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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Company Report

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
PRESENTED BY
: DEEPA
: KADAMBARI
: ASHA
: VISHAL

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Mission & Strategy Statement
• Mission Statement:
“To provide customers with superb value, high quality,
relevant technology, customized systems, superior
service and support, and products and services that
are easy to purchase and use.”
• Strategy Statement:
“To do business with its consumers one-on-one,
through the phone or internet.”

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Timeline
1980 Purchased first computer and takes it apart
1983 Wanted to beat IBM, Sells upgraded PCs out of UT
Dorm Room
1984 Registers Dell Computer Corporation DBA PC’s Limited
Sells Direct to end users
1986 12 mhz 285 based system. 30 day money back guarantee
1987 International subsidiary in UK
1988 Initial IPO $30 million
1989 Accumulates excess inventory
1990 First to sell through retail CompUSA, Best Buy, WalMart
1991 Converts entire line to 486… high technology priority
1993 $2 Billion in sales

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Timeline
1994 Launches Latitude Notebook Setting new records on
battery life.
1996 Introduces Power Edge servers for small and medium
server markets
3 Solidifies internet market. $12 million per day from
customers. Sets up supplier network.
4 Revenue hit a record $25 billion.
5 Sales topped $30 billion.
6 Annual sales passed $40 billion.
7 Dell launched XPS, a line of high-performance.
8 Annual sales hit a record $55.91 billion.
2006 Dell shares fell 4.7 per cent.

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Company Overview
• Headquartered in Key Statistics
Round Rock, Texas Company Type Public (NASDAQ: DELL)
Fiscal Year-End January
• Founded in 1984 By 2005 Sales (mil.) $49,205
1-Year Sales Growth 15.8%
Michael Dell 2005 Net Income (mil.) $3,043
1-Year Net Income Growth 13.1%
• Sells Wintel Days supply in inventory 3
systems via the
direct model Source of all data is
the Dell 2005 10-K
filing unless otherwise
noted.

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell’s Strategy – Direct From Dell
• Sales Of Computer Systems Directly
To Consumers
• Elimination of Retail Middlemen
• Computer System Construction
Based Upon Individual Customer
Needs
• Quick Introduction of
State Of The Art
Technology
• Elimination Of Heavy
Inventory Investment

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell’s Strategy – Direct From Dell
Effect On Working Capital
Cash Conversion Cycle
0
• Reduction Of 2000 2001 2002 2003 2004 2005
-10
Inventory -20
-30
-40
2004 2003 2002 2001 2000
2005
Inventories 28-Jan-05 30-Jan-04 Jan-31-03 Feb-1-02 Feb-2-01 Jan-28-00
32
Days of sales outstanding 31 28 29 32 34
4
Days of supply in inventory 3 3 4 5 6
73
Days in accounts payable 70 68 69 58 58
-37
Cash conversion cycle -36 -37 -36 -21 -18

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell Strategy for INDIA
• Dell will understand the indian market and judge the
sales performance before they take a decision on
manufacturing unit.
• India is now the 13th market for DELL.
• The $28.5-billion Dell Computer Corporation, a
computer systems company and provider of Internet
infrastructure, will now sell its products and support
operations in India.
• In both software and hardware as well we have
outsourcing from India as well.

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Continue………
• Dell will initially deal directly with customers in major
cities and set up a call centre at Bangalore to cater to
the Indian market.quot;
• Dell will concentrate on selling its products to the
business houses.
• Big MNCs and business houses are our prime market.
• Customers could place their orders either through the
company Web site or dial a toll free number, he said
adding, this would help it to cut down distribution cost
by 6 to 8%

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Continue………
• In the last few years, the company had sold about
60,000 units in India, but expects a triple digit growth
over the next two years
• Dell plans to strengthen its service level and coverage
by adding more service partners to the current
arrangement with Tata Infotech.
• Dell is planning for local sourcing and merging of
components, and working to virtually integrate the
logistics provider into world-class supply-chain
management system to enhance customer service
quality.

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Continue………
• Dell is in the process of tying up with various local
companies for this purpose.
• the products will be competitively priced as the price of
components have been going down drastically.
• Dell believes that the tariff structure, which is a
problem right now, will go down eventually and the
products will become much cheaper.

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Target Market
DELL have always been suppliers for
businesses and that is the way it is going to
be in India. DELL is No.1 in the businesses
market, while number four in the consumer
market.
By Michael Dell

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Company Value
Dell’s Strategy – Direct From Dell
Effect On Working Capital
Selected Working Capital
• Reduction of $5,000
Accounts $4,000
$3,000
Receivable/Extension $2,000
of Accounts Payable $1,000
$0
2001 2002 2003 2004 2005
2004 2003 2002 2001
2005
Crediting
(in millions of $) 28-Jan-05 30-Jan-04 Jan-31-03 Feb-1-02 Feb-2-01
$ 4,414
Accounts Receivable $ 3,635 $ 2,657 $ 2,269 $ 2,424
8895
Accounts Payable 7316 5989 5075 4286
-78
Allowance for doubtful accounts -84 -71 -68 -69

