final dell project

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PROJECT ON STRATEGIC MANAGEMENT

(Topic): THE STRATEGIC MANAGEMENT AT DELL

A PROJECT SUBMITTED

AS A PART OF INTERNAL EVALUATION OF

COURSE: STRATEGIC MANAGEMENT

PROGRAMME: M. COM, UNIVERSITY OF MUMBAI

FIRST SEMESTER 2013-14

SUBMITTED BY

(Name) Venu Gudla

ROLL NO. 12

UNDER THE GUIDANCE OF

MR. RAMRAJ T. NADAR

GURU NANAK COLLEGE OF ARTS, SCIENCE AND COMMERCE

G. T. B. NAGAR, MUMBAI - 400 037

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Declaration

I hereby declare that the work embodied in this project entitled THESTRATEGIC MANAGEMENT AT DELL forms my own original contribution

which has been carried out under the guidance of Mr.RAMRAJ T. NADAR at

Guru Nanak College of Arts, Science and Commerce, G.T.B. Nagar, Mumbai

400037. This work has not been submitted for any other degree of this or any

other University. Whenever reference has been made to the work of others, it has

been clearly indicated and included in the Bibliography.

Signature of Student

(Name) Venu Gudla

Certified by

Signature of Internal Guide Signature of External Examiner

College seal Signature of Principa

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Acknowledgement

I would like to thank a lot of people without whom this project would not have

been complete. First prof.RAMRAJ T.NADAR he was of utmost help in guiding

me structures this project. She helped me throughout and was always present to

help me whenever I had a doubt.

A research can never be over without access to a good library and in this case I was

blessed as our college library, is very well stocked with books. And the lending

policy made life a lot easier. And not to forget the unconditional support provided

by my parents and friends.

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INDEX

CHAPTER NO. PARTICULARS PAGE NO

1 ABOUT DELL 6

2 KEY TOWARDS STRATEGIC PLANNING 8

3 PEST ANALYSIS 12

4 STRATEGIC MANAGEMENT PROCESS 15

5 SWOT ANALYSIS 22

6 7-S FRAMEWORK OF McKINSEY 24

7 LEVELS OF STRATEGIC MANAGEMENT 27

8 MICHAEL PORTERS MODEL OF

COMPETITIVE ADVANTAGES

29

9 BCG MATRIX MODEL 31

10 GE MATRIX 34

11 GRAND/CORPORATE LEVEL STRATEGY 36

12 SUGGESTIONS 38

13 CONCLUSION 49

14 BIBLOGRAPHY 40

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CHAPTER 1

ABOUT DELL

Founded in 1984 by Michael Dell. No.1 PC provider in the U.S. and No.2worldwide. Based in Round Rock, Texas. Employs more than 82,700 people

worldwide. Grew during the 1980s and 1990s to become a brand. Direct Business

Model is the foundation for Dells business. Dell maintains a consistent focus on

offering the best value and customer. Dell is a trusted technology innovator with a

diversified, comprehensive IT portfolio. Dell is a global company committed to its

customers and employees

History :

In 1996, Dell began selling computers via its web site

Introduced the 316LT, the companys first notebook

computer in 1989

Joined the top-five computer system makers worldwide in 1993

Earning appr. $1 million per day 7 months after the launch of dell.com in 1996

Introduced E-Support, an online tool to provide technical support to customers

1999 1999, Dell overtook Compaq to become the largest seller of personal computers

in the US

2007, Dell set a goal of becoming the greenest technology company on Earth for

the long term. The company launched a zero-carbon initiative

For the first time, Dell achieves No. 1 ranking in global market share in 2001

2003, name was changed to "Dell Inc."

2006, Dell purchased the computer hardware manufacturer Alienware

January 2007, started a turnaround plan that promises to yield $3 billion in annual

savings over the next three years.

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Recent Developments :

In January 2009, Dell announced that they will withdraw all manufacturing from

Limerick and move it to its new plant in the Polish city of Lodz by January 2010.

Raised their cost-reduction target to $4 billion. Dell also announced that it aimed to become a "onepercent company," giving

away 1 % of pretax profits to education and digital inclusion projects mainly in

emerging markets, by February 2010.

