STRATEGIC MANAGEMENT

Dell Inc.in 2008

Case Analysis & Decision (Case 2)

PREPARED AND SUBMITTED BY GROUP

ELMAHI ELSHIKH ELAJAB ELSHIKH MR081123

LIu XIA MR081157

MOHAMAD AZRAAI AHMAD SHUHOD MR 081107

KHAIRUL ANUAR MOHAMAD MR091076

HAJIR ROHANI MR081093

SUBMITTED TO:

DR. LAI YENG CHAI

December 31-12-2009

1. STRATEGIC MATTERS

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 DELL INCORPORATION LOOSE WORLDWIDE LEADERSHIP IN
PERSONAL COMPUTERS TO HEWLETT-PACKARD (HP).

2. ISSUES

In order to address each of the strategic matters, the most important

things to do are:

TO REGAIN GLOBAL MARKET LEADER IN PERSONAL

COMPUTERS.

3. ALTERNATIVES

Generated alternatives for the identified issue are:

A. TO CHALLENGE AND COUNTER ATTACK HEWLETT-PACKARD

STRATEGIES:-

HEWLETT-PACKARD STRATEGIES

Sales 1. Sales made through distributors, retailers and other

channels. These included retailers that sold HP product
through internet stores, value- added product and
services, smaller retailer, customer segments,
software vendors, system integrators etc.

Costs- 2. Scrutinize supply chains, streamline the organization

efficient structure, trimming corporate overheads and site
worldwide.

IT 3. Simplified complicated IT operations; to engineer

utilization HP’s IT architectures and operations.

Provision 4. Outsourcing to assemble PCs and servers (e.g. x86) by

of PCs and contract manufacturers throughout various part of the
servers. world.

New 5. Introduce new products and services and capitalize

Products data centre architecture, mobile computing and digital
printing.

Customer 6. Assembled of orders according to customers’

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services specifications with maximize manufacturing efficiency
by contract manufacturers.
Acquisitio 7. Acquire software-technology and services companies
n such as Compact ($7bil), Electronic Data System (EDS)
($13.25bil), 1000 salespeople

B. TO CONTINUE THE EXISTING DEL STRATEGY INORDER TO

OVERTAKE HEWLETT-PACKARD

DELL STRATEGIES

Sales 1. Bypassing distributors and retail dealers eliminated the

markups of resellers via direct sales and build-to order
business model.
2. Customer-based sales and marketing focus at
corporate, government, household and individual
buyers segments.
3. Supplementing the direct sale strategy with sales at
the retail stores of select partners.
4. Installing direct store kiosks as a hands-on
complement to internet and phone sales (e.g.; Japan
and U.S.). Entry into the white-box PC segment (i.e.,
unbranded).

Costs- 5. Making build-to-order manufacturing and partnering

efficient with reputable key suppliers of PC parts and
components.
6. Ongoing improvement in assembly efficiency by
making innovations and redesigning the PCs.
7. Commitment to just-in-time inventory practices into
market place.
8. Continuous pursuit of cost-reduction initiatives,
organizing operations more efficiently across company
value chain-design, supply, logistic, materials,
manufacturing, labor etc.

IT 9. Web site strategy via incorporating e-commerce

utilization technology and internet and use of IT into everyday
business practices, value-added services for customer
with large IT operations.

Provision 10. Produce standard technology of PCs and servers

of PCs and (e.g. x86) via seismic shift in server technology.
servers. 11. Outsourcing the full assembly of some laptop
models to Asian contract manufacturers (e.g. Taiwan’s
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 Foxconn Group)

New 12. Expansion into new products offerings to include

Products data storage hardware, switches, handheld PCs,
printers, and printer cartridges.

Customer 13. Provide custom-built products and custom-tailored

services services, on-site services, on-line training program,
customer service centers, premier pages web sites,
product design services, enhance services and support
for large enterprises, online shoppers with customer
reviews of Dell products, customer-driven research and
development and standardized technology.

Acquisitio 14. Acquire software-related companies such as; Ever

n dream corporation (SaaS), SilverBack Technologies
Inc (IT infrastructure), MassageOne Inc (e-mail
services), EqualLogic (storage area network), ASAP
Software, Network Storage Company.

Quality 15. Quality control processes on components, parts,

control and subassemblies internal and from suppliers.

Advertisin 16. Advertising through leading computer publication

g such as PC World, PC Magazine, Wall Street Journal.

