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Michael DellCase study

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Introduction

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Introduction• Who is Michael Dell?

The American businessman, investor,Philanthropist and author. He is the founder, chairman and chief executive officer of Dell Inc., one of the world’sleading seller of personal computers.

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• 41st richest person in the world.• Net worth of US $ 20.1 billion.• In 2011, 12% ownership of the company.• Also invested in other companies managed by a firm MSD

capital.

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Conti..• At the age of 24,

“Entrepreneur of the year”, from Inc. magazine.• Top CEO in American business from Worth magazine.• “CEO” of the year from financial world and chief executive

magazines.• In 2013, received Franklin Institute’s Bower award for

business leadership.

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Conti..• Writings: “Direct from Dell”, which is an account of his early life, company’s founding, growth and missteps, as well as lessons learned.• Philanthropist:

“ Michael and Susan Dell foundation”, was established which focuses on urban education and childhood health.

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Conti..• Dell Incorporation: The main business of Dell Company is selling the product of laptops, netbooks and desktops. Dell Company is selling different kinds of models of laptops.

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Personal life

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Personal life

• Born in February 23, 1965 in Texas, America.• His father was an orthodontist.• His mother was a financial consultant and stockbroker.• At age eight he applied to take a high school equivalency

exam, hoping to get out of the school and into the business world faster.

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• By his early teens, he was using the money he earned from part time jobs to invest in stocks and precious metals.

• Gadgets and everything electronic continued to fascinate him.

• At the age of 15 he bought one of the first Apple computers and immediately disassembled it to see if he could put it back together.

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• In high school, he took a job selling newspaper subscriptions.

• He used his data research skills to identify an untapped customer base, earning $18,000 in a single year.

• He rewarded himself with a new computer and a BMW and was soon planning a business venture on his own.

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• Michael married Susan in 1989.• He has four children.• Alexa Dell, Kira Dell, Juliet Dell, Zachary Dell.

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Conti..• The Dell family home in Austin, TX is reported to be the

15th largest home in the world, with eight bedrooms, 21 bathrooms, a conference room, a gym, and a total of 22,000 square feet on 60 acres.

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Philanthropy

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• Founded in 1999.• Headquarters West Lake Hills, Texas.• Susan Dell – Cofounder.• Susan and Michael Dell have supported the foundation

primarily through investing the proceeds of sales of shares of Dell Inc.

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• The Michael & Susan Dell Foundation is dedicated to improving the lives of children living in urban poverty around the world.

• Its offices are in Austin, TX and New Delhi, India, and Cape Town, South Africa.

• The foundation has committed more than $1 billion (as of January 1, 2014) to global children’s issues and community initiatives to date.

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• The Dell family foundation funds programs that foster : 1. high-quality public education 2. childhood health, 3. improve the economic stability of families living in

poverty.

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Dorm Room to Board Room

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To

DORM ROOM BOARD ROOM

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Dorm Room To Board Room

• Dell purchased unsold IBM PCs from retailers at cost, adding additional memory and disk drives and selling them at prices 10-15 % below retail.

• With an initial investment of $1000 he registered the business with state of Texas.

• Minimal advertisement.

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• Quickly brought him a large customer base on campus.• He inspired from the feedback.• Outside contracts followed quickly.• He moved off campus, filling a large apartment with

computer parts and assembled new computers.

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• Although he had promised his parents to curtail his business activities and concentrate on his studies.

• By spring vacation he had to break the news: his venture was writing sales of $80,000 a month. He was ready to quit school and run his business full-time. He incorporated the company -- initially called PC's Limited

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Conti..• PC’s limited (1986) was offering first toll free technical

support service.• Dell continued to offer customers a discount of 10% below

his competitors through the application of “just-in-time” supply practices.

• Dell purchased parts based on orders and only assembled machines for immediate delivery.

• With no inventory or spare parts to store, the company enjoyed grammatically lower over head then its competitors.

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Conti..• With his enormous volume of sales Dell could insist that

his suppliers maintain warehouses near his factories to speed up the process of order.

• In 1988;He changed firm’s name to “Dell Computer

Corporation” and Company became public.• He is the youngest CEO to head the Forutne500 company

when the company was first included on the list in 1992.

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• Dell Computer was also a pioneer of online commerce, selling computers over the burgeoning World Wide Web(1996).

• the Dell web site immediately sold 30 to 50 computers a day.• By the end of the decade, Dell's daily online sales were $18

million.• The name was further shortened to Dell Inc.