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Problems & Issues of Case
Stagnant Sale of Computers
Stagnancy in Revenue
In the further course of presentation we will try to explain
what dell did to overcome this issues

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Company Value
Intangible Value of Dell
Market Capitalization
Breakdown
Assets
$23,215
R&D % of Net
24%
Expenditures Revenue
(in millions of $)
Dell $463 < 1%
Intangiable
$73,915
Apple 489 6%
76%
HP 878 4%
Source: Dell, Apple, and HP – 10-K filings

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Storage
POS
Server
Software
Desktop
Notebooks
Peripherals

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Performance

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Performance
Net Revenue
(in millions of $)
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Performance
Industry Analysis
Net Revenue Growth
40%
35%
30%
25%
20%
15%
10%
5%
0%
1997 1998 1999 2000 2001 2002 2003 2004 2005
-5%

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Industry Analysis
What drives this
industry growth?
• Technology
• Internet
• Applications
• Pricing

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Industry Analysis
Dell’s Market Segmentation
Revenue By Market Revenue By Product
Asia Pacific-
Japan
11% Enterprise
21%
Europe US - Desktops
22% Business 50%
52%
Notebooks
29%
US -
Consumer
15%

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Competitors

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Competitors
Key Numbers Dell HP IBM
$49,205 $79,905 $ 96,293
Annual Sales ($ mil.)
$97,647 $58,026 $149,402
Market Cap ($ mil.)
Profitability Dell HP IBM Industry Market
19.0% 28.5% 42.5% 19.9% 48.4%
Gross Profit Margin
6.2% 4.3% 8.8% 4.5% 6.2%
Net Profit Margin
46.9% 9.3% 28.3% 23.3% 11.7%
Return on Equity
13.1% 4.6% 7.7% 8.3% 2.0%
Return on Assets
43.5% 8.3% 18.9% 21.8% 5.7%
Return on Invested Capital
Source: Hoovers

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Competitor environment Evolving
2006
2000

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell services business continues to rapidly expand

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Significant growth opportunity for Dell

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
PC SUPPLY CHAINS
Customer Customer
PULL
Virtual Integration
Distribution
Channels
PULL
Dell
PUSH
Manufacturer
PUSH
Suppliers
Suppliers
Typical PC Supply Chain Dell Supply Chain
(Compaq, HP, IBM, etc.)

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Supply Chain Management
Customers
Hub
Factory

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Growth “A big jump”

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Pricing Matrix
High Medium Low
For Loyal
High Customers
Medium New
Quality
Medium Customers Market
Retailers
Low
Price

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Dell Product Mix
Owned Products Third Party Products
Desktops Switches
Notebooks Electronic software & Acc.
Servers Storage
Printers

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Product Line
Desktop Notebooks Servers
Inspiron Notebooks Poweredge Tower
 Dimension Desktop
Latitude Notebooks servers
 Opti-plen Desktop
Dell Precision Mobile Poweredge Pack
 Dell precision Desktop Notebooks Optimize Servers
 Open source Desktop Open source Poweredge Blade
Notebooks Servers
Storages Switches Electronic Software & Acc.
Power vault direct Power over ethernet Desktop acc.
attached storage Handheld Table PC’s
switches
Power vault network Managed switches Notebook acc.
storage Web managed Notebook Power
Power vault tape MP3 player
switches
Monitor etc.
backup storage
Enterprise class
storage

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
DELL Customers

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Reasons For Stagnant
Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
sale
Ishikawa Diagram
???
Competitors Tech
Factor
Logistics
No Face to
Face Comm.
Late Entrant
Direct Support
Tax
Pricing Factor

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Study & Survey
Survey of Companies:
• HDFC Std. Life Ins.
• BPL
• Godrej Lawkim
• Pantaloons

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
DELL Questionnaire
1)Which Company’s Server You use ?
Dell Hp IBM Lenovo Others Plz Specify
2)Which Kind of Server you use?
3)What is the purpose of not Purchasing DELL products ?
4)Who are the support partners of DELL who looks after the service in India for you ?
5) Which Company Peripherals do you use ?
6)What are the applications for Dell products?
7) Do you feel DELL is successful in sale of computer and its peripherals in India ?
8) In future do you think DELL would be able to cater to your requirements keeping in mind
the current scenario ?

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Recommendations
• Maintain a moderate market share
growth in the PC industry while sticking
to low price, high quality strategy
• Grow business segment (servers)
• Concentrate on global expansion
• Pursue government contracts
• Expand & grow lucrative printer and
computer peripheral products
• Buy back stock

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
Recommendations
• Analysts are across the board on stock
recommendations
• Dell has met or exceeded its projections for 16
straight quarters
• Slowing growth but not leveling out
• No signs of industry collapse in the near future
• Dell continues to gain market share and HP has
forfeited price competition

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations

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Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations
“Think Simple, Live Simple Life Will be Simple”