C. TO ESTABLISH NEW STRATEGY TO OVERTAKE HEWLETT-

PACKARD

DELLS’ NEW STRATEGIES

New 1. Introducing new concepts of products with diversify

product multiple dimensions in term of products with servers,
concepts storage, printing and services.

Market 2. Grow market share outside the U.S which Dell

share Corporation currently has at 10%.

Sell 3. Sell its worldwide network computer factories in an

computer effort to stabilize financial and reduce production
factories costs.

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4. CRITICAL FACTOR

A. TO CHALLENGE AND COUNTER ATTACK HEWLETT-PACKARD

STRATEGIES:-

CRITICAL CURRENT FUTURE LOGICAL

FACTORS SITUATION SITUATION ASSUMPTION

Sales Bypassing Sales made More attraction

distributors and through from corporate,
retail dealers distributors, government,
eliminated the retailers and other household and
markups of channels included individual buyers
resellers via retailers that sold segments.
direct sales and products through
build-to order internet stores,
business model. value- added
product and
services.
Costs - efficient High cost of Scrutinize supply Offer higher quality
operation in chains, streamline of product but with
supply chain, the organization lower cost.
organization structure, trimming
structure and corporate
corporate overheads and site
overheads worldwide.
compared to
rivals.

New Products Products offerings Introduce new New generation of

and technology include data products and customers want
innovations. storage hardware, services and more high-tech,
capitalize data glitzy, fashionable
switches,
centre and more
handheld PCs, architecture, customizable
printers, and mobile computing products.
printer cartridges. and digital
printing.

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Provision of PCs Produce standard Outsourcing to High productivity
and servers. technology of PCs assemble PCs and of product for
and servers via servers by contract customers and fast
seismic shift in manufacturers supply chain.
server throughout various
technology. part of the world.

Customer Provide custom- Assembled of It encourages new

services built products and orders according to customers and
custom-tailored customers’ loyal customers to
services, on-site specifications with buy more.
services maximize
manufacturing
efficiency by
contract
manufacturers.

Supporting Limitation of Increase number of High productivity

industry supporting supporting of product and fast
Such as IT, industry such as industries with supply chain.
component IT, component large IT operation.
supplier, raw supplier, raw
materials. materials etc.

Change in Mostly younger Differentiation Satisfying and

consumer customer and from the Rivals. increasing number
Preferences. partly old fashion of IT conscience
customer. consumers will
Distinguish the
firm from its rivals.

B. TO CONTINUE THE EXISTING DEL STRATEGY INORDER TO

OVERTAKE HEWLETT-PACKARD

CRITICAL CURRENT FUTURE LOGICAL

FACTORS SITUATION SITUATION ASSUMPTION

Capturing a Mostly loyal Enhance services Younger

new customer customers and support for generation tend to
segment from urban areas large enterprises, do everything
online shoppers online, hence
with customer attracting younger
reviews of Dell and new
products, customers from
customer-driven urban and rural
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 research and area.
development and
standardized
technology.

Promotion Only a “thank Giving gift/discount It encourages

gift/discount you” letter along after a certain customers to buy
with catalogue amount of buying more

Aggressive Moderate Higher brand Aggressive

e-Marketing E-Marketing image due to E-Marketing is a
activities. aggressive e- branding tool that
Marketing keeps Dell on
activities customers' minds.

Customer Minimal customer More program such More new

loyalty loyalty program. as; giving gift, customers and
bonus, discount, loyal online
and free delivery customers
charges to keep programs.
the customers
loyalty.

C. TO ESTABLISH NEW STRATEGY TO OVERTAKE HEWLETT-

PACKARD

CRITICAL CURRENT FUTURE LOGICAL

FACTORS SITUATION SITUATION ASSUMPTION

New product Products offerings Introducing new Satisfying numbers

concepts include data concepts of of consumers
storage hardware, products with would grow
switches, diversify multiple globally.
handheld PCs, dimensions in term
printers, and of products with
printer cartridges. servers, storage,
printing and
services.

Market share Most of market Capturing a Faster ability to

share within US. broader gain share in new
Market by growing markets versus
market share limitation market.
outside the U.S

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Sell computer Higher overhead Sell its worldwide Ability to offer
factories costs of network computer competitive price
worldwide factories by as reduction of
network computer entering into production costs.
factories agreement with
compared to contract
rivals. manufacturers to
produce in PCs.

Increase Sales 15% and 5% The leader in sales Both on line sale
worldwide market worldwide market and retail shops
share of PCs and share of PCs and are able to sell
printing products printing products. more PCs and
respectively. printing products

Brand Moderate well- More brand Well trained and

awareness known brand awareness more dedicated
outside the US. outside the region employees enable
Also, some reps via well trained to present the
cannot present and more Brand adequately
the brand committed and appropriately
adequately. employees sell it outside the
region.