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Conti..Products by dell company:• Desktops• Servers• Notebooks• Pen Drives• Smart Phones

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• Peripherals• Printers• Televisions• Scanners

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Dell products

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Dorm Room to Board Room

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Business Strategies

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Conti..• Strartegy#1 Develop the fast-passed, close-knit company culture

with the attitude of a challenger.• Main idea:1. Have a common goal, everyone understands.2. Be hiring ahead of your objectives.3. Get everyone involve in seeking good talent.

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Conti..4. Drive company growth through personal employ growth.5. Have managers that are immersed and personally

involved.• Strategy#2 Build a company where the employees have strong

sense of ownership.• Main Idea:1. Make learning new skills are necessity rather than an

option.

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Conti..2. Allow smart experimentation, with a tolerance for failure.3. Learn about problems as quickly as possible.4. 4. Communicate what’s happening and what’s planned.5. Set a single goal everyone can rally around.

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Conti..• Strategy#3: Understand what costumers experience whenever they use

your product.• Main idea1. Learning about customers experiences outside your industry.2. Developing new products from the customers perspective.3. Knowing your customers intimately.

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Conti..4. Becoming your customers advocate.• Strategy#4: Find new way to add value and exceed expectations

from the customers perspective.• Main idea:1. Looking at the big picture issues.2. Becoming a valued advisor for your customers.

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Conti..3. Separating facts from hype.4. Turning customers into teaching.• Strategy#5 Forge strong alliance with your suppliers in order to

strengthen your competitive edge.• Main idea:1. Define where you add value and where partners are better.

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Conti..2. Keep it simple.3. Stay very close to your suppliers.• Strategy#6: Bring suppliers and technology partners into your inner

circle , and let them have a meaningful input.Main idea: 1. Reverse the demand-- supply equation.

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Conti..2. Trade information for inventory.• Strategy#7 Differentiate your product to create a sustainable

competitive edge.• Main idea:1. Focus Customer needs, not what the competition deliver .2. Find ways to use competitors strengths against them.

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Conti..2. Look for opportunities and move to explore them quickly.3. Execute well.4. Stay ahead of competition not behind them.• Strategy# 8 Thrive on the changes the expanding connected

economy is going to generate for your business.

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Conti..• Main idea:1. Plan for change as an opportunity to grow.2. Apply the internet to breaking down traditional

boundaries.3. Readjust priorities around new prevailing factors.4. Use the internet to achieve high growth.5. Use the communication capabilities to expand links.

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Customer RelationshipManagement

Strategy

Make segmentation and identify customers

Listen to their customers

Learn from customers

Each member is a student who is responsible of learning from the customers.

DELL’S CRM STRATEGY

Pre-Sales customer support

CUSTOMER INTERACTION

EXPERT OPINIONS

Post-Sales customer support

Online support:

EXPERIENCE SHARING

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Marketing Strategy

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Marketing Strategy

Dell Inc. marketing strategy is based on segmentation.

• Backbone of Dell computers.• Based on segmentation, company takes its positioning and

modifies its offerings for each segment’s customers.

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“An Important element of virtual integration with customers is segmentation. The finer the segmentation, the better

able Dell is to forecast what customers are going to need and when. Then coordination of flow of strategic

information comes to stage all the way back to suppliers, effectively substituting information for inventory”

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Conti..• Focusing on Personal Users.• In the early 2000s, Dell attempted to diversify its business

by targeting personal consumers, such as families and students that needed to purchase computers.

• Dell's Retail Strategy.• In the fall of 2007, Dell announced partnerships with

major computer retailers, including Wal-Mart, Best Buy and Office works.

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HOME USERS

SMALL BUSINESSES

ENTERPRISE SUPPORT

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Dell’s Way to Success• Dell's way to success is dell’s Direct model. Always

listen to Custom

ers

Never Sell Indirect

Disdain invento

ry

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Dell Direct Model vs Indirect Model

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DELL DIRECT MODEL

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Conti..Dell’s direct model is a combination of:

1. Suppliers2. Inventory Management 3. Direct Sales

Together these allow for maximum effectiveness with minimum cost.

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Conti..1. Suppliers: Dell gets the parts from the suppliers and assembles

them as per required by the customers. Dell selected the suppliers on the bases of:

• Quality of products• Cost• Time management

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MICROSOFT - for Windows

INTEL - for micro processors

NVIDIA - for Graphic chips

SONY - for monitors

SUPPLIERS

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2. INVENTORY MANAGEMENT

• In contrast to others who produce –to stock, dell first receives the order and the money and only then starts to build, using that money to purchase from supplier.

• Therefore there is customization of products for each and every customer.

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• While other companies had to guess, DELL knew exactly what its customers wanted before manufacturing the product.

• Others had to maintain inventory as there existed middlemen, so to support reseller and retail

channels.