Product line

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CHAPTER 2

KEY TOWARDS STRATEGIC PLANNING

VISION STATEMENTThrough effective and strategic community partnership, dell supports educational

services programs that address the critical and most basic technology access needs

of its neighbours in Dell communities prerequisite to success in digital world.

Dell provides a classic example of how the principles of strategic management

have been used to translate an innovative vision into a successful and sustainable

enterprise. Their vision statement basically tells the way they do their business.

They want to be successful in the digital world for this they rely on latest

technology. Dell provides quality products to cater the needs of the people. In

intend to build good relationship with their customers and suppliers.

MISSION STATEMENT

To provide customers with superb value, high quality, relavent technology,

customized systems, superior service and support and products and services that

are easy to purchase and use.

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VALUES

Their first priority is to be a successful business and that means investing for

growth and balancing short term and long term.

OBJECTIVES

Following are the objectives of Dell Corporation

1. Modify laptop designs according to students preferences.

2. Double laptop sales in student market.

3. Increase revenues by 25% by the end of the second year of launching.

4. Develop a promotional campaign to promote the modified laptops.

5. Increase awareness of the existent agency project objective research strategic

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plan conclusion.

GOALS

Goals are the specific interim or the ultimate time based measurement to be

achieved. While implementing strategies in pursuit of companies objectives. The

goal of the organization are set consistent , achievable and realistic. As per

surveys the present major goal of the organization is to adopt the best technology

and appoint few more personnel that would bring efficiency in the organization.

PROGRAMS

Last but not the least program plays a significant role in maintaining a smooth

track within the organization.Dell has got an implementation plan followed up bythe above strategic plan. The Program of Dell creates opportunities to developreal-world skills in an environment that encourages personal and professionalgrowth and gain exposure. It learns the ins and outs of one of the high-tech

industries in the same sector.

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STRATEGY

To do business with its customers one on one through the phone and internet. In

doing so, Dell will meet its customerss expections of :

Highest quality.

Leading technology.

Competitive pricing

Individual and companys accountability.

Best in class service and support

Flexible customer capacity

Financial stability.

The direct relationship continues throughout the

customer experience

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CHAPTER 3

PEST ANALYSIS

A scan of the external macro-environment in which the firm operates can be

expressed in terms of the following factors:

Political

Economic

Social

Technological

POLITICAL

The political environment in the US has been changing abruptly in the previous

year. Dell being an integralpart of this economy has also been greatly affected by

these changes and has not been able to counter them. Changes in the legislation

and laws of the US govt. have tried to revive the PC business but the reciprocations

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have been less then what was expected. The company has been able to beat the

expectations of Wall street who predicted more dip by posting less losses by utting

costs. The conservatism that exists in the consumer spending has been increasing

which has adversely affected Dells performance. Issues of environment policies

has also affected Dell as Dell came under significant pressure from environmentalgroups across the US to assume responsibility for its old products and this

experience sensitized company officials to the risks and opportunities of state and

federal e-waste regulations and the need to take proactive steps against them.

ECONOMIC

High tarrifs on IT products makes Dell difficult to enter other markets apart from

USA . since most of the population of the world is young and adaptive to change intechnology, dell aimed to manufacture its products which are more user friendly

and can be afforded by young professionals, because purchasing power of working

population saw an increase over the past few decades. Since the economy saw a

change due to the meltdown and recession, dell also had to modify some of its

policies to cope up with the changing scenario.The change in the US economy also

effected Dell with it bring change in its core policies of inventory and credit

management of receivables and inventory conversion days to decrease its operating

cycle and thus reduce cost.

SOCIAL

Increase of younger population and working population have led to the increase of

the use of computers. A technological revolution has been around the corner,

people have become techsavy ,that have resulted in the increase in the demand for

computers .These days people have time constrains and as a result of it they prefer

to buy the product online ,which has given Dell an advantage over others because

of dell.com.

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TECHNOLOGICAL

Tecnological changes are happening at a very fast rate due to which Dell is able to

provide advanced technology products to the customers.As a result of chnologicalchanges Dell has also increased their product line.It is adopting to the echnological

changes as he old technology is becoming obsolete.One of the most important

affets of technological changes that have led to the increase of the demand of Dell

computers is their Direct Business Model.They have excellent ecommerce

capabilities, which can be seen with the success of the dell. The recent chnological

changes can be seen in their recent products like New PowerEdge Servers , New

Enterprise Computing Portfolio, Innovation Aids Recovery, Ultra-Thin Laptop,

Adamo,which will be in the market very soon. Dell could exploit the network-internet,extranet to reach the corners of the world.

