Term Paper On Dell

Dell Market Research:

Executive Summary

The Customer Research Process on Dell Laptop on is given as the requirement of the course entitled Consumer Behavior. I have choose product as Dell Laptop, Inc. It is among the world’s leading computer manufacturers that has transformed diversified into variety of business segments over the year. However, the research is realistic, which has a good possibility to be succeeded. Usually there are many laptops in the market and the market of laptop is competitive.  However, we can compete in this tough competitive market because the Dell laptop is not only providing a very high quality and security and safety but also expensive. This research analysis the current situation, followed by customer research process on Dell laptop, different opportunities and threats, then Motivation as a psychological force, Model of the motivation process, Needs of Goal, Comparison of positive and Negative motivation, afterwards it also discusses the Maslow’s Hierarchy of Needs, Types and system of Needs, and finally the conclusion.


Statement of the Research problem

This term Paper is prepared for Dr. Shohidul Islam, course instructor of the Undergraduate program, School of Business; at University Of Information Technology and Science as a partial requirement of Consumer Behavior. This Paper is prepared during the Summer, 2011 semester and would be submitted in the same semester. The standard procedure for formal Paper (given by the instructor) has been followed.

Scope & objectives of the study

The operational activities are very vast Dell Inc. in Bangladesh. But this study limited to the find position, attitude, preference, and the consumer purchasing intuition on the product.

General objective

The objective of this research work was to find out the problems why the sell is not increased compare with other brands and at the same time, imply some strategy that would help the corporate sales department to improve its performance which would help the organization to maintain a high customer retention ratio.

Paper Objective:

To analyze the existing corporate customer’s attitude, I examined the following issues in this research work:




     Easy to add update parts.

   Competitive pricing policy and tariff plan.

   Delivers promise.


In this research study, the null and alternative hypotheses are –

H0: Dell Inc. customer’s attitude toward the price and easy to add update parts are negative.

Ha: Dell Inc. customer’s attitude toward quality and security and safety are positive or neutral


The study is basically a combination of primary & secondary data. I have interviewed associated personnel of the Sales department & it was not very difficult for me. As the secondary source, information was also taken from books and other vouchers and as well as from World Wide Web.

Research Design

For this research I have adopted the primary research design. The information about the research components are as follows –

  • Kind of information – For this research I found out individual respondents’ information.
  • Method of administering the questionnaire – I used a survey questionnaire for collecting information for the research.
  • Nature of questionnaire – For the research work, close ended questions was asked. The average interviewing time was approximately 10 – 15 minutes.
  • Sample size –for this research work the sample size was 50.

Data Collection

I obtained necessary data for this Paper by surveying 50 customers. I went to the different offices, neighbors, friends, and institute and asked them to fill up the questionnaire if they are using corporate cellular phone.

Data Analysis

For the analysis of the collected data I used by manually. Some cross-tabulations were conducted to show the difference in the service quality, brand image, and customers’ attitude toward the laptop in Bangladesh. For the hypothesis testing I used manually. In some analysis I found out frequency, and percentage. A regression analysis was also used for this research work. The analyzed date is presented both in graphical and tabulated format.  Depending on the result of the analyzed data I made some recommendations which I believe would be helpful for the decision making strategy for the corporate sales and production departments of Dell laptop.

Quantitative research designs: A quantitative research study consists of a research design, the data collection methods and instrument to be used, and the sample design.

Observational Research

Observational research is an important method of consumer research because marketers recognize that the best way to gain an in-depth understanding of the relationship between people and products is by watching them in the process of buying and/or using the products. I have done some report by observation

Mechanical Observation

It uses a mechanical or electronic device to record customer behavior or response to a particular marketing stimulus.

Physiological Observation

Marketers also use physiological observation devices that monitor respondents’ patterns of information processing.


A controlled experiment of this type ensures that any difference in the outcome (the dependent variable) is due to different treatments of the variable under study and not to extraneous factors.


