Michael Dell had steered his company through many phases and obstacles, making it one of the first computer manufacturers in the world. Basing the company on a direct sales model, with Dell being the only company in the beginning to do so, he grew the business many fold and simultaneously kept cost and inventory levels at a minimum (Days of inventory at 6 days, the lowest amongst peers). This formula worked well for the company till the market dynamics were more or less the same. Dell believed in selling computers as products and relied on branding based on the ability to sell computers effectively. While doing that, other companies such as HP and Apple were turning the art of selling computers into a branding exercise. Through such efforts both companies were experiencing massive growth throughout the 2000 decade while Dell was experiencing difficulties as a company.
Hence, the current shape of the company, in which it has lost 60% of its stock value reflects the new demands of the market. There is little that Dell is doing wrong in terms of supply chain and value chain. The only problem lay at the front end, where it is not doing a good job to brand its computers and make them more attuned to public demands. By using the same techniques to appeal to their retail customers as they do to their institutional customers, the company needs to relook at the way it markets and satisfies its retail customers, as they hold the key towards future growth in the company.
External Analysis
Porters Fiver Forces
Bargaining Power of Suppliers
Bargaining power of suppliers are low overall as most of the components included in the final product have many vendors. This holds true for most of the peripherals and components included in the computer. ...
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... requires that it become stronger at marketing and treat customers like customers rather than being snobbish and expecting customers to be educated to begin with. Given that, the first alternative that of growing the retail segment presents a better opportunity to fix the problem identified. This is because increased focus on the retail segment will lead to efforts to make the brand more relevant to them, make it more appealing for the customer and allow the company to pursue various distribution channels. It is forecasted that the change will yield results in a five year time period. The first 2-3 years will be spent on building product line and value chain to support the new efforts. The next two years will result in a comprehensive marketing plan that will roll out the new customer focus of the company and make the brand more relevant to various target markets.
Michael Dell is the founder and CEO of Dell Computers Inc. one of the largest sellers of personal computers in the world. His contribution to the computer industry is the “one-to-one relationship between the company and the customer— there are no intermediaries, no middlemen” (Krames, 2003, p.59). Not only did he relinquish the middleman, he also perfected combination of the bottoms up strategy and the just-in-time (JIT) by waiting till he received orders from the customer to build computers. In doing this, Dell increased its return on investment (ROI) while reducing its inventory overhead cost.
By the 1980s, just before the rise of Wal-Mart, Kmart had become complacent. It believed it would be the king of discount retailing, now and forever. It didn't perform an accurate SWOT analysis, but to be fair, who could have seen the rise of Wal-Mart to the position of the world's number-one retailer? Still, as Wal-Mart built new stores in town after town, supported by cutthroat pricing and solid logistics, Kmart's complacency would cost them. Part of the problem was that as Wal-Mart was pouring money into information technology (IT), Kmart's IT budget continued to shrink – not just once, but several years in a row. While Wal-Mart's logistics and supply chain management got sharper, Kmart's stagnated. And while Wal-Mart was able to squeeze more value out of its stores and its systems, Kmart lost ground. By the time Kmart had finally decided to start devoting more resources to IT, it was so far behind Wal-Mart that catching up would have been a near-impossible task without the recession in the early part of this decade. With the effects of the recession taken into account, Kmart instead was consigned to also-ran status among discount retailers.