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CHAPTER 4

STATEGIC MANAGEMENT PROCESS

Strategic thinking provides the foundation of the strategic management. By

providing an insight into the forces behind the intense competition, by developing

a sustaining competitive advantage based on organization core competency. It can

be broadly divided into three phases:

PHASE 1

Strategic formulation

It is referred as a strategic plan

1. Framing mission objectives:

The first step adopted by Dell Corporation was to frame the mission and

objectives for the organization.

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For example mission: the purpose of the organization is to achieve the honor of

becoming the best consumer friendly company

2. Analysis of the internal environment:

After setting the mission and objectives the next step is to analyses the internal

environment.

E.g.: Dell Corporation needs more qualified manpower, machines adopted by

Dell Corporation should be highly Resultant.

3. Analyze of external environment:

The management conducts the analyses of the external environment.

E.g.: Dell Corporation manufactures product that are hygienic and long lasting.

4.Gap analyses:

Management also conducts gap analyses that is for this purpose themanagement compares and analyses its present performance level and desired

future performance level.

E.g.: Dell Corporation has in acted gap analyses as it compared the last 5yrs.

The performance level with the present level and came with a conclusion that in

future they will surely come up with the new brand launch

5 Framing alternative strategies

The management needs to frame alternative strategies and accomplish the

objectives of the firm.

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6 Choice of strategies:

Dell Corporation already has a highly sophisticated server with alternative

strategies it chooses the best among the various strategies.

Phase 2

Strategic implementation:

The strategies are formulated for each and every functional area.

Once the strategies are formulated the next stage is strategic implementation

Step 1

Formulation of plans, programs and projects

Setting strategies will not guarantee success, so every organisatron also needs to

work laboriously in order to achieve the desired results. Dell Corporation has abroad plan which includes the goals, policies and procedures.

Step 2

Project implementation

The project passes through various stages i.e.

1 Dell Corporation makes it a point that their concept is achievable.

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2 Their plans are organized in such a way that the results are achieved without any

damage or duplications.

3 clean up phase: Dell Corporation follows follow up action of above listed phases.

Step 3

Procedural implementation:

Dell Corporation before implementing any new strategies examine all the

government regulatory framework

E.g. Dell Corporation before dealing with any foreign company needs to be awareof all the export and import charges.

Step 4

Resources and allocation:

It deals with the arrangements and commitment of physical financial and hr, Dell

Corporation allocates all its resources in such a way that there is no duplication ofwork and also aims at avoiding wastage

e.g. it sets different goals for the delegates

Step 5

Structural implementation

There is a need for an organizational structure for implement strategies. Dell

Corporation follows the divisional structure and therefore the implementation

strategy moves on division wise.

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Step 6

Functional implementation

Dell Corporation as an organization implements all its functional plans and its

policies .

Step 7

Behavioral implementation

After implementing the strategy an organization studies the behavior of the

strategy.

E.g. Dell Corporation studies the impact of its strategies by keeping a small

conference meeting with all its divisional heads

Phase 3

Strategic evaluation and control:

It is the phase in which the manager tries to assume that the strategic choice is

properly implemented and is meeting the objective of the organization

Step 1

Setting standards

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Dell Corporation in order to initiate control is done by setting standards and

making them aware of the tolerance limit they should keep.

Step 2

Measurement of performance

The next step is to measure the actual performance with the planned one.

E.g. the organizational heads compares the set targets with the achieved one.

Step 4

Finding out deviation

At this step the organization pin points the deviation or blockages if any

E.g. while implementing a strategy for a new branded product Dell Corporation

faced a difficulty as the packaging of that product was done with the help of lowquality plastic

Step 5

Analyzing deviations

Here the top executives are the cause of deviations

E.g. Dell Corporation could not procure better spare parts from the company it

used to buy earlier.

The emotional bonding was the main cause for its dependence of that company

providing low quality spare parts.