Personal interviewsurveys most often take place in the home, institutes, friends. The latter, referred to as mall intercepts are used more frequently than home interviews because of the high incidence of not-at-home working women and the reluctance of many people today to allow a stranger into their home.

Telephone surveysare also used to collect consumer data; however, evenings and weekends are often the only times to reach telephone respondents, who tend to be less responsive-even hostile-to calls that interrupt dinner, television viewing, or general relaxation. The difficulties of reaching people with unlisted telephone numbers have been solved through random-digit dialing, and the costs of a widespread telephone survey are often minimized by using toll-free telephone lines. Other problems arise, however, from the increased use of answering machines and caller ID to screen calls. Some market research companies have tried to automate telephone surveys, but many respondents are even less willing to interact with an electronic voice than with a live interviewer. I have done also by the telephone.

Mailsurveysare conducted by sending questionnaires directly to individuals at their homes. One of the major problems of mail questionnaires is a low response rate, but researchers have developed a number of techniques to increase returns, such as enclosing a stamped, self-addressed envelope, using a provocative questionnaire, and sending pre-notification letters as well as follow-up letters.

Online surveysare sometimes conducted on the Internet. Respondents are directed to the marketer’s (or researcher’s) Web site by computer ads or home pages. Because the sample’s respondents are self-selected, the results cannot be projected to the larger population.

Report format

This research paper format is formal in nature. For the formatting I used APA format.


Figure 1: The laptop user of the respondent

The mode for the responses of this question is 2, that is the majority respondents are using GP Corporate connections. The frequency table shows that among 120 respondents, 43.4% respondents are using GP connection, while 23% respondents are

using banglalink, 17.2% using CityCell, and remaining 14.2% respondents are using AKTEL corporate connection.

Comparing the above sample result it can said that majority of the corporate clients are using GP connection while banglalink got the second position in case of subscriber base of the selected sample.


The major limitation factor for this Paper was primarily the reluctance and strict adherence to confidentiality maintenance attitude shown by the officials of Dell Inc. Though I knew & had access to much information, but there are still some important things which I couldn’t get hold of & they don’t even prefer to disclose those in front of general people.


company profile

NASDAQ-100 Component
S&P 500 Component
IndustryComputer Systems
Computer Peripherals
Computer Software
IT consulting
IT services
FoundedAustin, Texas
November 4, 1984
Founder(s)Michael Dell
Headquarters1 Dell Way
Round Rock, Texas, U.S.[1]
Area servedWorldwide
Key peopleMichael Dell
(Chairman & CEO)
Smart Phones
RevenueUS$ 61.49 billion (FY 2011)[2]
Operating incomeUS$ 3.43 billion (FY 2011)[2]
Net incomeUS$ 2.63 billion (FY 2011)[2]
Total assetsUS$ 38.59 billion (FY 2011)[2]
Total equityUS$ 5.64 billion (FY 2011)[2]
Employees103,300 (January 2011)[2]
SubsidiariesDell Services

Dell, Inc. is an American multinational information technology corporation based in round Rock, TexasUnited States, , that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest technological corporations in the world, employing more than 103,300 people worldwide. Dell is listed at number 41 in the fortune 500 list. Dell has grown by both organic and inorganic means since its inception—notable mergers and acquisitions including Alienware (2006) and Perot system (2009). As of 2009, the company sold personal computer, servers, data storage device, network switches, software and computer peripherals. Dell also sells HDTS’s, cameras, printers, MP3 players and other electronics built by other manufacturers. The company is well known for its innovations in supply chain management and electronic commerce.Fortune Magazine listed Dell as the sixth largest company in Texas by total revenue. It is the second largest non-oil company in Texas (behind AT&T) and the largest company in the Austin area.

