Report on Dell Inventory control and logistics
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PROJECT REPORT ON Submitted By : Section A Acknowledgement This project comes out to be a great source of learning and experience. A lot of effort has been put by various people to make this project a success. This has greatly enhanced our knowledge about Dell Inc. We greatly acknowledge our indebtness to Mr. Rahul Mishra,for helping us throughout this project and for providing us in-depth knowledge. This project is a culmination of efforts of our entire team whose sincere inputs and focused attitude could bring this project to fruition. Finally, thanks to almighty God who has been a source of strength and confidence. Index ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ ➢ Mission ,Vision , Aim , Objective Executive Summary External Environment • PEST Analysis • Industry Analysis Strategy • Corporate • Business • Functional Competition • Core Competency • Porter’s Five Forces Model • Porter’s Generic Strategy Internal Environment • SWOT Analysis • TOWS Analysis • Porter’s value Chain Model Corporate Culture Forecast Key Issues & Challenges Suggestions Conclusion MISSION 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.” Statement Strategy : To do business with its customers one on one through the phone and internet. In doing so, Dell will meet its customers’s expections of : • • • • • • • Highest quality. Leading technology. Competitive pricing Individual and company’s accountability. Best in class service and support Flexible customer capacity Financial stability. “The direct relationship continues throughout the customer experience” Interpretation : Mission statement tells the purpose of existence of the company.Dell through its mission statement tells that they are a totally customer oriented company that aims to provide customers with high quality and value through customization,according to the needs of the customers.They want to deliver high value with the help of latest technology that is easy to use.They also wanttheir products and services to be available for consumers at low price. Dell has been very successful towards its mission statement .They are no doubt customer oriented as they provide award winning customer servicesthat is well known through out the world.Their Direct Business Model is a very efficient and effective way of doing the business.In this, the products are directly sold to the customers and interemidiateries are deleted from the process.This helps in reducing costs for Dell and they in turn pass on this savings to the customers.Dell provides customization through which customers get what they want.Along with providing quality products ,Dell also provides quality services.The purchase of Dell products have become easy as its all done through phone or internet ( Its been a successful way of selling their products.Dell has also started to sell through retail stores hence making the purchase of their products easy for the customers. Suggestions : Dell is the market leader after HP and has been quite successful w.r.t to its mission .But is not up to the mark when we talk about its technology part. Dell is quite slow in adding new value added features to its product and in using the new technology ,as compared to its competitors.Therefore ,it should try to bring changes in its products more quickly than its competitors.If Dell concentrate on this part there is no doubt that it will become No 1 on the world map. Dell’s mission is also known as:: OUR PEOPLE- “ THE SOUL OF DELL : ” At Dell, we value and are committed to: • Customers: creating loyal customers by providing a superior experience at great value. • The Dell Team: our continued success lies in teamwork and the opportunity each member has to learn, develop and grow. • Direct Relationships: being direct in all we do. • Global Citizenship: participating responsibly in the global marketplace • Winning: having a passion for winning in everything we do. VISION VISION STATEMENT: “Through 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.” Interpretation : 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. OBJECTIVES 1. Modify laptop designs according to student’s 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 plan conclusion. Executive Summary About Dell : • Founded in 1984 by Michael Dell • • • • • No.1 PC provider in the U.S. and No.2 worldwide 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 Dell’s business • Dell maintains a consistent focus on offering the best value and customer experience • Dell is a trusted technology innovator with a diversified, comprehensive IT portfolio • Dell is a global company committed to its customers and employees Dell Competes in : • Computer Hardware ○ Personal Computers (primary) ○ Computer Networking Equipment ○ Computer Peripherals • Computer Services ○ Information Technology Services History : • In 1996, Dell began selling computers via its web site • Introduced the 316LT, the company’s 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 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. Dell Structure : It conducts operations worldwide, and manage business in three geographic regions: • Americas region, based in Round Rock, Texas, covers the U.S., Canada, and Latin America. • Europe, Middle East and Africa (EMEA) region, based in Bracknell, England, covers Europe, the Middle East, and Africa. Asia