Strategy Audit on

Dell IFSA.
Presented To
Dr Ahmed Maher

Presented by

Corporate Structure

Over the years, Dell Inc. has broadened its product line to include not only desktop and laptop (listed under mobility) computers, but also servers, storage systems, printers, software, peripherals, and services, such as infrastructure services. (S) The company was reorganized from a geographic structure into three global business units. (S)

Corporate Culture

Dells original business model was very simple: Dell machines were made to order and delivered directly to the customer. (S) The companys early rapid growth resulted in disorganization. (W) Michael Dell temporarily slowed the corporations growth strategy while he worked to assemble and integrate a team of experienced executives from companies (S) like Motorola, Hewlett-Packard, and Apple. (S) Dell drove down costs further by perfecting its manufacturing processes and using its buying power to obtain cheaper parts. (S) Dell had grown in size to the extent that its usual double digit

Corporate Resources

Marketing

Dell PCs had consistently been listed among the best PCs on the market by PC World and PC Magazine. (S) Dell made computers more quickly and cheaply than any other company. (S) Dells absence in retail stores had hurt the companys attempts to expand beyond PCs into consumer electronics such as television (W) Sales to US consumers carried margins of only 6% compared with 11% for corporate buyers. (W)

Corporate Resources

Finance In 2006, company earned $3.6 billion in net income on $55.8 billion in net revenue. (S) Cash flow was never a problem because Dell was paid by customers long before Dell paid its suppliers. (S) Its reduction of overhead expenses to only 9.6% of revenue meant that Dell earned nearly $1 million in revenue per employee (S)

Corporate Resources

R&D Dell spent less on R&D. (W) Dell waits until new technology became standard. (W) High dependence on PC products (W)

Corporate Resources

Operations Dell uses its direct mail and telephone sales by offering its sales via internet. (S) The company held virtually no parts inventory (S) Dell became the master of process engineering and supply chain management (S) Dell customer service has fallen with rate 6.3% to a score of 74 (industry average) (W). Policy of accepting old PCs, printers and other products made by dell for free recycling throughout the world. (S)

Corporate Resources

Human Resources More people for customer services meant increased costs (W)

Corporate Resources

Information Systems CRM and helpdesk systems. (S)

Internal Factor Evaluation Matrix

4 = Superior Response; 3 = Above Average Response; 2 = Average Response and 1 = Poor Response

No.

Internal Factors Strength

Weight

Rating

Weight score

1 2 3

Product Reliability Build To Order Comp Prices

0.1 0.1 0.2

4 3 3

0.4 0.3 0.6

Elimination of the mark ups added by the reselling party through the direct sales to end buyer resulting in lower costs to consumer without cutting down margins for Dell

0.1

0.4

Excellent cash flow

0.1

0.4

Weakness 6 High dependence on PC products Minimal investments in Research and Development 0.2 3 0.6

0.1

0.4

Not a lot of production units and regional offices in the west including the United States

0.1

0.2

Total

3.3