Dell traces its origins to 1984, when Michael Dell created PCs Limited while a student at the University of Texas at Austin. The dorm-room headquartered company sold IBM PCcompatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PCs Limited could better understand customers’ needs and provide the most effective computing solutions to meet those needs. Michael Dell dropped out of school in order to focus full-time on his fledgling business, after getting about $300,000 in expansion-capital from his family. In 1985, the company produced the first computer of its own design—the “Turbo PC”, sold for US$795. PCs Limited advertised its systems in national computer magazines for sale directly to consumers and custom assembled each ordered unit according to a selection of options. The company grossed more than $73 million in its first year of trading. The company changed its name to “Dell Computer Corporation” in 1988 and began expanding globally—first in Ireland. In June 1988, Dell’s market capitalization grew by $30 million to $80 million from its June 22 initial public offering of 3.5 million shares at $8.50 a share.  In 1992, Fortune magazine included Dell Computer Corporation in its list of the world’s 500 largest companies, making Michael Dell the youngest CEO of a Fortune 500 company ever. In 1996, Dell began selling computers via its web site, and in 2002, Dell expanded its product line to include televisions, handhelds, digital audio players, and printers. Dell’s first acquisition occurred in 1999 with the purchase of Convergent Technologies. In 2003, the company was rebranded as simply “Dell Inc.” to recognize the company’s expansion beyond computers. From 2004 to 2007, Michael Dell stepped aside as CEO, while long-time Dell employee Kevin Rollins took the helm. During that time, Dell acquired Alienware, which introduced several new items to Dell products, including AMD microprocessors. To prevent cross-market products, Dell continues to run Alienware as a separate entity but still a wholly owned subsidiary.

Lackluster performance, however, in its lower-end computer business prompted Michael Dell to take on the role of CEO again. The founder announced a change campaign called “Dell 2.0,” reducing headcount and diversifying the company’s product offerings. The company acquired EqualLogic on January 28, 2008 to gain a foothold in the iSCSI storage market. Because Dell already had an efficient manufacturing process, integrating EqualLogic’s products into the company drove manufacturing prices down.


►        In 2009, Dell acquired Perot Systems a technology services and outsourcing company founded by H. Ross Perot.

►     On September 21, 2009, Dell announced its intent to acquire Perot Systems (based in Plano, Texas) in a reported $3.9 billion deal.Perot Systems brought applications development, systems integration, and strategic consulting services through its operations in the U.S. and 10 other countries. In addition, it provided a variety of business process outsourcing services, including claims processing and call center operations.

►        On August 16, 2010, Dell announced its intent to acquire the data storage company 3PAR. On September 2, 2010 Hewlett-Packard offered $33 a share, which Dell declined to match.

►     On November 2, 2010, Dell acquired Software-as-a-Service (SaaS) integration leader Boomi. Terms of the deal were not disclosed.


“Its the way we do business. It’s the way we interact with the community. It’s the way we interpret the world around us—our customers needs, the future of technology, and the global business climate. Whatever changes the future may bring our vision—Dell Vision —   will be our guiding force.
So Dell needs full customer satisfaction. In order to become the most successful computer company, they need the newest technology and loyal customers.”


 “Dell is building its technology, its business and its communities through direct relationships with our customers, our employees and our neighbors “(Dell 1) Dell’s mission is to be the most successful Computer Company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of:

• Highest quality
• Leading technology
• Competitive pricing
• Individual and company accountability
• Best-in-class service and support
• Flexible customization capability
• Superior corporate citizenship
• Financial stability


The famous slogan of Dell Inc. is – “The Power to Do More”.


It was somewhat difficult to find an exact up-to-date statement of the market share Dell currently holds in the laptop market, but this report will therefore draw on figures for recent years and a conclusion will be drawn from this evidence and other researched information.

►        Dell laptop is high price in the Bangladesh market.

►     It is so complex to add update parts.

►        The quality of dell laptop is better then other brands.

Motivation as a psychological force

Motivationis the driving force within individuals that impels them to action. This driving force is produced by a state of tension, which exists as the result of an unfulfilled need. Individuals strive both consciously and subconsciously to reduce this tension through behavior that they anticipate will fulfill their needs and thus relieve them of the stress they feel. The specific goals they select and the patterns of action they undertake to achieve their goals are the results of individual thinking and learning.

