Dell Inc: Moving Beyond Direct Sales Model
|
Case Code: BSTR280 Case Length: 26 Pages Period: 2006-2008 Pub Date: 2008 Teaching Note: Not Available |
Price: Rs.400 Organization: Dell Inc. Industry: Computers Countries: Global Themes: Sales & Distribution Management, Supply Chain Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Dell's Direct Business Model
Dell entered the PC makers market during the 1990s with the exceptional business model of direct selling, which revolutionized the global IT industry. Earlier, PC makers used to sell PCs through middlemen like retailers and wholesalers and there was very little possibility of customizing the products...
Direct-Only Model not Working for Dell Any More?
Analysts felt that the innovative sales model developed by Dell had made it the industry's favorite and also a high technology initiator with good sales growth. However, industry insiders observed that those upbeat days appeared to be over for Dell as the company's profits and share prices had dropped considerably in the mid-2000s...
Dell's New Strategy
Shortly after replacing Rollins as CEO, Michael put together a new executive team at Dell. To reconstruct its PC business, Dell announced that it would lay off around 1,000 employees. A memo issued to Dell employees by Michael that was leaked to the media, hinted that the company was now open to moving away from its direct-only model...
Testing Retail Waters
On May 24, 2007, Dell disclosed its plans to sell PCs in the US, Canada, and Puerto Rico through Wal-Mart and Sam's Club stores...
Embracing the Channel
Dell's new channel strategy was not just about retailing, it also focused on VARs. Since 2006, Dell had been secretly developing some business with channel partners. These VARs integrated the hardware components provided by Dell and sometimes also installed software to offer customized products to their clients who were indirect customers of Dell...
A Smart Move?
Analysts in general appreciated Dell's new channel strategy as many of them had been saying for a long time that such a change was necessary for the company. IDC analysts Richard Shim said, "For years they didn't have to (change) because they kept winning."...
Is Dell Taking a Big Risk?
Some analysts felt that Dell was taking a big risk with its new channel strategy. They felt that the company might be diluting what it was good at. They noted that Dell was undergoing a change at the fundamental level and the change would be far-reaching, requiring the company to manage its inventories in a different way...
Initial Results
In the second quarter of 2007, Dell's market share fell further by 5 percent, while HP's share rose to 37 percent. According to iSuppli, in the third quarter, Dell continued to trail HP with PC shipments of 9.9 million as against HP's 13.1 million...
Outlook
Dell was confident that the initiatives it had taken would lead to healthy growth and profitability in the long term. In addition to its new channel strategy, the company was banking on its more recent focus on product design and technology...
Exhibits
Exhibit I: Dell's Key Financials
Exhibit II: Five Tenets of Dell's Direct Model
Exhibit III: Dell's Direct Model Poster
Exhibit IV: Dell Stock's Performance: March 2003-March 2008
Exhibit V: A Note on HP's Distribution Strategy
Exhibit VI: A Brief Note on the Global PC Market
Exhibit VII: Dell's Electronic Kiosks at Shopping Malls
Exhibit VIII: Dell's Retail Store at Dallas
Exhibit IX: What the VARs Wanted from Dell
Buy this case study (Please select any one of the payment options)
| Price: Rs.400 |
Price: Rs.400 | PayPal (9 USD) |