The company also got their brand reinforced by national advertising campaigns solidifying its position as America’s department store. Hence, management could focus on developing strong customer loyalty and differentiation from its competitors due to its less conservative and traditional style compared to department stores. This is designated as a strength for the company which can be utilized to meet the set goals and objectives, hence sustainable growth (Kossowski,
Dell is one of the renowned companies in the world. If someone is asked to name the companies, which sell computers, he/she will definitely include the name of Dell (Martin 2002). In fact, it is widely accepted brand in the world. However, with the arrival of rival companies, post 2007, for Dell, it was testing to stay alive in the race in the computer industry. Dell in effect is acknowledged by some experts as one of the vulnerable brands. Hence, it would be preemptive for the corporation to continue to exist in the contest, where big companies, such as Apple and Acer have dominated the market by this
Dell Inc. has realized that the most efficient path to the customer is through a direct relationship, with no intermediaries to add confusion and cost. With the power of their direct model and their team of talented people, they are able to provide to their customers high-quality, relevant technology, customized systems, superior service and support, and products and services that are easy to buy and use. HISTORICAL REPORT Dell Inc, was founded as “PC’s Limited” in 1984 by Michael Dell, while still a student at the University of Texas at Austin, with just $1000. From Michael Dell's off-campus dorm room at Dobie Center, the startup aims to sell IBM-compatible computers built from stock components. Michael Dell started trading in the belief that by selling personal computer systems directly to customers, PC's Limited could better understand customers' needs and provide the most effective computing solutions to meet those needs.
Michael Dell founded the company Dell to offer network servers, workstations, storage systems, Ethernet switches, desktops, and notebook PCs after successfully selling his computers to customers directly in Texas. Over the course of three years his sales volume warranted the opening of an international sales office in 1987. In 1988 he began selling to large customers including several government agencies and Dell became a publicly traded company.
According to the casing study, Intel’s “Rebates” and Other Ways It “Helped” Customers Intel paid customer huge pay. As the dominating company, they purposely paid other companies not to use ADM products. They paid Dell 6 billion dollars over a 5 year period (Velasquez, 2014). In addition, they knew ADM would not be able to compete with them: they took advantage of their size and used their rebate program to try and ADM from advancing in the x86 processor industry. In addition, Intel’s monolply-like behavior is displayed in the terms of quality. They did not care about customers wanting the reliable x86 processors, they wanted to monopolize the market with their product, and would pay a huge amount of money to achieve their
The main objective of this report is to develop and provide a sales and marketing plan for which the company will help to generate more profit and acquire more customers to patronize the product. This report will cover the period of 2016 to 2017 which will serve as guidelines that needs to follow of the employees, managers and management team to reach the desired goals and target for the company.
The purpose of writing this essay is to give an idea how these two respected CEOs of multinational companies has changed the world. Technology is booming nowadays, even the minor things that we can do manually are done using technology. Steve Jobs, the co-founder of Apple computer and Bill Gates, the co-founder of Microsoft, has changed the world. These two leaders are best known for their innovations which has taken our world to the next level. Steve and Bill has got something in common. Surprisingly, both of these CEO had never graduated from college, but they are known to be the world most successful leaders and they both work in the same kind of company (Lashinsky, 2013). Nevertheless, their leadership styles differs (Peralta,2011). The way they treat the employees at the workplace is in contrast.
Best Buy opened it’s doors in 1966 by the name of “Sound of Music”, it wasn’t until 1986 that it proceeded to change it’s name to what it is recognized today. Best Buy is the top retailer in the nation’s (USA) consumer electronic retail industry. What makes Best Buy unique is that they sell electronics and appliances used for home and office, they provide customer service and business support through their Geek Squad Technical Support System, and they offer major tech brands and their products such as Apple and Windows in house. According to The New York Times, the computer and electronics industry consists of companies engaged in the retailing of computers and peripherals, consumer electronics and other technology products. The industry includes household appliances, audio and video equipment, consumer software, digital cameras, cell phones and components and other electronic goods.” Like many top leaders, Best Buy has not been immune to issues in regards to maintaining its status in the market. Some of the issues the company faces include, loss in stock value, loosing the retention of it’s customers, and being out-competed by e-commerce companies in the same industry such as, Amazon. All of this can be classified as a marketing problem Best Buy faces.
iii. Bargaining Power of Buyers The bargaining power of buyers is high due to the low switching costs and the availability of substitute products. iv. Threat of Substitutes
The demand for memory chips was insatiated. All products had successful launch and carried premium pricing.
The bargaining power of suppliers is very low. Major players are vertically integrated for example KKD is producing their own equipment while others are partnering up with suppliers.
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.
Dell Inc had very effectively used the direct marketing channel for the sales of computers to the end consumer. When all the other pc makers were selling through retailers and distributors, Dell had started efficient use of the direct channels.