Needs     every individual has needs, some are innate, others are acquired. Innate needs are physiological (i.e., biogenic); they include the needs for food, water, air, clothing, shelter, and sex. Because they are needed to sustain biological life, the biogenic needs are considered primary needs or motives.

Acquired needs         are needs that we learn in response to our culture or environment. These may include needs for self-esteem, prestige, affection, power, and learning. Because acquired needs are generally psychological (i.e., psychogenic), they are considered secondary needs or motives.



Goals are the sought-after results of motivated behavior. As motivation Process indicated, all behavior is goal oriented. Our discussion of motivation in this chapter is in part concerned with generic goals, that is, the general classes or categories of goals that consumers see as a means to fulfill their needs. If a student tells his parents that he wants to become a medical doctor, he has stated a generic goal. If he says he wants to get an M.D. degree from UCLA, he has expressed a product-specific goal. Marketers are particularly concerned with product-specific goals, that is, the specifically branded products and services that consumers select for goal fulfillment.


Motivation can be positive or negative in direction. We may feel a driving force toward some object or condition or a driving force away from some object or condition. for example, a person may be impelled toward a restaurant to fulfill a hunger need, and away from motorcycle transportation to fulfill a safety need.

Some psychologists refer to positive drives as needs, wants, or desires and to negative drives as fears or aversions. However, although positive and negative motivational forces seem to differ dramatically in terms of physical (and sometimes emotional) activity, they are basically similar in that both serve to initiate and sustain human behavior. For this reason, researchers often refer to both kinds of drives or motives as needs, wants and desires. Some theorists distinguish wants from needs by defining wants as product-specific needs. Others differentiate between desires, on the one hand, and needs and wants on the other. Thus, there is no uniformly accepted distinction among the terms needs, wants, and desires.


Hierarchy of needs



Market Trends

The market for laptop computers has distinguished itself as one of the fastest growing segments of the commuter industry. Throughout its growth and development, this market, like many others has changed a great deal as a result of customer demands. In an effort to eater to these demands, companies like Dell look to market trends to aid the development of new products. In it’s most recent stages the laptop market has been specifically influenced by a number

        Generally, the over all market for Laptop’s is being influenced by many of these trends. One in particular, however, is affecting the marketing the market more than any other. Simply, customers are becoming more educated about their purchases. Computers are being sold less to first time buyers and much more to consumers who have personal computers at least once before. As an increasing numberof customers become more knowlwdgeable about other trends are beginning to take shapo.

As a result of this consumereduation, buyers want increased customization of personal compuer. The growing amount of knowledge amont customers is creating the ability for buyers to distinguish their owen personal needs in a computer from a standardized product.

The laptop market is growing at a faster rate than desktop computers. This is beging driven by global in


Dell’s Direct Model approach of enables the company to offer direct relationships with customers such as corporate and institutional customers. Their strategic method also provides other forms of products and services such as internet and telephone purchasing, customized computer systems; phone and online technical support and next-day, on-site product service. This extensive range of products and services is definitely one of Dell’s strengths.

Dell Computer’s award-winning customer service, industry-leading growth and consistently strong financial performance differentiate the company from competitors for the following reasons:

Reliability, Service and Support – Dell’s direct customer allows it to provide top-notch customer service before and after the sale.

Latest Technology – Dell is able to introduce the latest relevant technology compared to companies using the indirect distribution channels. Dell turns over inventory for an average of every six days, keeping inventory costs low.

The company’s application of the Internet to other parts of the business –including procurement, customer support and relationship management — is growing at a rate of 30 percent. The company’s Web site received at least 25 million visits at more than 50 country-specific sites.


Price for Performance – Dell boasts a very efficient procurement, manufacturing and distribution process allowing it to offer customers powerful systems at grater then high  prices.

Customization – A complete Dell system is complex and hard to add new update parts to meet each customer’s specifications.

