Dell Vishal

Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors Recommendations

C o m p a n y R e p o r tC o m p a n y R e p o r t


PRESENTED BY

: DEEPA

: KADAMBARI

: ASHA

: VISHAL


Mission & Strategy Statement

• Mission Statement:

“To provide customers with superb value, high quality, relevant technology, customized systems, superior service and support, and products and services that are easy to purchase and use.”

• Strategy Statement:

“To do business with its consumers one-on-one, through the phone or internet.”


Timeline

1980 Purchased first computer and takes it apart1983 Wanted to beat IBM, Sells upgraded PCs out of UT

Dorm Room1984 Registers Dell Computer Corporation DBA PC’s Limited

Sells Direct to end users1986 12 mhz 285 based system. 30 day money back guarantee1987 International subsidiary in UK1988 Initial IPO $30 million1989 Accumulates excess inventory1990 First to sell through retail CompUSA, Best Buy, WalMart1991 Converts entire line to 486… high technology priority1993 $2 Billion in sales


Timeline

1994 Launches Latitude Notebook Setting new records on battery life.

1996 Introduces Power Edge servers for small and mediumserver markets

1998 Solidifies internet market. $12 million per day from customers. Sets up supplier network.

2000 Revenue hit a record $25 billion. 2001 Sales topped $30 billion. 2004 Annual sales passed $40 billion. 2005 Dell launched XPS, a line of high-performance.2006 Annual sales hit a record $55.91 billion.2006 Dell shares fell 4.7 per cent.


Company Overview

• Headquartered in Round Rock, Texas

• Founded in 1984 By Michael Dell

• Sells Wintel systems via the direct model

Key Statistics

Company Type Public (NASDAQ: DELL)

Fiscal Year-End January

2005 Sales (mil.) $49,205

1-Year Sales Growth 15.8%

2005 Net Income (mil.) $3,043

1-Year Net Income Growth 13.1%

Days supply in inventory 3

Source of all data is the Dell 2005 10-K

filing unless otherwise noted.


• Sales Of Computer Systems Directly To Consumers

• Elimination of Retail Middlemen• Computer System Construction

Based Upon Individual Customer Needs

Dell’s Strategy – Direct From Dell

• Quick Introduction of State Of The Art Technology

• Elimination Of Heavy Inventory Investment


Effect On Working Capital

• Reduction Of Inventory

Dell’s Strategy – Direct From Dell

Inventories2005 2004 2003 2002 2001 2000

28-Jan-05 30-Jan-04 Jan-31-03 Feb-1-02 Feb-2-01 Jan-28-00

Days of sales outstanding 32 31 28 29 32 34

Days of supply in inventory 4 3 3 4 5 6

Days in accounts payable 73 70 68 69 58 58

Cash conversion cycle -37 -36 -37 -36 -21 -18

Cash Conversion Cycle

-40

-30

-20

-10

0

2000 2001 2002 2003 2004 2005



Dell Strategy for INDIA

• Dell will understand the indian market and judge the sales performance before they take a decision on manufacturing unit.

• India is now the 13th market for DELL.• The $28.5-billion Dell Computer Corporation, a

computer systems company and provider of Internet infrastructure, will now sell its products and support operations in India.

• In both software and hardware as well we have outsourcing from India as well.


Continue………

• Dell will initially deal directly with customers in major cities and set up a call centre at Bangalore to cater to the Indian market."

• Dell will concentrate on selling its products to the business houses.

• Big MNCs and business houses are our prime market.• Customers could place their orders either through the

company Web site or dial a toll free number, he said adding, this would help it to cut down distribution cost by 6 to 8%


Continue………

• In the last few years, the company had sold about 60,000 units in India, but expects a triple digit growth over the next two years

• Dell plans to strengthen its service level and coverage by adding more service partners to the current arrangement with Tata Infotech.

• Dell is planning for local sourcing and merging of components, and working to virtually integrate the logistics provider into world-class supply-chain management system to enhance customer service quality.


Continue………

• Dell is in the process of tying up with various local

companies for this purpose. • the products will be competitively priced as the price

of components have been going down drastically.• Dell believes that the tariff structure, which is a

problem right now, will go down eventually and the products will become much cheaper.


Target Market

DELL have always been suppliers for businesses and that is the way it is going to be in India. DELL is No.1 in the businesses market, while number four in the consumer market.