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Step 6

Taking corrective measures

The top level management of Dell Corporation will analyze the blockage and give

an alternative

E.g. in order to remove the blockage Dell Corporation may replace the low quality

spare parts and find out other good quality plastic at the low price.

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CHAPTER 5

SWOT ANALYSIS

STRENGTH

No inventory buildup

Acquition with Equalogic

Quality product and service

Whole world focus

Brand name

Customer service

Cost efficiency

Direct sell model=customization + fast+ delivery + low cost

Winning culture

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latest technology

First mover advantage

e-commerce capabilities: www.dell.com

Buid to order manufacturing process

Product design+after sales service

Expert Supply Chain Management

WEAKNESS

No proprietary technology

High dependency on component suppliers

occasional product recall.Eg.In 2004 Dell had to recall 4.4 million laptop

adapters

because of a fear that they could overheat, causing electric shocks or fires.

unable to switch supply dues to the lack of large suppliers in the World

high attrition rates among visitors to Dell.com

no physical presence ofservice centres

slow in introducing fancy features

Lack of innovation

OPPORTUNITIES

Network-internet, intranet and extranet

Developing nations market

Low costs and growing advanced technology

Growth in business, education and government markets

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Global wide access to customers and market.

Expansion

Increasing income of consumers

Globalisation

THREATS

Competition

Currency fluctuation in

countries outside the US

Political instability

Tariff trade barriers

Recession

Decling sales

CHAPTER 6

7-S FRAMEWORK OF McKINSEY

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The 7-s framework of McKinsey is a Value Based Management (VBM) model that

describes how one can holistic and effectively organise a compan. Together these

determine the way in which a corporation operates.

Dell Corporation has become a leading company as it has a very strong product

marketing focus it has certainly adopted the basic 4ps of marketing ie

price,product, place,and promotion mix are the 4 strong weapons with the help of

which Dell Corporation has overcome all the consequences it has faced during its

inception.

SHARED VALUE

The interconnecting center of McKinseys model is: Shared Values. What does the

organisation stands for and what it believes in. Central beleifs and attitudes.As the

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hand works in the human body the shared values are the core values of the

organization as it connects soft skills of the Dell Corporation.

STRATEGY

Plans for the allocation of a firms scarce resource, over time, to reach identified

goals. Environment, Competition, Customers. As Dell has already adopted the

brand name Dell it has reached its saturation stage now in order to sustain for a

longer term they need to renovate or launch new products under the same brand

name which they are doing.

STRUCTURE

The way the organisations units relate to each other : centralised, function

divisions (top-down); decentralised(the trend in larger organisation); matrix,

network, holding,etc. Chief company official all the essentials departments in order

to acquire efficiency and effectiveness. This assits the organization to achieve the

desirable goals. the company saw to if they have acquired expertise knowledge to

develop faith and trust of the consumers.

SYSTEM

The procedures, processess and routine that characterise how important work is to

be done: financial systems; hiring, promoting and performance appraisal systems;

information system. The Dell Corporation has followed formal as well as informal

procedure that governs the day to day activity. The mis system of Dell Corporation

is so strong that they can analyze consumer response by a easy going system

whereas due to its dignified image it has acquired intermediaries confidence within

them. the agent of the organization conduct various market surveys with the help

of the retail system, call centre system,etc. such a informal system avails the

organization to have crystal clear information in the to progress.

STAFF

Numbers and types of personnel within the organisation. Dell has also appointed

people from below poverty line session so that they can also their livelihood on the

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same side,in oder to motivate their staff they provide various financial as well as

non financial incentives.

This will make their employees to work in more enthusiasm and intrest.

STYLE

Cultural style of the organisation and how key managers behave in achieving the

organisations goals.ie; Management Styles. The top level management of Dell

Corporation has maintained a discipline aatmosphere. They make sure that they

achieve result within a defined time. They supervise their subordinated in such way

that they work in deliberate manner.

SKILL

Distinctive capabilities of personnel or of the organisation as a whole. The

capability of the organization has bound that the consumers with their standardized

quality product. The competency of the organization is to provide its product at an

affordable price and in addition to it,its products are convention able, available in

urban as well as remote areas.