Dell’s biggest weakness is attracting the college student segment of the market. Dell’s sales revenue from educational institutions such as colleges only accounts for a measly 5% of the total. Dell’s focus on the corporate and government institutional customers somehow affected its ability to form relationships with educational institutions. Since many students purchase their PCs through their schools, Dell is obviously not popular among the college market yet.

For home users, Dell’s direct method and customization approach posed problems. For one, customers cannot go to retailers because Dell does not use distribution channels. Customers just can’t buy Dell as simply as other brands because each product is custom-built according to their specifications and this might take days to finish.


Personal computers are becoming a necessity now more than ever. Customers are getting more and more educated about computers. Second-time buyers would most likely avail of Dell’s custom-built computers because as their knowledge grows, so do their need to experiment or use some additional computer features.

Demand for laptops is also growing. As a matter of fact, demand for laptop has overtaken the demand for desktops. This is another opportunity for Dell to grow in other segments.

The internet also provides Dell with greater opportunities since all they have to do now is to visit Dell’s website to place their order or to get information. Since Dell does not have retail stores, the online stores would surely make up for its absence. It is also more convenient for customers to shop online than to actually drive and do purchase at a physical store.


In a volatile market such as personal computers, threats abound. Computers change in a constant sometime daily basis. New software, new hardware and computer accessories are introduced at a lightning speed. It is essential for Dell therefore to be always on the lookout for new things or introduce new computer systems.

The threat to become outmoded is a pulsating reality in a computer business. Not only that, companies must produce products that are high in quality but low in price. This is one challenge that Dell contends with.

One of the biggest external threats to Dell is that price difference among brands is getting smaller. Dell’s Direct Model attracts customers because it saves cost. Since other companies are able to offer computers at low costs, this could threaten Dell’s price-conscious growing customer base. With almost identical prices, price difference is no longer an issue for a customer. They might choose other brands instead of waiting for Dell’s customized computers.

The growth rate of the computer industry is also slowing down. Today, Dell has the biggest share of the market. If the demand slows down, the competition will become stiffer in the process. Dell has to work doubly hard to differentiate itself from its substitutes to be able to continue holding a significant market share.

Technological advancement is a double-edge sword. It is an opportunity but at the same time a threat. Low-cost leadership strategy is no longer an issue to computer companies therefore it is important for computer companies to stand out from the rest.

Technology dictates that the most up-to-date and fastest products are always the most popular. Dell has to always keep up with technological advancements to be able to compete.


The marketing department  and the production manager have to intention about the high price compare with other brands and production engineer has to create easy insalivations the updated parts what the customers need to full fill their satisfaction. The dell laptop i-5 price is Tk. 55,000 but same functions HP is Tk. 46,000 . So As a poor country our students and the lots of people who are  middle class could not afford the price of Dell Laptop. However, a high level people buy it. They motive and drive from their needs. As Maslow’s hierarchy of needs after full fill the necessary then he goes to  Safety and Security Needs Social Needs Ego Needs. So we people are not affort the Dell laptop because of high and could not easy to add update parts because when we buy a laptop for al long period.


The current market trends in the personal computer industry, for laptop in particular, are being driven by ever changing customer needs, wants , and demands. As a result Dell Inc. is forced into a constant state of adoption in order to satisfy their customer. By taking full advantage of strength, paying close attention to their weakness and identifying both opportunities and threats from the macro-environment, these companies can position themselves as significant shareholders in an intensely competitive market.

1 Executive Summary

This paper aims to analyse strategy content, context, and organisational purpose of Dell Inc., one of the world's largest computer manufacturers. Dell's direct business model based on virtual integration, low inventory, and direct relationships is evidently a key source of com­petitive advantage on several levels.

Underpinning key findings from a critical evaluation of a variety of factors, in particular the computer industry and international dimensions of Dell's value system, strategic chal­lenges for the company would include three key issues: first, Dell should address its weak performance in terms of customer service. Second, since Dell's current sales to corporations account for about 85 per cent, the author recommends a stronger focus on the more lucrative high-growth private consumer segment. Finally, Dell will have to successfully exploit oppor­tunities on the fast-growing, but extremely competitive markets of Asia-Pacific.