Pacific-Japan (APJ), based in Singapore, covers the Asian countries of the Pacific Rim as well as Australia, New Zealand, and India. • Acquisition : • September 8 1999 - First acquisition ConvergeNet Technologies on • May 8 2006 - Acquired Alienware, a specialty computer desktop manufacturer, integrated it into the company's highend product line. It introduced several new items to Dell products, including AMD microprocessors.To prevent crossmarket products, Dell continues to run Alienware as a separate entity but still a wholly-owned subsidiary. January 28 2008 - Acquired EqualLogic to gain a foothold in the iSCSI storage market.It was the largest acquisition of $1.4 billion .Integrating EqualLogic's products into the company drove manufacturing prices down. It extended Dell's leadership in simplifying IT for customers and partners. • • 2008 – Three acquisitions ,EqualLogic, The Networked Storage Company, and MessageOne • • 1999-2000 -Purchased stakes in four companies(NaviSite,, Fast Search & Transfer, Netyear Group). Divested two companies, in 2000 and 2008. Major customers: • large corporations, • government agencies • medical and educational institutions • small business • individuals Coming products : • New PowerEdge Servers • New Enterprise Computing Portfolio • Innovation Aids Recovery • Ultra-Thin Laptop, Adamo Financials : • Revenue in the QY 09 fell 16% from the same period a year ago to $13.4 billion. Profits plummeted 48% to $351 million, or 18 cents a share, from $679 million, or 31 cents a share. • • • Revenues of $61,133 million during the financial year ended February 2008, an increase of 6.5% over 2007. Operating profit of the company was $3,440 million in FY2008, an increase of 12.1% over 2007 Net profit was $2,947 million in FY2008, an increase of 14.1% over 2007 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 : • Business/Corporate Class : • • • • • • • • • • OptiPlex - office desktop computer systems Vostro - office/small business desktop and notebook systems n Series - desktop and notebook computers shipped with Linux or FreeDOS installed Latitude - commercially-focused notebooks Precision - workstation systems and high-performance notebooks. PowerEdge - business servers PowerVault - direct-attach and some network-attached storage (NAS) PowerConnect - network switches Dell/EMC - storage area networks (SANs) EqualLogic - enterprise class iSCSI SANs • Home Office/Consumer Class : • • • • • • • Dimension - Consumer desktop systems. Inspiron - consumer desktop and notebook systems Studio - medium-end consumer slim hybrid desktop and laptop systems XPS - enthusiast and high-performance desktop and notebook systems Studio XPS - high end design focus of XPS systems and extreme multimedia capability Alienware (XPS Extreme) - high-performance gaming systems rivaling HP's gaming division,VoodooPC Adamo - high-end laptop brand to compete with the MacBook Air USB keydrives, LCD televisions, and printers. Dell monitors LCD TVs, plasma TVs and projectors for HDTV and monitors Dell On Call - extended support services (mainly for the removal of spyware and computer viruses) Dell Support Center - extended support services (similar to "Dell On Call") for customers in the EMEA. The Solution Centers also support hardware for customers outside of warranty. • Peripherals: • • • Services and support: • • • Dell Business Support - a commercial service-contract that provides an industry-certified technician with a lower call-volume than in normal queues; it covers hardware- and some software-support. • Your Tech Team - a new support-queue available to home users who purchased their systems through either Dell's website or Dell phone-centers. These customers gain access to a specialized queue currently located in Tampa, Florida. Customers can request a technician with whom they have worked previously, and the technicians can troubleshoot a wider range of problems — including some that would fall under the "Dell on Call" category. Data backup and virus removal remain out-of-scope for this queue. Analysis of Dell in RECESSION • Dell's biggest market, the US, revenue fell 17% and unit shipments dropped 23%. • Sales were down significantly among all customers, particularly small and medium-sized businesses and the largest corporate customers. • Dell's changes have failed to drive consistent growth. • Global job cutting programme. • Dell announced a 10% cut in global jobs and announced further job cuts at its Ireland sites earlier this year. • There was a continuing decrease in end-user PC demand, and that was before the world's banking system went into meltdown according to Dell • Shutdown of its Edmonton, Alberta office, losing 900 jobs. • Ending of about 8,800 jobs in 2007-2008 — 10% of its workforce. • On January 8, 2009 , announced the closure of its manufacturing plant in Limerick, Ireland with the loss of 1,900 jobs and the transfer of production to its plant in Poland. • Profits fell by nearly half in the fiscal fourth quarter, and it would slash $1 billion more in expenses to bring costs in line with falling sales in the economic downturn. PEST Analysis Political : The political environment in the US has been changing abruptly in the previous year. Dell being an integral part 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 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 cutting costs. The conservatism that exists in the consumer