5. EVALUATION OF ALTERNATIVES

A. TO CHALLENGE AND COUNTER ATTACK HEWLETT-PACKARD

STRATEGIES:-

ALTERNATIVES
CRITICAL FACTORS
To challenge and Not to challenge
BASED ON FUTURE
counter attack and counter attack
SCENARIO
Hewlett-Packard Hewlett-Packard
strategies strategies

Sales made through Yes; increase in sales No; decrease in sale

distributors, retailers and better services because customer will
and other channels for customers and prefer better service
included retailers that capable to offer at nearest stores.
sold products through competitive price.
internet stores, value-
added product and
services.

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Scrutinize supply Yes; production costs No; production costs
chains; streamline the will reduce maintain high and
organization structure, significantly and unable to offer
trimming corporate consequently lower competitive price.
overheads and site the price.
worldwide.

Introduce new Yes; attract new No; poor customer

products and services generation customers interaction due to
and capitalize data with different outdated products.
centre architecture, preferences.
mobile computing and
digital printing.

Outsourcing to Yes; reduces No; high operation

assemble PCs and operation costs costs
servers by contract effectively.
manufacturers
throughout various
part of the world.

Assembled of orders Yes; capable to offer No; poor competition

according to competitive price at due to limited offer to
customers’ higher quality of customers.
specifications with products and satisfy
maximize customers.
manufacturing
efficiency by contract
manufacturers.

Increase number of Yes; reduces No; high operation

supporting industries operation costs costs
with large IT effectively.
operation.

Differentiation from Yes; attract new No; poor customer

the Rivals. generation customers interaction due to
with different outdated products.
preferences.

B. TO CONTINUE THE EXISTING DEL STRATEGY INORDER TO

OVERTAKE HEWLETT-PACKARD

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 ALTERNATIVES

CRITICAL FACTORS To continue the To discontinue the

BASED ON FUTURE existing Del existing Del
SCENARIO strategy in order strategy
to overtake
Hewlett-Packard

Enhance services and Yes; better growth in No; poor market

support for large market demand with demand due to poor
enterprises, online appropriate customer customer service
shoppers with approach strategy. approach.
customer reviews of
Dell products,
customer-driven
research and
development and
standardized
technology.

Giving gift/discount Yes; satisfying and No; poor customer

after a certain amount increasing number of attractions owing to
of buying consumers and loyal poor incentives
customers. offered to customers.

Higher brand image Yes; encourage No; poor customer

due to aggressive e- customers to buy promotion
Marketing activities more and attract the
others.

More program such as; Yes; more attraction No; poor customer
giving gift, bonus, tool that keeps Dell attractions due to
discount, and free on customers' minds. minimal programs
delivery charges to and activities
keep the customers
loyalty.

C. TO ESTABLISH NEW STRATEGY TO OVERTAKE HEWLETT-

PACKARD

CRITICAL FACTORS ALTERNATIVES

BASED ON FUTURE
SCENARIO To establish new To maintain with
strategy to old strategy.
overtake Hewlett-

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 Packard

Introducing new Yes; increase in sales No; decrease in sales

concepts of products and revenue with the due to limited product
with diversify multiple multiple choice of offered.
dimensions in term of product.
products with servers,
storage, printing and
services.

Capturing a broader Yes; more No; limited customer

Market by growing segmentation in local market.
market share outside customers and
the U.S product categories

Sell its worldwide Yes; Increase in cash No; Unstable financial

network computer flow and reduce High production
factories by entering production costs costs.
into agreement with resulting in more
contract competitive in global
manufacturers to market.
produce in PCs.

The leader in sales Yes; more aggressive No; poor in marketing

worldwide market in marketing globally locally and globally.
share of PCs and
printing products.

More brand awareness Yes; Increase in sales No; poor customer

outside the region via and revenue globally attractions due to
well trained and more with the brand poor brand
committed employees awareness program awareness.
domestically and
outside the region.

