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After a sloppy 2 year period without Michael Dell, How could Dell revitalize his struggling company that had long, defin PowerPoint Presentation
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After a sloppy 2 year period without Michael Dell, How could Dell revitalize his struggling company that had long, defined success in its industry? . Structure of Presentation. What are the components of the personal computer industry Business Models Customers Manufacturing, R & D, Marketing

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slide1

After a sloppy 2 year period without Michael Dell, How could Dell revitalize his struggling company that had long, defined success in its industry?

structure of presentation
Structure of Presentation
  • What are the components of the personal computer industry
    • Business Models
    • Customers
    • Manufacturing, R & D, Marketing
  • What was Dells approach-through mid 2000’s
    • Customers
    • SWOT Analysis
    • Dell’s Value Chain
    • Products and Services
structure of presentation1
Structure of Presentation
  • Competitors-IBM/Lenovo, Compaq/HP, Gateway
    • How does the PC Market look?
  • Was it the best thing for Michael Dell to return to the company?
  • Why Does Dell want to get away from their trademark Direct Sales program?
  • Where does Dell Go from here?
    • Recommendation
business models
Business Models
  • Dell and Gateway-Direct
  • IBM and Compaq- Indirect through Retailers

Dell

Competitors

dell s approach
Dell’s Approach
  • Dealt directly with end user
  • Served Primarily Corporate Customers with High end computers at low costs
  • Assembly started after order was placed
slide7
Relationship Buyers

Transaction Buyers

Small-to-Medium Businesses

Home computer users

Online or called in specified order

Encourage more advanced PC’s to buyers

Avoided inexperienced buyers

  • Large Organizations
  • Repeat Orders
  • Outside and Inside Sales Reps for each account
  • Customized Web based stores

Two types of Buyers Dell wanted to work with up to 2000, they need to expand their horizons to maintain growth

slide8

Even though they sold the same product, Users felt they had control over how “good” of a computer they were getting for their money

customers
Customers

Education needs to be focused on, every other market has been capitalized on. The focus needs to be on education and customer retention for the business’ you have currently.

consumer ratings 100 point scale
Consumer Ratings (100 point scale)

Dell needs to improve its brand image and surpass their highest rating on 80 in 2000

marketing and sales
Marketing and Sales
  • HP- 1billion,2008
  • Apple-500 million,2008
swot analysis
SWOT Analysis

Dell Has room to grow in the retail segment

dell value chain
Dell Value chain

Dell

Microsoft Windows

Sony, Global Market

Dell

Dell

Dell Testing

FedEx

Dell controls all parts of the Chain, saving time during shipping and keeps inventory low having monitors shipped directly to customer.

production and logistics
Production and Logistics
  • Tailored to each customers needs
  • Holds no finished goods inventory
  • Only took hours rather than days
  • Carried 4 days inventory vs. 20-30 days of competitors
  • Shipment went from Dell to pickup monitor to customer, no need to have extra inventory

Dell’s Direct Model was superior to all other competitors

competitor s
Competitor’s

IBM/Lenovo, Compaq/HP, Gateway

ibm and lenovo
IBM and Lenovo
  • Relied on Channel partners- Distributers and Resellers
  • Tried shipping heavily configured PC’s
  • AAP-Authorized Assembly Program
    • Lightly configured PC’s
    • Other companies finished the computer
  • Poor logistics for building PC’s caused higher prices
    • Tear downs and rebuilds cost time and money
  • Ventured into direct sales
compaq and hp
Compaq and HP
  • 1994-Worlds Largest maker of PC’s through full line of PC’s
optimized distribution model
Optimized Distribution Model
  • PC’s were built only after an order was received
  • Deliveries continued to go through distributers and resellers-SLOW
  • Direct Plus Program-designed to sell directly to small and mid size businesses.
  • Tried to keep everyone happy

By 1999 Compaq had shot itself in the foot and reported significant losses trying to please everyone

slide21

High Quality and High Performance

  • 75% PC’s sold through distributers and resellers
  • Aimed at the high end user
  • HP Sticks with resellers and distributers
  • Average computer sold was 35 days old
gateway acer
Gateway/Acer
  • Very similar to Dell
  • Focused on home users and small businesses rather than large corporations
  • Acer became 100% Indirect and “Un-Dell”
  • Very inexpensive PC’s sold through retailers to consumers.
  • 2nd Largest Producer of PC units
apple
Apple
  • Sleek Design
  • High Cost
  • Ease of Use
  • Opened on retail stores in 2008
  • Increased market share by ~5% in one year after release of iPod and iPhone
slide24

How does the PC market look?

Compaq/IBM

Dell

High

Lenovo/HP

Acer

Apple

Low

High

Low

Differentiation

Cost

slide26

Rollins sticks to Dell’s Historical Strategy and kept missing expected earnings.

  • Pricing Mistakes, Bad Sony Batteries, Poor customer service ratings, poor accounting practices, no volume increases.

As soon as Michael Stepped down, problems surfaced that had been going on before he left the company

michael dell s return
Michael Dell’s Return
  • Brings in outside talent
    • Ronald Garriques from Motorola
    • Mike Cannon, from Solectron
    • Brian Gladden , from GE
    • Ed Boyd, from Nike
  • Direct Model was a revolution, not a religion.
  • Opened channels to retailers
  • Launched a new line of laptops
  • Purchased Perot Systems
  • Decreased Sales, Decreased Returns
market share for each distribution
Market Share for Each Distribution

Dell needs to shift to Retailers in the US and Globally. People want to see and touch what they are buying

dell s new value chain
Dell’s New Value chain

Contractors

Contractors

Global Market

Microsoft Windows

Retailers

Dell gave up all parts of the Chain, saving over $3 billion dollars on costs.

optimally
Optimally
  • Dell would continue growth with new/ hip generation while innovating products around their new team
  • Dell would expand into the global market via retail sales
  • Dell would expand into the global market via better customer service and scrapping their direct end user sales model
  • While also breaking into the retailing world and creating Dell stations rather than Dell vs. HP vs. Acer
  • Possibly look to buy Acer to take more of the market