spending has been increasing which has adversely affected Dell’s performance. Issues of environment policies has also affected Dell as Dell came under significant pressure from environmental groups 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 in technology, 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 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 technological changes Dell has also increased their product line.It is adopting to the technological 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 . The recent technological 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. Industry Analysis Q1 was a slow quarter for PC sales: The worldwide market fell 6.5% year-overyear to 67 million units, Apple's Mac business leveled out after strong growth last year. U.S. Mac shipments were down 1% year-over-year, representing 7.4% of the market, according to Gartner. But that's a significant deceleration after the company grew U.S. shipments about 33% year-over-year during Q1 '08. (And grew U.S. shipments 8% year-over-year in Q4 '08,.) Meanwhile, Dell (DELL) sunk, as its shipments fell 16% to 26.2% of the U.S. market. And netbook specialist Acer grew its shipments by 49% to 13.6% of the U.S. market, third to HP and Dell. COMPETITORS Hewlett-Packard (HP):: HP recently posted better financial results than Dell, but has announced around 26,000 redundancies as part of its attempts to cut costs and integrate the £7.2bn acquisition of EDS.Dell rival Hewlett-Packard has also suffered in the global recession. The world's largest computer maker reported last week that profits in the fiscal first quarter ended Jan. 31 fell to $1.85 billion from $2.13 billion in the year-ago period. Revenue rose 1%, but failed to meet Wall Street estimates. Dell has been very very slow in introducing most of the value added features its competition has incorporated (Such as face recognition of Lenovo, fingerprint recognition, Swivel Monitors and Tablet PCs by HP, Apple,IBM,Sun Microsystems,Gateway, Lenovo, Sony, Acer, Toshiba and Asus. Dell and its subsidiary, Alienware, compete in the enthusiast market against AVADirect, Falcon Northwest, VoodooPC (a subsidiary of HP), and other manufacturers. Strategy Corporate strategy: Dell’s corporate strategy is to provide products directly to customers.To provide high technology quality products and services through customization.Their strategy also includes cost cutting where ever possible. Business strategy: 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 strategy::: Cost leader ship through direct sell model In direct sales model it sells directly to customers has the following characteristics:  Efficient supply chain/distribution system  Just-In-Time inventory system reduces costs  Direct sales by using ,which  Internet increases good relations with consumers & suppliers  Impressive Supply Chain Management  Strong strategic alliances with other companies Direct Business Model = Customisation+ Customer service CORE COMPETENCY Dell has an edge over its competitors due to the core competecy that exits within the organization.This is Dell’s Competitive advantage and has created superior value above its rivals. Direct Business Model (low cost advantage+ customization) • • • • • • • • • • • Sell directly to consumers. By selling directly to the customer Dell removes all the cost that they would have incurred during the holding and marketing of the products. Dell’s model is based on build-to-order process, where company builds each PC on demand.Customers can choose what components they want for their computer, Dell then assemble the order and ships it.This strategy improves customer satisfaction and reduces costs and risks to the company. No intermediaries No warehousing Selling direct lowered dell costs by 25-40% compared to competitors.Dell passed these savings to customers.Dell believed that this could help best understand customers’ needs and provide the most effective computing solutions to meet these needs. Build products to consumer order Eliminate retail mark-ups and costs Reduce risks associated with large inventories of finished goods Close relationship with consumers & suppliers Use information to enhance the Value Chain Total customization of their personal computers. ADVANTAGES:: Price for Performance. By eliminating resellers, retailers and other costly intermediary steps together with the industry's most efficient procurement, manufacturing and distribution process Dell offers its customers more powerful, more richly configured systems for the money than competitors. Saves money and time Customization. Every Dell system is built to order. Customers get exactly, and only, what they want. Just In time: Orders are build at the time of order. a just-in-time (JIT) manufacturing approach, which minimizes inventory costs. Service and Support. Dell uses knowledge gained from direct contact before and after the sale to provide award-winning, tailored customer service. Latest Technology. Dell's efficient model means the latest relevant technology is introduced in its product lines much more quickly than through slow-moving indirect distribution channels. Inventory is turned over every 10 or fewer days, on average, keeping related costs low. Superior Shareholder Value. Dell was the top-performing stock among the Standard & Poor's 500 and Nasdaq 100, and represented the top-performing U.S. stock on the Dow Jones World