3. ABOUT DELL INC.
Founded in Austin, Texas, U.S in November 4th 1984.
Founder: Michael Dell.
Employees: 1,03,300 employees all around the world.
Dell is the third largest PC makers in the world after
HP and Lenovo.
Dell is ranked 41st in the Fortune 500 companies list
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4. ABOUT LENEVO PVT. LTD.
Founded in the year of 1984 by Liu Chuanzhi.
Lenovo was incorporated in Hong Kong in 1988
under its previous name, Legend.
Lenovo is the second largest PC maker in the
world after HP.
In 2005 Lenovo acquire IBM personal computer
business and became a worldwide brand by
sweep ‘Chinese centric image’.
Currently Lenovo markets ‘Thinkpad’ notebooks
and ‘Thinkcenter’ desktops under its brand.
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5. THE PC INDUSTRY OF TODAY
Strangest Industry
Very Price Competitive
Systems and Components sold at low margins
Rapid price fluctuations in the market.
Vendors keep low inventories
Vendors contend with high Bankruptcy Rates 5
6. INDUSTRY PROFITS AT A GLANCE
40%
Notebook average profit margin 2%
Netbook average profit margin 0.6%
30
Operating source: Canalys estimates November 2009.
Margin
20
10
0 Other
0 components Software
Peripherals
100%
Microprocessors Personal Services
computers
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source: Profit Pools: A Fresh Look at Strategy, O.Gadiesh & J.L.
Gilbert, Harvard Business Review, June 1998.
9. STRENGTHS OF DELL’S DIRECT
BUSINESS MODEL
Dell Direct Business Model’s Five Principles :
1. Most Efficient Path to the Customer
2. Single point of Accountability
3. Build – to – order
4. Low Cost Leader
5. Standards Based Technology
Supplier Relationships
Pricing – low inventory cost & low product cost
Customer Relationship Management (CRM)
Increased application of Internet based technologies
Low operating costs
Customer Delight – the end result 9
10. WEAKNESS OF DELL’S DIRECT BUSINESS
MODEL
Not a computer manufacturer, but a maker
Lack of solid dealer / retailer relationships
‘Simple buying’ not possible since each product is
custom built
No ‘touch and try’ feeling presented to customer
Penetration of low-end market and rural market
Requirement of a Credit Card for online purchase
Customers’ perspective of Salesmanship
High cost to bring in a Dual System Model – a
model having both Direct and Retail Sales
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12. LENOVO’S THREE PHASE PLAN – INNOVATION,
OPERATIONAL EFFICIENCY & CUSTOMER
SATISFACTION
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13. STRENGTHS OF LENOVO’S
IMPORTATION OFFSHORE BUSINESS MODEL
Maintaining close contact with the corporate
customers, while handling all transactions
through wholesalers.
All operational processes of importation and
distributation done by wholesalers.
Cost of maintaining the local operation dropped
when the system came to practice.
Good marketing and distribution strategy
Strategic alliance with suppliers
Quick after-sales responsiveness
Effective Dual Business Model 13
14. WEAKNESS OF LENOVO’S
IMPORTATION OFFSHORE BUSINESS MODEL
Additional step in the sales process
Additional cost theoretically
High delivery time
Poor global perception
Ignoring the potential market
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15. WHAT DELL MUST HAVE . . .
Improved R & D and bring in innovations –
Others’ expenditure 4-5 % of Nett Revenue
Partnership with microprocessors companies like
AMD who offer a varied technology
Strategic relations with dealers / suppliers
Give a ‘Touch and Try’ to its customers
Should bring in a ‘Simple Buying’ experience
Rural & Low-end market-share
Flexibility to ‘Adapt and then Adopt’
A Dual Business Model
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16. Physical presence in potential and existing
markets
An inorganic growth strategy
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17. CONCLUSION
We think that by implementing the
suggestion made above, the company Dell Inc.
can overtake its competitors to become No.1 in
the market. The thing the company need the
most is the flexibility to ‘Adapt and then Adopt’
as and when the market demands.
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