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Conti..3. Direct sales:

• Michael Dell revolutionized the personnel computer industry by skipping the middle man and selling computers directly to customer at home.

• He also innovated PC manufacturing by developing a process to mass-produce individually made-to-order computers, a process that Dell still uses to power the backbone of their personal computer business to this day.

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• Dell then enabled customers to order these personalized computers directly online, as one of the first online retailers selling personal computers that could be custom-ordered and shipped directly to your home.

• His innovations in manufacturing and distribution have made him one of the most successful businessmen of his time.

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• Dell determined that he could compete with retail computer dealers by selling direct to consumers at a lower price and offering better technical service.

• In spring 1986 Dell introduced the fastest personal computer of the time, a 12-megahertz 286 processor.

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• The price of $1,995 compared favorably with IBM's price of $3,995 for a 6-megahertz 286 processor.

• The machine caught the attention of the news media and excellent performance reviews and a cover story in PC Week. Sales exploded to $60 million that year.

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Advantages of direct ModelIn doing so, Dell will meet customer expectations of:

• Highest quality• Leading technology• Competitive pricing• Individual and company accountability

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• Best-in-class service and support• Flexible customization capability• Superior corporate citizenship• Financial stability"

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Lessons by Michael Dell

From : Direct from Dell

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Conti..• Think unconventionally:

Plenty of people told Dell that his 'direct' approach to selling computers would never work on a large scale. "It's fun to do things that people don't think are possible or likely" he says. Consequently, questioning conventional wisdom became a basic element of the culture of the firm.

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Conti..• Despise the status quo:

Dell staff are told to think like entrepreneurs or as if they are owners of Dell. They are much more likely to take risks. He tells staff: "There's not risk in preserving the status quo, but there's no profit, either."

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Conti..• Set big goals that may just be doable:

At the end of 1986 the company set a goal to achieve $1 billion in sales by 1992 and to expand internationally. By 1992 it was doing twice this. Setting a large goal makes you think about how you will achieve it.

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Conti..• Love change:

'Being on the cover of Fortune doesn't guarantee you anything' Dell says. In the computer industry, no-one can rest on their laurels; you need a climate of perpetual change and be a voracious learner to foresee what is happening and provide for it. Dell even surfs the Web after his kids have gone to sleep to see what people in chat rooms are saying about the company.

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Conti..• Focus on your possibilities, not your competitors:

A simple tip, easily forgotten in the stress of the business arena, but which assists creative solutions. Don't act from fear; measure yourself not by others but by an absolute standard of excellence.

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Conti...• FIND A PROBLEM AND FIX IT:

Every breakthrough business idea begins with solving a common problem.

The bigger the problem, the bigger the opportunity.

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Conti..• FIND A PURPOSE:

While a passion and a problem might be enough to start a business, it’s purpose that brings fulfillment . Our purpose is to enable human potential by accelerating the adoption of technology on a global scale, and in turn opening the door to growth, productivity and opportunity for people everywhere.

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Position of Dell Incorporation

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Position of Dell Inc.

• Dell is continuing to emphasize a customer promise to create the most secure and manageable IT solutions.

• Dell has wrapped its core IT strengths with new thoughtfully designed and attractive products geared for enhanced productivity in a variety of customer use cases.

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Conti..• Dell was the No. 1 storage solutions provider in the first half of 2014.• Dell maintained its No. 2 share position in the global x86 server

market.• Dell Software registered double-digit revenue growth year-over-year.• Dell is ranked by Gartner No. 1 in Worldwide IT Services for

Healthcare Providers.• Dell delivers year-over-year growth across every region globally.

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• Today, Dell is the world’s fastest growing integrated IT company.

“ Our strategy is resonating with customers worldwide as they look for a stable, reliable end-to-end solutions provider to meet their business and IT needs,” said Michael Dell, chairman and CEO.

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• As a private company, Dell has accelerated investments in research and development, the channel, the customer experience and sales to deliver industry-leading growth and innovation.

• With the ability to pursue a long-term strategy with 100 percent customer focus, Dell increasingly stands alone as an integrated provider of the end-to-end solutions that matter most to customers. 

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• Dell has employed as many as 78,000 people worldwide, which is five times as many people as are employed at the University of Texas, where the company was born.

• Dell products are now also sold in Wal-Mart, Staples, and other retail outlets.

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Social Media Presence

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Lessons From Michael Dell’s Life

Case study

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Lessons..

1. Every customer is important. 2. Innovation is incremental and continual. 3. Innovators are their own market research departments. 4. Collaboration leads to the best ideas.  5. Participation is powerful.

 

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