Stock Index. Profitability:Through the direct business model Dell has eliminated the reseller’s markup as well as the risks associated with large inventories of parts and finished goods. Dell frequently receives parts just hours or even minutes before assembling a PC to fill a customer’s order. Since the prices of computer components are constantly going down, it makes sense to avoid buying large inventories of stock that could be purchased at a later date for less. And since computer components also go out of date quickly, this avoids antiquated stock. This, in turn, improves profitability and allows Dell to sell its products for a lower price to the customer. Customer Focus:Is dedicated to meeting the expectations and requirements of internalcustomers; gets first-hand customer information and uses it for improvements in products and services; acts with customer in mind; establishes and maintains effective relationships with customers and gains their trust and respect. Internet Leadership Sales via Dell’s Web site surpassed $18 million per day during early 1999, accounting for 30 percent of overall revenue. The company's application of the Internet to other parts of the business --including procurement, customer support and relationship management -- is approaching the same 30-percent rate. The world's second-biggest computer maker has recently switched from a pure online and phone sales model to build an expanding network of retail stores, putting its PCs and laptops within the reach of consumers without Internet access. Porter’s Five Forces model Threat of New Entrants: MODERATE The entry of new comers in 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 Low differentiation However, in the midst of sever competition, Dell can still gain market share from other competitors. That proves Dell’s business strategies have been successful. • • • • Threat of Substitutes: LOW Strong presence of PC’s 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. Dell’s products are very reliable and customer service is outstanding. These two factors help Dell to create certain brand royalty. But that’s given the fact that the Company set the prices very low. If the prices are raised too high, customers will not hesitate to switch. Porter’s Generic Strategies D Cost leadership: Dell has been very successful because of its cost leadership.It has been able to reduce the costs with the help of its Direct Business Model.In this Dell sells directly to its customers hence eliminating the intermediateries.The cost is reduced by: (1) passing distributors and retail dealers that reduced marketing and sales costs by eliminating the markups of resellers, (2) building to order greatly reduced the costs and risks associated with carrying large volumes of both and finished goods. 3) cutting out the intermediaries between the manufacturer and the consumer. Initially, Dell's direct from the factory approach relied on telephone sales. With the emergence of the Internet, Dell Computer could extend the reach and scope of the direct sales model at a relatively low marginal cost. The company was ideally positioned to take advantage of the Internet because of its distinctive supply chain. Unlike its major rivals, Dell did not face any channel conflict with resellers or distributors by going online. Moreover, with a build-to order manufacturing process already in place, customers could easily configure their own products online, just like they were already doing over the telephone. Dell's build-to-order and sell-direct approach attracted growing numbers of customers, not only in the United States, but all over the world.The supply chain compression resulting from the direct-tocustomer model gave his company a substantial unit cost advantage over everyone else. With an inventory turnover rate of about 60 times per year, Dell has minimized the rapid depreciation and inventory write-off costs that have chronically plagued the PC industry. It has also greatly reduced its working capital requirements by operating on negative cash conversion cycle – receiving payment from its customers before it pays its suppliers for components. Many of the major players in the PC industry have continued to manufacture their products in bulk and keep their distributors and retailers stocked with ample inventories. As a result, Dell has sustained a comparative advantage as a result of its lower overhead costs. For example, Dell's overhead costs (selling, general and administrative expenses) in both 1999 and 2000 were less than 10% of its total revenues versus industry norms of 15-17 percent. The direct sales model also enables closer customer integration. Dell has built strong and stable relationships with both the large corporations and smaller enterprises that are its core customers. Unlike its rivals, who depend on indirect sales, Dell possesses a great deal of information about its customers. By logging all of its interactions with customers, Dell knows their purchasing behaviour, demand patterns, and satisfaction levels. With a little bit of data mining, Dell managers can determine how customers buy computers, what motivates different types of buyers, and thereby accurately forecast demand in various market segments.Dell also collects timely information about the performance of its products. This enables it to respond quickly to emerging problems and, in some cases, avoid costly refunds and service