Matching Dell - Case Summary

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Matching DELL

History:
IBM Market Leader in Mainframe –market share 61%, starts PC business in ’81, in 2 yrs market share is 42%
IBM Strategy : • Purchase PC components as against manufacturing inhouse (Main frame) • Open Architecture : OS – Microsoft, Microprocessor – Intel , reason, to encourage application developers and enhance Peripheral market • Sales : o Largely corporate clients - thought its huge sales force o Retail clients through value added resellers – handled, installations, configured SW,customer networks and service part of responsibility • Competition : Apple with propriety architecture had 20% market share, Compac enters in ’82, Dell in ’84, • Competitors strategy :: use resellers
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PC’s customized to buyer spec, assembly commenced only after receiving order. • Business and govt – 77% of sales • Home and small offices – 18% • Educational institutes – 5%

• Sales and Marketing Very large customers accounted for 70% of business and no single customer accounted for more than 2 % Dell grouped there customers into two types • Relationship buyers – large companies with potential of repeat business, had a team of outside and inside sales rep to manage the relationship, having access to online info, about the customers entire purchase history. • Transactional buyers – SMB and Personal,user call centers, and AD’s by DELL to reach out to them • DELL experimented with retail channel in 1990, resulting in brisk sales, but lower margins, resulting in retail losses, in 1993, DELL withdrew in 1994. • DELL sub divided its customer base into multiple categories, to identify unique opportunities and economies. • 1996-Dell website-as a medium for transaction buyers. • Premium pages were developed for Relationship buyers, with approved computer configurations for each customer • 1998 - resulted in USD 10 million sales per day thru the website. • Production and logistic o No finished good inventory, assembly on actual orders from 4 manufacturing plants, US, Ireland, Malasyia and China, o Daily meeting to match production schedule, order sent

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