1. Dell Case Study: Financial Review
Questions and Answers
Question 1: List ways that Dell conduct research on its customers to continually
improve products and services.
Customer Advisory Panel
Dell.com Customer Spotlights
Online Surveys
Telephone sessions
Question 2: What are the features of Dell's research?
CAP conduct open discussion sessions for everyone to tell and hear about products and
services. Social media was also carried out during session for people to give input online.
Dell support provides information regarding trouble shooting guides. Customers can access
this information via popular topics, content type or technical support topics.
Question 3: What is Dell's unique selling point?
Customization of product
Direct sale o customer
Various mode of purchase available
Special discounts available
Question 4: What are strategies Dell uses to generate revenue?
Commercial customer demand for Dell enterprise solutions – including servers and
networking systems, storage and services – increased significantly worldwide. Dell’s
commercial business continues to benefit from improved demand across all products and
services, and in all geographies as Dell expands its enterprise solutions portfolio. Recently,
Dell acquired Scalent, developer of virtual infrastructure management technology, and
Ocarina Networks, a leading developer of storage optimization technology. The company
also announced an agreement to acquire 3PAR, the leading global provider of utility storage
for cloud computing. These moves illustrate Dell’s commitment to build its capabilities for
open and affordable enterprise solutions.
Server and networking revenues increased 35 percent with rapid growth in blades.
Storage revenue improved 13 percent led by EqualLogic storage products, which grew 63
percent as it gains wider adoption among customers.
Services revenue increased 57 percent to $1.9 billion with the inclusion of Perot Systems.
2. Dell introduced new Business-Ready Configurations of servers, storage, networking and
virtualization technologies to help customers more quickly deploy open, affordable, fully-integrated,
virtualization-ready data center solutions.
The corporate refresh cycle is continuing and led strong growth in Dell’s commercial client
business. Revenue in total mobility and desktop products grew 21 and 17 percent,
respectively, driven by particular strength in large enterprise and small and medium
businesses. In the quarter, Dell announced new Latitude E-Family laptops and features, and a
portfolio of Flexible Computing solutions and services to extend the reach of virtual
desktops.
Question 5: What does return on investment mean in relation to Dell's marketing
campaign and how is it measured.
The basic Return on Investment can be found by dividing a company's net profit (also called
net earnings) by the total investment (total debt plus total equity), and multiplying by 100 to
arrive at a percentage:
Net profit / total investment × 100 = Return on Investment
So if net profit is $30 and the total invested is $250, the Return on Investment is:
30 / 250 = 0.12 × 100 = 12%
Investors can use an alternative Return-on-Investment formula, which is: net income
divided by common stock and preference stock equity, plus long-term debt. Meanwhile, it is
vital to understand exactly what a return on investment measures, for example assets,
equity, or sales. Without this understanding, comparisons may be misleading. A search for
"return on investment" on the Internet, for example, harvests sites detailing staff training,
e-commerce, advertising and promotions. Be sure to establish whether the net profit figure
used is before or after provision for taxes. This is important for making accurate
comparisons of Return on Investment.
Dell then measures the effectiveness of each campaign, comparing and ranking campaigns,
learning from best results, thus keeping advertising fresh and most importantly customer
responsive. In addition, the effectiveness of different campaigns can easily be compared.
Question 6: Identify three external threats and two internal weaknesses that Dell could
face.
Threats
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
3. 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.
Weakness
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
Question 7: What types of information can a business gather from its internal systems
about it customers to assist in the planning process?
Customer inquiries
Customer feedbacks
Public surveys
Question 8: List four ways environment scanning can be conducted to look for
information.
Unconditional viewing
Conditional Viewing
Enacting
Searching
Question 9: Describe qualitative and quantitative research and provide three ways
research process.
Qualitative research is a method of inquiry employed in many different academic
disciplines, traditionally in the social sciences, but also in market research and further
4. contexts. Qualitative researchers aim to gather an in-depth understanding of human behavior
and the reasons that govern such behavior.
Quantitative research refers to the systematic empirical investigation of social phenomena
via statistical, mathematical or numerical data or computational techniques. The objective of
quantitative research is to develop and employ mathematical models, theories and/or
hypotheses pertaining to phenomena.
Ways to conduct search
Qualitative research
Observation
Interviews
Data collection
Quantitative research
Surveys
Experimental
Company records
Question 10: How could the Australian Bureau of Statistics assist with the research
process.
The Australian Bureau of Statistics assists and encourages informed decision-making,
research and discussion within governments and the community, by providing a high quality,
objective and responsive national statistical service. If you can't find the information you
need from the ABS website, or require further statistical information you can contact them
via the ABS' National Information and Referral Service (NIRS) which is a phone information
and referral service, or Client Services. ABS trained consultants can work with you to satisfy
your statistical information needs.
