Presentation Transcript

1. In order to reverse the trend of falling stock prices and waning investor confidence, how can Dell find strong growth again in a computer market dominated by a few key players selling a product that is becoming increasingly commoditized?
2. What is the nature of the competitive landscape in the PC market, who are the key players, and is Dell competing with all of them or do they need to focus only on specific threats? What is the current value proposition in today’s market and where can Dell focus their efforts to increase revenue and market footprint? How does Dell regain investor and internal confidence in their company, which is key to obtaining the necessary capital to move forward with corporate growth?
3. What is the nature of the competitive landscape in the PC market, who are the key players, and is Dell competing with all of them or do they need to focus only on specific threats?
4. Competitive Landscape – are they all direct competitors? Acer & Apple are after a different segment than Dell. They can’t be ignored entirely, but the real threat to Dell’s dominance is the next guy………
5. A closer look at Compaq/HP – the global leader After years of struggle HP seems to have found a formula that works for them. For personal consumers – making the computer a personalized accessory vs. a consumer product. For businesses, keeping the relationship and using sales to drive demand – but allowing the customer to be “in control” of the buying process and fulfillment channel.
6. Comparing Apples or Oranges? Acer is a competitor in low-cost. But the real comparison is between HP and Dell who focus on both business and individual consumers. As the only company focusing primarily on direct sales – Dell has to create demand and deliver value both pre and post sale to drive customers to their product.
7. Does the Strategy Work? We don’t have specific category rankings for 2009. But customer ratings still say that Dell is the best in its market (considering Apple’s customer segment is quite different). It’s safe to say that Dell’s problem doesn’t lie in the product or customer perceptions.
8. Does the Strategy Work? High Customization/ Differentiation Low Customization/ Differentiation High Cost Low Cost It would appear that Dell has one of the most customized systems, at one of the lower prices points – but somehow this isn’t enough to make them a global #1. HPs success may indicate that customization isn’t the selling point that it used to be when computers seem a commodity in today’s market (vs. a luxury a decade ago).
9. What is the current value proposition in today’s market and where can Dell focus their efforts to increase revenue and market footprint?
10. How’s it made – and what are my options? With this combination, and market dominance by a few key players – product differentiation will be very difficult to achieve, and still produce a product compatible with other systems (for networking, work file collaboration, etc). Dell and other makers need to find a way to differentiate themselves on something other than just “system configuration”.
11. Distribution Channels – getting it into the customers’ hands. The market is going away from middle-men and mainly to Distributor Direct models. Dell needs to leverage this by analyzing what they can do to maximize their strength in this area and compete effectively with the new entrants to this model (HP particularly).
12. Where is the market today for computers? * Acer & Apple considered different products/market segments While worldwide unit sales has grown to 4.4 times the US market, Dell is still stuck at only 1.6 times worldwide sales vs. US sales. Dell appears to be missing a huge market by not aggressively attacking the growth outside the US.
13. Is the Value in the Actual Product? Apple has changed its product and generic strategy. For all other players the average sale price of the end product continues to decline. Revenue can only keep positive by increasing units sold for a finite period of time. It’s time for Dell to find the next growth stream in the market.
14. The Dell Manufacturing Process Customer Places Order Commodity Hardware (box) Commodity Hardware (keyboard) Peripherals & Accessories (i.e. Monitor) Commodity Hardware (hard drive) Peripherals & Accessories (i.e. Printer) High- Tech Hardware (microprocessors) Packaging & Shipping High-Speed Software Upload Received by Customer Burn-In Testing Post Sales Service & Support By all assessments Dell already has a very optimized manufacturing and delivery system. Perhaps the growth avenue is here
15. Dell’s Post-Sale Support Five Control Centers Worldwide for Customer Support Thousands of Pages of Customer Support Information 400 Caches of Spare Parts Worldwide Phone-In Technical Support Staff Third Party (Unisys) On-Site Technical Support While “sufficient” - with large customers spending an estimated $5,500 per computer for IT support and maintenance, this would appear the place for Dell to focus on growing their revenues with post-sale support and warranties.
16. With customers leaving the distributors & resellers, Dell should be able to find ample growth in providing IT services – especially to small/medium sized businesses, and possibly smaller educational institutions as well.
17. Dell has the highest SG&A – how can we help control some of this overhead? R&D is last among all but Acer. Is there a reason they are being outspent three fold by their biggest competitor, HP? R&D isn’t for the PC maker any more – so perhaps they should save money on SG&A and put it towards R&D on their enterprise products or post-sale customer support improvements.
18. 1994 2 regions 2002 15 regions Symphony System linking sales with supply Symphony (or another system) should be used to reduce the complexity of their sales districts and further slim down the sales operations.
19. How does Dell regain investor confidence in their company to obtain the necessary capital to move forward with corporate growth?
20. Are We Moving In The Right Direction? Dell’s focus has traditionally been selling to businesses – but share has declined. Dell must find a way back into the business market where they were strongest.
21. What Can Dell Offer to Each Customer Segment?? The ability of Dell to compliment MIS departments for larger customers ties in well with the purchase of EDS and Perot Systems.
22. Why the precipitous drop in performance & stock price?? Investor confidence is key to any public company. Dell will need to address all of these issues – while also addressing their future in the computer market at large.
23. What Does Dell Bring to the Future? STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
24. RECOMMENDATIONS
25. Recommendations – Customer Segments The recurring theme is to tap the $5,500 per computer post-sales IT support market in the business segment.
26. Recommendations – Corporate Focus The primary focus of Dell moving forward should be selling its entire product line of computers, enterprise systems, peripherals, and post sale IT/MIS support. Dell must also push into expanding markets to reduce the gap between US and global sales. As a complement to this strategy Dell should push bulk sales of products to reduce complexity of business IT systems caused by multiple different computers vs. a standardized approach.