6. STRATEGIC DECISION

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 6.1. Dell Incorporation is capable to address both of its
aforementioned strategic matters via the following steps
decisions processes:-

6.1.1. First and foremost, Dell Incorporation is to challenge

and counter attack Hewlett-Packard strategies by making
sales through distributors, retailers and other channels
included retailers that sold products through internet
stores, value- added product and services. Scrutinize supply
chains; streamline the organization structure, trimming
corporate overheads and site worldwide. Introduce new
products and services and capitalize data centre
architecture, mobile computing and digital printing.
Outsourcing to assemble PCs and servers by contract
manufacturers throughout various part of the world.
Assembled of orders according to customers’ specifications
with maximize manufacturing efficiency by contract
manufacturers. Increase number of supporting industries
with large IT operation. Differentiation from the Rivals.

6.1.2. The second step, Dell Incorporation is to continue

the existing Del strategy in order to overtake Hewlett-
Packard by enhance services and support for large
enterprises, online shoppers with customer reviews of Dell
products, customer-driven research and development and
standardized technology. Giving gift/discount after a certain
amount of buying. Higher brand image due to aggressive e-
Marketing activities. More program such as; giving gift,
bonus, discount, and free delivery charges to keep the
customers loyalty.

6.1.3. The third step, Dell Incorporation is to establish new

strategy to overtake Hewlett-Packard by introducing new
concepts of products with diversify multiple dimensions in
term of products with servers, storage, printing and
services. Capturing a broader market by growing market
share outside the U.S. Sell its worldwide network computer
factories by entering into agreement with contract
manufacturers to produce in PCs. The leader in sales
worldwide market share of PCs and printing products. More
brand awareness outside the region via well trained and
more committed employees

7. IMPLEMENTATION ACTION PLAN

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7.1. Owing to numerous internal organization issues, Dell
Incorporation should address these issues by implementing
integrated production planning and operation control systems as
soon as possible. It needs a watchful eye to analyze each and
every function in order to find out the best way of doing the job.
This is a teamwork job under direct supervision of the CEO.

7.2. Dell Incorporation should take the opportunity of change in

consumer preferences by introducing new concepts of products
development in order to differentiate the firm from its rivals and
to attract diverse group of customers.

7.3. Marketing RND and consumer preferences survey should be

conducted in order to find out what exactly consumers need. This
strategy should be implemented right after finishing the previous
one.

7.4. On the “customer’s loyalty” issue, moreover, today people tend

to do everything online! Therefore, expanding online selling
system and e-marketing couple with service back-up centre/shop
will help the firm to capture a broader market as well as younger
generation customer.

7.5. Dell Incorporation is to develop an easy to navigate, multi lingual

website and doing aggressive e-Marketing activities as well as to
try to take the highest rank in pioneer search engines. Dell can
implement this strategy simultaneously with the previous with the
help of Marketing VP and a reliable IT counselor.

7.6. Dell Incorporation should be ready for expanding its global sales
market. Analysis and records prove that this is the best strategy
to take advantage of the growing market. Expanding global
market sales for the Dell Incorporation should carry out two
steps:-

7.6.1. In the first phase, Dell should sell its worldwide network
computer factories in an effort to reduce production costs.
After one year, positive results of the previous implemented
strategies and after gaining the projected ROI will be ready
for more expansion.

7.6.2. Second phase, Dell is to presence in a wider market and

taking more advantage of the growing market, Dell should

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 continue its expansion through grow its market share
outside the U.S globally.

7.7. Dell implementation action plan has been summarized in the

following table:

STRATEGIC DECISION MADE

1. 2. 3. 4. Expanding global
Implemen Productio Diversify Expandin market
tation n multiple g online
Actions planning dimensio selling 4.1 4.2
and ns in system Within Globally
operation term of and e- the
control products marketin region
systems g
WHAT Production New Expanding Expanding Expanding
To planning product online sales after multiple
implement? and developme selling service. product
operation nt and system and
control promotion and e- functional
systems marketing

WHY To gain a To To capture To To

To control differentiat a broader presence presence
implement? over the e and market & within the in a wider
business attract attract region market &
diverse younger market but higher
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 group of customers with growth
customers higher rate
growth
rate
HOW Engineerin Based on Easy to Expanding Through
To g all consumers navigate, sales after acquiring
implement? functions preference multi service Software-
to s survey, lingual centre/ related
find out producing website shops with services
how PCs and long term such as
resources products aggressive lease Ever
are to be with more e- agreement dream
utilized Contempor Marketing Corporatio
ary high- n, Silver
tech Black Tech
products. etc.