calls. More generally, Dell Computer knows who each end user is, what equipment they have bought, where it was shipped, and how much the customer has spent. This information helps Dell to provide high levels of customised service; to offer complementary products and services; to coordinate maintenance and technical support; and even to forecast (if not encourage) PC replacements and upgrades. Some of its corporate customers have even outsourced their entire range of PC inventory activities, from purchase to disposition, to Dell. SWOT ANALYSIS Strengths Weaknesses • • • • • • • • 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 • • • • 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 • • • • • • • Winning culture latest technology First mover advantage e-commerce capabilities: Buid to order manufacturing process Product design+after sales service Expert Supply Chain Management Opportunities • • • • dues to the lack of large suppliers in the World high attrition rates among visitors to no physical presence ofservice centres slow in introducing fancy features Lack of innovation Threats • • • • • • • • Network-internet, intranet and extranet Developing nations market Low costs and growing advanced technology Growth in business, education and government markets global wide access to customers and market. Expansion Increasing income of consumers Globalisation • • • • • • Competition Currency fluctuation in countries outside the US Political instability Tariff trade barriers Recession Decling sales TOWS Analysis Strenghts-opportunities:: Dell has cost leader ship in the market .They provide quality at reasonable price ,which would help them to establish themselves in the growing economies.The income of consumers is also increasing and they could exploit this situation and increase the profis of th company.Business,education and government markets are growing and therefore the demand for computers will also increase in the coming time ,so Dell should try to reach even to the smallest corners of the world to increase the sales.Globalisation would help Dell to present itself on the global platform.It would be able to exploit this opportunity because of its core competencies. Opportunities –Weakness::Dell lacks innovation as compared to its competitors.It is also slow in creating value added features to its products and slow in bring change in its product line so as to carter any new product or technology launched in the market . Strenghts-Threats::Dell provides quality and is well known for its customer service.It has an edge over its competitors becaususe of its Direct Business Model.It could over come its competitors because of this factor. Weakness-Threats::One of the major threats for Dell is the decling sales of PC’s and recession.But Dell is not the only one that is affected by this ,every company in the industry is the victim. Value chain model FIRM INFRASTRUCTURE The main strength of Dell is in its inventory management. As the company sells through direct model , it mostly receives its payments from its customers immediately online or through the credit card. It then places orders on the component vendors and proceeds on the assembly but pays to the suppliers only after 36days after the product is shipped. As a result , the cash-conversion ratio for Dell is negative as compared to other PC makers who have positive cash conversion ratios due to advance payment to suppliers. OPERATIONS Dell outsources all its components manufacturing, including sub-assemblies like motherboards and nearly the entire production chain for notebook PCs. However it does not outsource the final configuration and keeps control over the production supply chains. Regional components manufacturers – which may be units of Asian, European and American companies – are increasingly supplying to Dell. INBOUND LOGISTICS Since Dell follows build to order and just in time policies, the inventory remains in the supplier’s books till Dell puts the order. Dell’s direct – selling model depends critically on lead time management so that insufficient lead conversion time would not leave the company with overage and underage of components. MARKETING SALES Dell has eliminated from its value chain the intermediaries, who would have charged a 20 -30 margin, from the value chain and aligning the supply chain closely to the assembly factories and the order-taking system. Dell has integrated the direct-selling model intricately with the supply chain. Even though the company assembles 80000 PC’s a day, it does not have any warehouse ,the assembly factories hold inventories for maximum of two days while the entire operation inventory is a maximum of 72days. TECHNOLOGY DEVELOPMENT Dell spends little on research and development, at $400 million , a fraction of HP’s $4 billion. Yet its management of supply chain is near perfect and the assembly operations are highly efficient and designed such that a PC is assembled by one worker so that any defects can be traced down to hum and made accountable. Corporate Culture Dell's Culture • believes in being direct in everything they do. • success is based on maintaining direct relationships built on trust. • Winning Culture and comprehensive diversity initiatives create a corporate environment based on meritocracy, personal achievement and equal access to all available opportunities. • focus our internal efforts on cultivating and promoting best practices