2 Literature Review and Analysis ofFrameworks

De Wit and Meyer (2005) divide strategy into the dimensions process, content, and con­text. Using this distinction as starting point, this study follows de Wit's and Meyer's (2005) understanding of strategy content (i.e. what actually constitutes a strategy for an organisation on different levels) and strategy context (meaning environmental or organisational conditions surrounding strategic activities).

On the business level, a widely agreed upon notion is that strategy should create competit­ive advantage over rival organisations operating in the same business area, preferably in a sus­tainable manner (de Wit and Meyer, 2005, Brown et al., 2005). Besides other basic compon­ents like an organisation's resource base and its product offering, its activity system is a key factor (de Wit and Meyer, 2005). In this context, the value chain, a popular framework de­veloped by Michael Porter (1985, cited in Brown et al., 2005), is an appropriate model to track the flow of movement from inputs to outputs. Illustrating a company's activity system throughout the value creation process, Porter (cited in de Wit and Meyer, 2005) distinguishes primary activities (inbound logistics, operations, outbound logistics, marketing and sales, and service) and support activities (procurement, technology development, human resource man­agement, and firm infrastructure). The value chain is based on the idea that value, instead of cost, is added at every stage (Brown et al., 2005), while the goal of these activities is to offer a level of value to the customer that exceeds the cost of these activities, thereby resulting in a profit margin (NetMBA Business Knowledge Center, 2006). Competitive advantage, it is ar­gued, can be the result of an extraordinary (re-)configuration of the entire activity system, as well as of its ability to manage the value system of which it is a part - i.e. a series of value chains, linking the firm to the value chains of its suppliers, channels and customers (de Wit and Meyer, 2005; NetMBA Business Knowledge Center, 2006).

The value chain is therefore also a useful approach to form a company's activities in which it can pursue a sustainable competitive advantage. At a very high level, Porter (1980, cited in Kippenberger, 1998), developed basic generic strategies: overall cost leadership, dif­ferentiation, and focus (i.e. serving limited target markets in terms of customer range, geo­graphy, or product range, more effectively, efficiently, or both). While Porter originally sug­gested an incompatibility between cost leadership and differentiation, he later revised this view by stating that “... any superior firm has achieved one type of advantage, the other, or both ” (Porter, 1991, cited in Prajogo, 2007).

According to Hedley (1977, cited in de Wit and Meyer, 2005), many companies are in­volved in different businesses, which can result in a large variety of individual, separate busi­ness strategies. Hence, on a corporate level, it is vital for organisations to strategically de­termine an optimal set of businesses, including decisions about which business they should be in at all (de Wit and Meyer, 2005). One challenge for organisations in this area is to resolve the paradox between synergy and responsiveness, with multi-business synergy striving to share and integrate activities, and responsiveness as granting business units a higher level of market-focused autonomy (ibid.).

But also corporations themselves can form partnerships and alliances within and across in­dustries (ibid.). On such a network level, establishing relationships with certain actors can be an eminent part of inter-organisational strategy. Amongst others, relations to suppliers (up­stream vertical) and to customers (downstream vertical) can form embedded collaborative net­works (ibid.). Nonetheless, many other inter-organisational relationships are also highly com­petitive, even confronting, and driven by a pursuit of independence towards rivals and other external parties. Hamel et al. (1989, cited in de Wit and Meyer, 2005) even perceive collabor­ation as competition in a different form.

Hence, it becomes clear that strategy must not consider organisations in isolation, but in relation to the industry context in which they operate. For example, the developments of an industry can show tendencies towards convergence or divergence, towards concentration or fragmentation (de Wit and Meyer, 2005). In order to accurately recognise the development of an industry, to understand both its drivers and inhibitors of change is critical. The critical question is how organisations can proactively modify or shape an entire industry, as opposed to mere adaptation to given industry dynamics (ibid.).