By Michael Dell


• Reduction of Accounts Receivable/Extension of Accounts Payable

Crediting (in millions of $)

2005 2004 2003 2002 2001

28-Jan-05 30-Jan-04 Jan-31-03 Feb-1-02 Feb-2-01

Accounts Receivable $ 4,414 $ 3,635 $ 2,657 $ 2,269 $ 2,424

Accounts Payable 8895 7316 5989 5075 4286

Allowance for doubtful accounts -78 -84 -71 -68 -69

Selected Working Capital

$0

$1,000

$2,000

$3,000

$4,000

$5,000

2001 2002 2003 2004 2005

Effect On Working CapitalDell’s Strategy – Direct From DellCompany Value


Problems & Issues of Case

Stagnant Sale of Computers

Stagnancy in Revenue

In the further course of presentation we will try to explain what dell did to overcome this issues


Intangible Value of Dell

Intangiable$73,915

76%

Assets $23,215

24%

(in millions of $)

R & D Expenditures

% of Net Revenue

Dell $463 < 1%

Apple 489 6%

HP 878 4%Source: Dell, Apple, and HP – 10-K filings

Market Capitalization Breakdown

Company Value


Server

Storage

POS

Software

NotebooksDesktop

Peripherals


Performance


Net Revenue(in millions of $)

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Performance


Net Revenue Growth

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1997 1998 1999 2000 2001 2002 2003 2004 2005

PerformanceIndustry Analysis


What drives this industry growth?

• Technology• Internet• Applications• Pricing

Industry Analysis


Dell’s Market Segmentation

US - Business

52%

Europe22%

US - Consumer

15%

Asia Pacific-Japan11%

Desktops50%

Enterprise21%

Notebooks29%

Revenue By Market Revenue By Product

Industry Analysis


Competitors


Key Numbers Dell HP IBM

Annual Sales ($ mil.) $49,205 $79,905 $ 96,293

Market Cap ($ mil.) $97,647 $58,026 $149,402

Profitability Dell HP IBM Industry Market

Gross Profit Margin 19.0% 28.5% 42.5% 19.9% 48.4%

Net Profit Margin 6.2% 4.3% 8.8% 4.5% 6.2%

Return on Equity 46.9% 9.3% 28.3% 23.3% 11.7%

Return on Assets 13.1% 4.6% 7.7% 8.3% 2.0%

Return on Invested Capital 43.5% 8.3% 18.9% 21.8% 5.7%

Competitors

Source: Hoovers


Competitor environment Evolving

20062000


Dell services business continues to rapidly expand


Significant growth opportunity for Dell


Vir

tual

Inte

gra

tio

n

Customer

Dell

Suppliers

Dell Supply Chain

PUSH

PULL

PC SUPPLY CHAINS

Typical PC Supply Chain(Compaq, HP, IBM, etc.)

Customer

DistributionChannels

Manufacturer

Suppliers

PUSH

PULL


Supply Chain Management

FactoryHub

Customers


Growth “A big jump”


For Loyal Customers

Medium Customers

New Market

Retailers

Pricing Matrix

High Medium Low

High

Medium

Low

Quality

Price


Dell Product Mix

Owned Products Third Party Products

Desktops

Notebooks

Servers

Printers

Switches

Electronic software & Acc.

Storage


Product Line

Desktop Dimension Desktop Opti-plen Desktop Dell precision Desktop Open source Desktop

NotebooksInspiron NotebooksLatitude NotebooksDell Precision Mobile NotebooksOpen source Notebooks

ServersPoweredge Tower serversPoweredge Pack Optimize ServersPoweredge Blade Servers

StoragesPower vault direct attached storagePower vault network storagePower vault tape backup storageEnterprise class storage

SwitchesPower over ethernet switchesManaged switchesWeb managed switches

Electronic Software & Acc.Desktop acc.Handheld Table PC’sNotebook acc.Notebook PowerMP3 playerMonitor etc.


DELL Customers

Company Overview Dell’s Strategy Company Value Performance Industry Analysis Competitors RecommendationsReasons For Stagnant sale

Tax

Late Entrant

Logistics

???

Competitors TechFactor

No Face to Face Comm.

Direct Support

Pricing Factor

Ishikawa Diagram


Study & Survey

Survey of Companies:

• HDFC Std. Life Ins.

• BPL

• Godrej Lawkim

• Pantaloons


1)Which Company’s Server You use ?Dell Hp IBM Lenovo Others Plz Specify

2)Which Kind of Server you use?

3)What is the purpose of not Purchasing DELL products ?

4)Who are the support partners of DELL who looks after the service in India for you ?

5) Which Company Peripherals do you use ?

6)What are the applications for Dell products?

7) Do you feel DELL is successful in sale of computer and its peripherals in India ?

8) In future do you think DELL would be able to cater to your requirements keeping in mind the current scenario ?

DELL Questionnaire


• Maintain a moderate market share growth in the PC industry while sticking to low price, high quality strategy

• Grow business segment (servers)• Concentrate on global expansion• Pursue government contracts• Expand & grow lucrative printer and

computer peripheral products• Buy back stock

Recommendations


• Analysts are across the board on stock recommendations

• Dell has met or exceeded its projections for 16 straight quarters

• Slowing growth but not leveling out• No signs of industry collapse in the near future• Dell continues to gain market share and HP has

forfeited price competition

Recommendations



“Think Simple, Live Simple Life Will be Simple”

Dell Vishal

Business

dell sales of computer

sales mil

annual sales

dell effect

michael dell

dell shares

days of sales outstanding31

year sales growth