among our global workforce in the areas of policy development, training, recruitment, mentoring, development, advancement and culture change. • Work/Life Effectiveness and career management programs enhance our ability to retain and develop valuable team members and demonstrate our commitment to the Dell Team. • Dell sponsors a community of networking groups formed by employees that help foster a more inclusive work environment, improve communication among employees and enhance understanding of all employees about the value of diversity. • Our goal is to enable employees to maximize their contribution to the company while also maintaining effectiveness between their work and personal lives. • We advocate flexibility in the workplace to empower employees, teams and managers to hold discussions about both the needs of the business and each employee's individual Work/Life Effectiveness goals, and then to construct a plan for fulfilling both priorities. • Dell is committed to developing our workforce and helping employees achieve their personal and professional best. Through an Career Management Program, we strive to develop, fully engage, and retain high-performing talent Forecast Dell has worked its way through the US economy with changes happening in consumer spending inflation rates, interest rates and has changed its strategies accordingly to increase its market share and market presence. Below is a view of the US economy and an analysis of Dell in this regard. GDP of the US economy for the year 2003-08. Year GDP in % 2003 2004 2005 2006 2007 2008 37685.028 39811.632 41969.756 44118.008 45845.477 46541.179 3.70 % 5.64 % 5.42 % 5.12 % 3.92 % 1.52 % The US economy is a developed economy and due to this extensive development its GDP has been decreasing constantly over the years and has decreased to minimal proportions. In this kind of economy , Dell has provided services to capture a part of the consumers purchasing capacity in the PC market. But due to a recession in the market Dell as other PC manufacturers has faced critical issues regarding sales, job cuts and decrease in market share. Dell has not been able to sustain its competitive advantage in the US economy due to wide spread recession but Dell was able to sustain its sales growth in other countries as compared to the US as seen in revenues of Dell. Dell has arrayed into different product mixes to sustain its growth in these periods. Dell’s supply chain and direct build to order models have been able to keep its sales up. US interest rates for the year 2003-08 June 25,2003 Dec 14,2004 Dec 11,2005 June 29,2006 Dec 11,2007 Oct 29 ,2008 1% 2.25% 4.75% 5.75% 4.75 1% The US federal reserve has been bring out cuts to keep the momentum in the economy going and this has also helped the PC market to grow especially Dell. From 2003 to 2007 Dell has reported profits YoY due to the policies followed by the US government. Interest rate cuts have had the following implications on Dell. Thus with the fed cutting rates to provide incentives to the corporate to grow, Dell has used this opportunity to increase investment in the co. and stretched its wings further in different markets. But in 2008 Dell has lost heavily to profits of $351m from $671m in the last year with a collapse in the supply chain and initial raw material cost increasing and an overall decrease in consumer spending and low cost behavior of the economy. Dell’s supply chain has taken a hit with its cost advantage not being applicable in this scenario and it resorting to retail supply then doing it through its own chain of suppliers. Inflation numbers in the US economy. Year 2008 2007 2006 2005 2004 CPI - Inflation Rate* 5.0% 2.8% 3.2% 3.4% 2.7% 2003 2.3% As is evident in the US economy and world over inflation rates have been on all times high in the previous year and this high rate of inflation resulted in low consumer spending in capital goods in corporate bodies and households. Inflation has taken its toll on Dell with posting sharper-than-expected fall in revenue as consumers bought cheaper personal computers and overall demand remained weak. And this fall could be worse if it wasn’t cushioned by cost cuts including job cuts. Dell is trying to sell its computer factories around the world — a move to overhaul a business model that previously was central to the company’s strategy, but which now is no longer competitive. The U.S. firm has approached contract computer manufacturers with offers to sell the plants to counter the effects if falling profits and rising costs. Key Issues & Challenges • Recession • failed to drive consistent growth. • Decling Sales • Dell is quite slow in providing value added features to its customers ascompared to its competitors. • Tough competition . 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 Dell’s direct Internet ordering system and create a “Clearance” area on its website Enhance customer support services • Increase Company recognition through a national advertising campaign. • 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 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 of the 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 very profitable for the company . But are faced with the proble of de slipping sales in the U.S. .they are being forced to look at alternative ways of brining revenue to the company,We believe that they 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.