CHAPTER 7

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LEVELS OF STRATEGIC MANAGEMENT

CORPORATE LEVEL

Dells corporate strategy is to provide products directly to customers.To provide

high technology quality products and services through customization.Their strategyalso includes cost cutting where ever possible.

BUSINESS LEVEL

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Dell's business strategy combines its direct customer model with a highly efficient

manufacturing and supply chain management organization and an emphasis on

standardsbased technologies. This strategy enables Dell to provide customers with

superior value; high-quality, relevant technology;customized systems; superior

service and support; and products and services that are easy to buy and use.

FUNCTIONAL LEVEL

Cost leader ship through direct sell model. In direct sales model it sells

directly to Customers ,which has the following characteristics:

Efficient supply chain/distribution system

Just-In-Time inventory system reduces costs

Direct sales by using www.dell.com

Internet increases good relations with consumers & suppliers

Impressive Supply Chain Management

Strong strategic alliances with other companies

Direct Business Model = Customisation+ Customer service

OPERATIONAL LEVEL

Dell has built one, global, end-to-end operational chain from customer to supplier

and back again that sets it apart from all others in terms of cash flow and

responsiveness.

In short,the company is increasingly leveraging these new conditions to reinvent

their cost structures, set new industry performance standards, and create

unmatched customer experiences in their business strategies.

Dell believe that Changing the game on competitors, sometimes permanently, is

the outcome of a winning operations management strategy.

CHAPTER 8

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MICHAEL PORTERS MODEL OF COMPETITIVE

ADVANTAGES

Threat of New Entrants: MODERATE

The entry of new comers is quite difficult because of the entry barriers that

are caused by:

Buyer loyalty

Brand name

Low price

Award winning customer service

Customisation

Decreasing profitability shows that there is a threat of new entrants.HP

overtook dell few yrs back

Rivalry: HIGH

Price War

Decreasing profitability

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Low differentiation

However, in the midst of sever competition, Dell can still gain market

share from other competitors. That proves Dells business strategies

have been successful.

Threat of Substitutes: LOW

Strong presence of PCs throughout society

One computer for every three people in the U.S.

Customer service

Direct Business Model

However, high price, and lack of software support prevent people from

switching to Apple system.

Bargaining Power of Buyer: High

Highly price sensitive

The cost leader has high market share which leads to high bargaining

power relative to its suppliers

Reliability and customer service become important factors.

Dells products are very reliable and customer service is outstanding.

These two factors help Dell to create certain brand royalty. But thats

given the fact that the Company set the prices very low. If the prices

are raised too high, customers will not hesitate to switch.

CHAPTER 9

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BCG MATRIX MODEL

No strategic management or marketing text appears to be complete without the

inclusion of the Boston Consulting Group (BCG) growth-share matrix. The BCG

Growth-Share Matrix is based on two dimensional variables: relative market share

and market growth. They often are pointers to healthiness of a business (Kotler

2003; McDonald 2003). In other words, products with greater market share or

within a fast growing market are expected to wield relatively greater profit

margins. The reverse is also true. Lets look at the following components of the

model:

Market Growth

Market growth axis, correlates with the product life cycle paradigm, and predicates

the cash requirement a product needs relative to the growth of that market. A fast

growing market is generally considered attractive, and pulls a lot of organisations

resources in an effort to increase gains. A case in point is the technological market

widely consider by experts as a fast growing market, and tends to attract a lot of

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competition. Therefore, a product life cycle and its associated market play a key

role in decision-making.

CASH COWS

These products are said to have high profitability, and require low investment for

the fact that they are market leaders in a low-growth market. This viewpoint is

captured by the founders themselves thus:

The cash cows fund their own growth. They pay the corporate dividend. They pay

the corporate overhead. They pay the corporate interest charges. They supply the

funds for R&D. They supply the investment resource for other products. They

justify the debt capacity for the whole company. Protect them (Henderson 1976).

According to experts (Drummond & Ensor 2004; Kotler 2003; McDonald 2003),

surplus cash from cash cow products should be channelled into Stars and

Questions in order to create the future Cash Cows.

STARS

Stars are leaders in high growth markets. They tend to/should generate large

amounts of cash but also use a lot of cash because of growth market conditions.Dell computers are placed in this stage which possess a large share in the rapidly

growing market.