WHERE Inside the Inside the Dell’s US, Europe Global

To organizatio organizatio website market market
implement? n n

WHEN ASAP, and Right after Simultaneo After After

To should be the 1st usly with finishing finishing
implement? finished at strategy the the 2nd the 3rd
the end of previous strategy strategy
year 2010 strategy

WHO CEO, with CEO + CEO + CEO + CEO +

To assistance Marketing Marketing Mktg. VP Mktg. VP
implement? of VPs of VP VP +
all reliable IT
functions counselor

8. POTENTIAL PROBLEM ANALYSIS

STRATEGIC DECISION MADE

1. 2. 3. 4. Expanding retail
Implemen Productio Diversify Expandin system
tation n multiple g online
Actions planning dimensio selling 4.1 4.2
and ns in system Within Globally
operation term of and e- the
control products marketin region
systems g

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Potential Negative Shift in a. Threat of Not Intense
Problem reactions consumers entry gaining the competitio
and preference b. Cost of projected n
resistances s shipments return

Contingenc Frequently Continuous a. Strong a. Brand

y informativ marketing Customer marketing awareness
Plan e and research loyalty campaign activities
persuasive program and b. New
speeches and branding product
and aggressive activities developme
meetings e- nt (NPD)
Marketing
b. Free or
discounted
Delivery.

WHAT A series of Continuous a. Gradually a. Brand

informativ marketing Customer implement awareness
To e and research loyalty ation along activities
implement? persuasive activity with b. New
speeches with marketing product
and aggressive campaign developme
meetings e- nt (NPD)
to manage Marketing
resistances b. Free or
discounted
delivery

WHY To prevent To make a. To keep To back to To prevent

To and reduce the firm up customers the of losing
implement? resistances to date in loyal projected market
and terms of and to growth share
encourage consumer reach to as rate
employees preference much as and
to s possible minimize
participate customers loss
b. To
increase
online
sales

HOW Showing Continuous Cutting a. Well a. Well

16
To befits and marketing cost of trained trained
implement? positive research inefficient staff staff
outcomes and online activities to should should
to surveying offer more adequately adequately
employees free or with present present
through discount the brand the brand
frequent delivery b. Strong b.
meetings marketing Intensively
campaign NPD

WHERE Inside the Online Throughout In stores & Externally

To organizatio survey and the Dell’s inside the & outside
implement? n throughout website organizatio the
the market n organizatio
n
WHEN Starts Starts Proactive Proactive Proactive
To before before strategy strategy strategy
implement? implement implement
ation ation
and will be and will be
continued continued

WHO CEO with CEO + CEO + CEO + CEO +

To assistance Marketing Marketing Mktg. VP Mktg. VP +
implement? of VPs VP VP Retail staff

9. CONCLUSION

9.1. With regards to the internal organizational issues, first and

foremost, Dell’s CEO should address these issues by
implementing integrated production planning and operation
control systems to gain a proper control over the business.

9.2. While projected growth rate for Dell Incorporation, surveys

shows that change in consumer’s preferences seems to be one
of the reasons the firm’s slowdown. Dells’ should take this
opportunity by introducing new concepts of products
development in order to differentiate the firm from its rivals and
to attract diverse group of customers.

9.3. In facing with “customers loyalty” issue Dell Incorporation

should expanding online selling system and e-marketing in order
to help the firm to capture a broader market as well as younger
generation customers.

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Appendix 2:

Mission, Objectives, Strategies:

HISTORY:

 Dell Company was established in 1984.

 Dell operation involves dosing, building and customizing hi-tech product.

 Their product line today includes Desktops, Servers, Laptops, Peripherals and
Workstation.

Mission:

Dell is a company leader in delivering the latest technology in computer systems to

customers, and a broad range of products that enhance the service. The main concept
is to sell directly to customers without intermediaries to better understand their needs
and provide personalize assistance to take customers to the next level of service.

Strategy:

Dell combines direct customer model which is our initial goal, with relevant
technologies and solutions, efficient manufacturing and logistics, and strive to find new
distribution channels amongst businesses and individuals around the world. Within the
customer experience, superior value, high quality, relevant technology, and customized
systems set us apart from our competitors. Also, product differentiation, and new
acquisitions are a part of the widening of the business.

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 10. BIBLIOGRAPHY

10.1. Lai, Y. C. (Director) (2009, July 12). Case Analysis and Decision.
Strategic Management (MRB 3012), IBS, UTM City Campus,
Kuala Lumpur.

10.2. Gamble J., J., A., Thompson, A., & Strickland, I. (2009). Crafting
& Executing Strategy: The Quest for Competitive Advantage:
Concepts and Cases. Boston: McGraw-Hill College.

10.3. David, F. (1986). Fundamentals of Strategic Management. New

York: Macmillan Pub Co.

Bibliography

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