder member of the Dell Company back in the year 1984. Michael is one of the youngest known developers who have ever lived. He founded the company at the tender age of 19 while he was still a student at the University of Texas. Michael Dell’s journey of success started when he added features to personal computers that he obtained from local retailers. Michael therefore sold such computers that he had modified himself and after making profits he decided to expand his business by hiring more people to help him in the supplies. In 1985, to do the business on a permanent basis, he left school and began to manufacture his own computers and sold them with the aid of advertisement in publications of computers trade (Hunger, 2006).

Dell Inc. is one of the world’s largest information technology firms, serving individual consumers as well as small businesses and large enterprises. The company manufactures and sells PCs and related equipment, including network servers, printers, displays, projectors, and storage systems. Founded from Michael Dell’s dorm at the University of Texas in 1984 with a mere $1,000, Dell’s revenues have grown to approximately $61 billion in 2009. This stemmed primarily from a direct-sales model and a well-managed supply chain, which provided Dell with significant operating margin advantages over competitors. Despite its historic success and legacy, in recent years Dell experienced difficulties in an evolving marketplace, which

As it does with in-customer operations, the Web opens both new channel opportunities and new dimensions of customer service. However, this newly created channel must maintain the fit between a company 's account set and its business model. All too many companies lose sight of this critical factor as they indiscriminately pursue incremental revenues. Dell 's direct-to-customer channel strategy certainly is a breakthrough in the industry. In the early stages of a technology product 's lifecycle, distributors are important for supporting new adopters. Dell has discerned a lucrative set of high-end customers that were ready for direct distribution with arm 's length customer support from help lines. An innovative direct channel strategy gave Dell these crucial elements of its powerful business model: Ø Real-time customer feedback and market insights Ø The ability to "sell what you have"--that is, using day-to-day pricing and sales incentives to shift demand toward products that are currently makable Ø Extremely crisp product life cycle transitions Ø Elimination of the obsolete and excess dealer stock that plagues the non-direct competitors Ø The ability to control pricing on a real-time basis. The capabilities were rooted in each company 's core business processes, many of which focused on supply management. The new supply chain masters consolidated their supplier bases in

Dell is among the fastest growing companies in the IT world. Dell started out as a company manufacturing PC’s and slowly developed as a big giant in IT industry. Today, Dell has an IT division which takes care of the cyber security called Dell Secure works. Dell designs, develops, manufactures, services and supports a range of computer systems including, desktops, laptops and enterprise products. Dell went public in 1988, capitalization for Dell increased to $85 Million Dollars from $1,000.00 in 1984. By 1996, Dell had become the 3rd largest hardware vendor in the world. In the late 1980’s Dell started gaining advantage with its PC business in the late 90’s. IBM was one of the big player in the industry

A dominant business model for PCs five years from now will be a SaaS Model. Where the consumers only pay's for the time spent using the product and not for the entire value of the PC itself. This will allow consumers to change manufacturers, explore new product & technology, and not get tied to the lifespan of the PC itself. The demand to set up new businesses without having to deal with the overhead cost upfront and the need to have the latest technology today will be the trigger for this changes.

Dell believes the direct business model is the most effective model for providing solutions that address customer needs.3 Customers pay only for the features they will actually use. Another benefit for customers is they deal directly with the product maker. Dell loads the software so the purchaser can use the product immediately. This USP has given Dell an element of uniqueness in the market place that allows it to differentiate products from the “off the shelf” versions that competitors produce. Dell’s direct contact with customers allows the company to: • Properly identify market segments • Analyse the requirements of each segment • Develop accurate forecasts of future demand.

Dell started out having a first mover advantage that allowed them to generate high returns and large growth in itd sales due to a unit direct sales model. As the industry matured, other competitors entered the market and markets pulled back Dells performance suffered. Today, Dell is the IBM of 2000 as it’s a mature business with GDP type growth in a