QUESTION MARKS

Question Marks have not achieved a dominant market position, and hence do not

generate much cash. They tend to use a lot of cash because of growth market

conditions. ConsiderHewlett-Packards small share of the digital camera market,behind industry leader Canons 21% (Canon 2006). However, this is a rapidly

growing market.

Eg. Dell Mobiles are newly introduced in the market and thus possess low market

share in a growing Market.

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DOGS

Dogs often have little future and are big cash drainers on the company as they

generate very little cash by virtue of their low market share in a highly low growth

market.

Thus to conclude with dogs these are the products that should be divested because it is these are

of no good for the company and has become a kind of liability for Dell Computers.

CHAPTER 10

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GE MATRIX

The 9 cells of ge matrix are grouped on the basis of low to high industryattractiveness and week to strong business strength and competitive position.

There are 3 zones indicating 3 different combinations.

1 GO AHEAD

Under these phase the signal is to proceed and take decisions such as Dell hasbecome universally acceptable and now it should go ahead and take up more

marketing development and expansion .

2 wait and watch

These is the 2nd zone of ge matrix, this indicates hold and maintain current strategy.

3STOP

Coming to the 3rd zone it gives signal to stop under the product of Dell Corporation

Thus to conclude with ge matrix it allows the user to select whatever criteria they

feel are more appropriate to their business situations.

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Dell Corporation possess highest attraction through its highly innovative and

technical products of mobile and computers and stands first in the Ranking of

Revenue and hence placed in the category as shown in the above table.

CHAPTER 11

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GRAND/CORPORATE LEVEL STRATEGIES

Grand strategies adopted by Dell corporation are explained below with the help of

the above table.

Dell adopts the combination of two strategies that is the 1,2; (Stability Strategy and

Growth Strategy)

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In the stability strategy Dell adopts the Sustainable growth Strategy wherby the

company wants to get a consistent profit through its products irrespective of any

new entrance of companies, Competiton, Technologyetc.

And in the second strategy Dell adopts the Product Development Strategy which

fall under Intensification Strategy. This Strategy is concerned with the Internal

Growth of the Company.

As the Company has a very good strenght in case of market attraction through its

innovative and user friendly products and with a great business strenght, the

company prefer to enter into more products in the same field.

New Products that are introduced by Dell are provided briefly in Chpt-1. Example,

dell has come up with some new softwares, started producing new electronic

products like Mobiles, High tech Laptops. And hence the dell Corporation adoptsthe combined Strategy of Stability and growth.

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CHAPTER 12

SUGGESTIONS

Should look for Alliance-mergers and acquisitions that would bring synergic

benefits for the company

Reduce the attrition rate by Converting visitors into customers(people who

visit the Dell site)

Focus on developing nations

Physical presence of Service centers would add value to their customer

service

Invest more in Research and Development.

Reduce errors in Dells direct Internet ordering system and create a

Clearance area on its website

Enhance customer support services

Increase Company recognition through a national advertising campaign.

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Should not only depend on the internet sales, should give equal importance

to retail stores. Though they have started with the retail selling but they

should give equal importance to it as they give to online selling

Build a variety of competencies (build core competencies into diverse

product lines)

Should focus on developing nations like India, China etc.

Demand for laptops will increase in the coming future therefore they should

try to exploit this situation.

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CHAPTER 13

CONCLUSION

Dell computer is successful in global markets as a result of best understanding of

customers' needs and their direct sell business model.

Dell's environmental programs for product asset recovery and product design for

environment have spanned more than a decade.

The company designs and customizes products and services to the requirements ofthe organizations and individuals, and sells an extensive selection of peripheral

hardware and computing software.

Dell is a well known name in the world that has been very successful towards its

mission.

It has focused on customization and maintaining low cost that has been veryprofitable for the company.

But are faced with the problem of slipping sales in the U.S. They are being forced

to look at alternative ways of bringing revenue to the company and will be able to

tackle this situation and would maintain a tight grip on the market due to their cost

leadership and because of their coming strategies.

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BIBLOGRAPHY

Book:

Strategy management

www.dell.com

www.wikipedia.com

www.scibd.com
http://www.dell.com/http://www.wikipedia.com/http://www.dell.com/http://www.wikipedia.com/

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