As many of today's industries are global in nature, organisations have to consider strategy in an international context. In an international management approach, one organisational challenge is to establish cross-border synergies, by means of standardising, coordinating, and centralising activities across political and cultural boundaries (ibid.). In contrast, to exploit local market responsiveness, by acknowledging local adaptation, decentralisation and autonomy might be useful in many cases. This has eventually led to contrasting perspectives of global convergence versus international diversity, since every organisation must reconcile these opposing demands on an individual basis (ibid.).

However, also from a more internally focused perspective - the organisational context - an interesting point should be understood, i.e. who should determine an organisation's stra­tegic directions in the first place, initiate changes, and exert power and control? But a rare choice is that between tight, top-down management control and self-regulatory organisational chaos. Rather, organisational leadership and organisational dynamics form the end poles of a continuum with regard to (re)shaping the organisational system (ibid.). Ireland and Hitt (2005) outline other key points of strategic leadership, e.g. developing and sustaining an ef­fective organisational culture and establishing balanced organisational controls.

Finally, it is clear that every strategy acts as a “course of action for achieving an organiz­ation's purpose” (de Wit and Meyer, 2005, p. 249). Advocates of a shareholder value per­spective would insist that companies should primarily serve the interests of its owners in a profitable manner. On the other hand, advocates of a stakeholder perspective also argue that the purpose is to serve the interests of all parties involved (ibid.). Dutta and Burgess (2003), identify key stakeholders as those with both high interest and high power (power-interest mat­rix). Besides, the notion organisational purpose involves issues of form and function of cor­porate governance, as well as elements of a corporate mission, which is often expressed in a mission statement (de Wit and Meyer, 2005).

3 Strategic Analysis: the Case of Dell Inc.

The organisational example chosen here, Dell Inc., provides various interesting starting points for evaluating and illustrating strategy in the business world. Following a structured ap­proach, relevant elements of strategy content and context are evaluated sequentially in this study. Nonetheless, it is most important to realise that to understand these elements in isola­tion does not make sense - rather, actual and potential interrelationships between them form the key points of a holistic strategic approach.

Organisational Background

Founded in 1984 by Michael Dell as Dell Computer Corporation, Dell Inc. is today one of the largest manufacturers and sellers of personal computers and information technology sys­tems worldwide. Dell splits its products into the categories desktop computer systems, mobil­ity products, software and peripherals, servers and networking products, and storage products (Dell Inc., n. d. d). Moreover, the company provides product support and several other product-related services such as financing and asset management (Datamonitor, 2006). Dell is best known for what has become known as its “direct business model”, a system which basic­ally aims at selling directly to customers and building products to order. Thus, Dell can both bypass the reseller channel and keep its stock of components and finished goods low (Magretta, 1998). According to its corporate website (Dell Inc., n. d. a), the company's invent­ory is turned over in only five days on average.

Based in Round Rock, Texas, the company serves both domestic and international mar­kets, operating in the Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific- Japan (APJ) as geographic markets (Dell Inc., n. d. c). Dell employs approximately 65,200 people and the company's overall revenues in 2006 amount to $55.9 billion (Datamonitor, 2006). Although operating globally, Dell has a particularly strong presence in the Americas, its largest geographic market - accordingly, the Americas generated 65.1 per cent of Dell's total revenues in 2006, followed by Europe, Middle East and Africa, with a proportion of 23.0 per cent in the same fiscal year (ibid.). The Americas segment is subdivided into business and consumer divisions, while sales to businesses comprise about 85 per cent of Dell's total reven­ues (Lee, 2007). Asia Pacific-Japan accounted for 11.9 per cent of the total revenues in 2006, though with a considerable growth rate of 20.9 per cent (Datamonitor, 2006).

