DELL CASE STUDY
SUBMITTED TO: SUBMITTED BY:
Mr. Supratik Ghatak RAMINDER PAL SINGH
12030141033

INTRODUCTION
Dell was founded in 1984 by Michael Dell, the computer
industry's longest-tenured chief executive officer, on a simple
concept: that by selling computer systems directly to
customers, Dell could best understand their needs and
efficiently provide the most effective computing solutions to
meet those needs. This direct business model eliminates
retailers that add unnecessary time and cost, or can diminish
Dell's understanding of customer expectations. The direct
model allows the company to build every system to order and
offer customers powerful, richly-configured systems at
competitive prices. Dell also introduces the latest relevant
technology much more quickly than companies with slow-
moving, indirect distribution channels, turning over inventory
every three days on average.

HISTORY OF DELL
• Dell grew through the 1980s and 1990s to
become at one stage the largest seller of PCs and
servers
• In 1992 , Dell entered into the Fortune 500 list
• In 1996 , Dell began selling computers via its web
site(Dell.com), generating $1 million in sales per
day just six months after site is live.
• In 1999 , Dell overtook Compaq to become the
largest seller of personal computers in US
• In 2006 , Dell was 25th in Fortune 500 list

COMPETITION IN PC INDUSTRY
• The PC industry is driven by rapid technological
improvements in components, particularly
microprocessors, other semiconductors, and
storage devices
• Two factors come into play in determining the
ability of PC companies to manage inventory and
introduce new products.
• The traditional distribution system of the PC
industry is an indirect model often referred to as
“the channel”

DELL BUSINESS MODEL

DELL BUSINESS MODEL
• Dell operated as a pioneer in the “configure to order”
approach to manufacturing - delivering individual PC
configured to customer specifications
• To minimize the delay between purchase and delivery,
Dell has a general policy of manufacturing its products
close to its customers.
• This also allows for implementing a just-in-time (JIT)
manufacturing approach, which minimizes inventory
costs
• Low inventory is another signature of the Dell business
model - a critical consideration in an industry where
components depreciate very rapidly.

Comparison b/w Compaq and Dell
sales model

DELL’s value web model
Component supplier
- The high-tech components, such as
microprocessors and software are
provided by firms as Intel and Microsoft,
they rely on big players.
- The low-tech components are provided
by small multiple players who compete on
prices and availability
Original Equipment Manufacturer (OEM)
The OEMs traditionally would receive all
the parts from their suppliers, assemble
the computers in their production lines
and ship them over to their distributors,
or Corporate resellers.

DELL’s value web model
Distributors
- They generally supply to corporate
resellers and other distributors
- They carry large quantities of different
products to increase their leverage when
dealing with their customers
- They also provide specific software,
peripherals, furniture,as well as service
- For example: Ingram Micro, Tech Data,
Computer 2000, and Santech.
Corporate resellers / System integrators
-The corporate resellers or system
integrators buy systems directly from
manufacturers and install these systems
at their corporate clients
- These are firms whose main purpose is
to provide customization to their clients

Benefits by implementing this model
• DELL
- Cash :Dell maintains a negative cash conversion cycle, that means the
payment receive for the product before it has to pay for the material
- Cost :Dell´s direct sales and build-to-order model has achieved superior
performance in the PC industry in terms of inventory turnover, reduced
overhead, cash conversion, and return on investment. Bypassing the
reseller channel that causes further cost reduction to the company
- CRM :Direct customer relationship is the key to Dell´s business model,
and provides distinct advantages over the indirect sales model
-Demand forecast: Dell has additional advantages over PC vendors who
must try to forecast demand and ship products based on those forecasts
• CUSTOMERS
- Tailored offerings from Dell in terms of add-on products and services
- Very customizable systems at an affordable rate, since Dell
manufacturing builds specifically for each customer

Customer Driven Innovation at Dell
• Dell has continued to provide distinctiveness to the industry, giving new
products, pioneering critical developments and innovations in home, small
business and enterprise computing.
• Dell’s R&D efforts now extend to all over other industries, driven by some
of the industry’s leading product designers and engineers.
• The focus point of Dell’s innovation approach remains an unwavering
commitment to delivering new and better solutions that directly address
customer needs.
• Dell start their innovation process with asking their customers, “What
would you really want this thing to do? Is there a different way to
accomplish that?” Then they meet with their suppliers and ask, “Can we
do this in a different way?”

Customer Driven Innovation at Dell
They learn from the feedback from customers and suppliers.
• Listen
• Dell understands the necessity directly through tens of thousands of
customer interactions, organized events, social media venues such as
communities and customer panels.
• Impact
• Many innovations commence in-house, led by a global team of top
engineers, product designers and technical experts. Others begin as a
team effort with Dell’s strategic partners.
• The mission is to deliver innovative and cost-effective solutions that
meet today’s real-life customer challenges and work seamlessly in
existing environments and with other products.
• Solve
• Dell is uniquely positioned to impact industry trends. We maintain
strong internal development capabilities. We associate, rather than
compete, with top industry technology suppliers and original
development manufacturers.

Dell’s Latest Experiment
• To reach the customer through social media eg. Twitter , facebook , linked in etc.