Question 11: What is a business opportunity? Provide two examples.
Business opportunity is the option available to you when it comes to successfully applying
your business ideas in the market. Creating and developing new and innovative business
ideas provides you with the opportunity to fill gaps in the market and offer differentiated
products and services to consumers
1. E-Learning: Learning electronically through the Internet, represents a continued strong
business opportunity for development of technology and learning content. The opportunity
for small business is to specialize in delivering highly focused content. For example, take
copywriting consultant, Joe Vitale, who earned $68,000 by offering an email-based 5-week
copywriting course.
2. On-Site Computer Service: With the proliferation of computers in homes and small
business, combined with increasing complexity, the market for computer services has grown
to over 300 billion with no national chain. Business opportunities exist in serving business
and consumer clients on-site with their repair, upgrade, and networking needs. No need to be
5. a certified technician, but hire certified techs to provide the service or check out franchise
opportunities like Geeks On Call, who has grown to over 340 locations from 70 in 2002.
Question 12: What is a business threat? Provide one example.
Business threats are elements in the environment that could cause trouble for the business.
If a company is aware of possible external threats, it can plan to counteract them. By
generating new ideas, IKEA can use a particular strength to defend against threats in the
market. One of threats to IKEA may stem from social trends such as the slowdown in first
time buyers entering the housing market. This is a core market segment for IKEA products
Question 13: What does the Pareto Principle mean? How could your business use the
Pareto Principle to grow market share of a product?
Observation that where a large number of factors or agents contribute to a result, the majority
(about 80 percent) of the result is due to the contributions of a minority (about 20 percent) of
factors or agents. Investigations suggest, for example, that some 80 percent of the sales of a
firm are generated by 20 percent of its customers, 80 percent of the inventory value is tied up
in 20 percent of the items, 80 percent of problems are caused by 20 percent of reasons. It is
however a heuristics principle, and has not been proved as a scientific law. Named after its
proposer Vilfredo Federico Damaso Pareto (1848-1923), French-born Italian engineer and a
founder of welfare economics. Also called 80/20 principle, Pareto's Law, or principle of
imbalance.
It's often easier and more effective to sell more to existing customers than it is to acquire new
ones. Once you understand why your existing customers buy from you, you can examine
ways of getting them to buy more or more frequently.
The Pareto principle - often referred to as the 80/20 rule - says that 80 per cent of your
success in any given field is often due to 20 per cent of your effort.
You can use the idea as a starting point to analyse how you can sell more to existing
customers. For example, if a small number of your products and services account for most of
your profit, can you sell more of the less profitable products to your customers? Or if your
higher-margin products or services are only being sold to a small percentage of your
customers, how can you raise that percentage?
Encourage more frequent buying
You can increase market share by getting customers to buy more frequently.
If your research shows customers buy at a particular time, make contact with them just
beforehand. For example, if you know that a business buys its stock from you at the end of
each month, a courtesy phone call, email or letter in the middle of the month can be effective.
You can also add value to your products and services to ensure repeat business. For example,
is there anything you can add to a service at little cost that is useful to your customers such as
a free overall 'tune up' every time they send their car or computer in for repair?
6. Get customers to spend more
Where appropriate, encourage customers to buy a premium product or service that better
meets their needs and provides a superior return for you. This is known as 'trading up'.
You could also offer purchase incentives and price promotions on items that they usually buy
from competitors, such as 'buy one get one free' or 'buy for ten months and get two free'
Question 14: True or False?
a) As a result of increased competition, the lifespan of business opportunities in the
marketplace is increasing-False
b) The success of a new opportunity is always measured in terms of profit-False
c) It is important that any new product or service is assessed at each stage of development
process and should not proceed to the next stage until it has met the specified requirement-
True
d) if a number of new product or service ideas are developed, the ideas should be ranked
against criteria to determine the best idea.-True
e) A marketing information system is available as a software package.-True
Question 15: Describe how Ansoff's Matrix is used to develop new opportunities with
range of strategies.
Diversification
Diversification is the name given to the growth strategy where a business markets new
products in new markets.
This is an inherently more risk strategy because the business is moving into markets in which
it has little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear idea about
what it expects to gain from the strategy and an honest assessment of the risks. However, for
the right balance between risk and reward, a marketing strategy of diversification can be
highly rewarding.
Question 16: Break-even Analysis: Calculate the break-even point for ice cream sales.
Ice cream are bought for $2.00 each and sold for $2.50. The business has fixed costs of
$400 per week. How many ice creams must be sold each week and therefore each day to
break even
Break even point= fixed cost/(selling price-variable cost)
=400/(2.50-2.00)