A look at Dell's history (Dell Inc., n. d. b) reveals persistent international expansion; the company opened manufacturing plants in Ireland (1990), Malaysia (1996), China (1998), and Brazil (1999). In recent years, Dell introduced new products, for instance handhelds, printers, and consumer electronics. In 2006, Dell acquired Alienware Corporation, a manufacturer of branded high performance personal computers, specially focusing on gaming and digital mul­timedia content (Dell Inc., 2006).

Business Level Strategy

The direct business model introduced by Dell is fundamentally different compared to tra­ditional computer manufacturers. While IBM, Compaq and HP utilised a built-to-stock value chain based on market forecasts and later dispatched to retailers, Dell built every system to or­der and sold directly to end customers (Govindarajan and Lang, 2002). Throughout its value chain, and especially in its primary activities, Dell explicitly focuses on adding value in the form of lower cost, simultaneously eliminating elements which do not add value, such as un­necessary high inventory and reseller mark-ups. For instance, Dell's inbound logistics are highly integrated with its suppliers through an efficient just-in-time delivery system (Brown et al., 2005). Moreover, the company's operations embrace high-quality mass customisation, optimised outbound logistics based on sophisticated data exchange systems with shippers, and direct selling through low-cost channels such as via phone and the internet (McGraw-Hill Stu­dent Resources, n. d.). As an article in MacWorld (cited in Holzner, 2005, p. 202) stated: “Basically, Dell is a sales and logistics engine that operates with minimal overhead.”

Through the information gained by selling directly to customers, Dell also developed the capacity to constantly further segment its customer base into distinct customer groups over time. As a result, it could better address individual needs (Magretta, 1998). However, at the end of these value-adding activities, the observation has been made with increasing frequency that Dell also loses value by delivering poor customer service and support (Brown et al., 2005; Holzner, 2005; Datamonitor, 2006; Holahan, 2006; Clark, 2006; Brignall and Levene, 2006) - a somewhat surprising fact, since Dell's direct business model allows the company to stay quite close to its buyers and the company itself claims to provide a superior customer ex­perience (Magretta, 1998; Dell Inc., n. d. f).

When Dell initiated business with a comparatively small resource base (Stewart and O'Brien, 2005), its original generic strategy clearly was cost leadership, or “being the lowest cost producer of standard technology and staying there” (anon., 2005). As observed by Magretta (1998), Nelson (2004), and Serwer et al. (2005), the design of the company's value chain delivered substantial cost advantages over its competitors. But gradually, also differenti­ation aspects emerged as part of Dell's strategy, as the company's value chain was able to de­liver highly customised products, simultaneously introducing the latest relevant technology much more quickly than competitors with higher stock and slow, indirect distribution chan­nels (Govindarajan and Lang, 2002) - a promising differentiator in industries with massive technological obsolescence.

Corporate Level Strategy

In managing an optimal set of businesses, Dell's strength is rooted in a wide range of products and services, along with their associated cross-selling opportunities (Datamonitor, 2006). Dell's distribution and logistics business model provides the basis for multi-business synergies within its product portfolio: originally developed for Personal Computers, the com­pany gradually expanded and adapted its innovative business model to sell servers, printers, peripherals, and storage equipment (Mockler, 2003). Similarly, Frigo (2003) states that Dell's strategic competencies are highly synchronised, thereby aligning strategic activities with fin­ancial value. Kraemer and Dedrick (n. d.) illustrate Dell's balanced approach of centralising certain strategic decisions and functions such as global sourcing and product development, while input from the regions provides the basis for local market responsiveness. In terms of its value chain, Dell utilises a strategy which decentralises primary activities, but centralises sup­port activities.

Dell rarely acquires other corporations, and if so, it is certainly not for the sake of sheer growth. In these cases, the company rather aims to strategically streamline and enhance its portfolio of products, services, and customer segments: for instance, Dell's acquisition of Ali- enware targets the segment of gaming and media content consumers, and through buying ACS in November 2006, Dell engages in sophisticated services such as design and installation of big computer systems (Dell Inc., 2006; anon., 2006).


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