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5-1
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
E15Dell Strategy Formulation Analytical Frame Work And Financial Statement Analysis
5-2
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Introduction of Dell Dell, Inc. is an American multinational information technology corporation based in 1 Dell Way, Round, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest technological corporations in the world, employing more than 103,300 people worldwide. Dell is listed at number 41 in the Fortune 500 list.
5-3
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Vision and Mission • Vision Statement:• "Dell is committed to being a good neighbor in the
communities we call home. We must continue to grow responsibly – protecting our natural resources and practicing sustainability in all its forms – and improve the communities where we live and work through our financial and volunteer efforts."
• MISSION STATEMENT:• Dell's mission is to be the most successful Computer Company in the world at
delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of.
• Highest quality• Leading technology• Competitive pricing• Individual and company accountability• Best-in-class service and support• Flexible customization capability• Superior corporate citizenship• Financial stability
5-4
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Income StatementDELL INC.
Statement of Operations
(in millions)
Annual Results
FY09 FY10 FY11
Income Statement:
Net revenue $61,101 $52,902 $61,494
Cost of revenue 50,144 43,641 50,098
Gross margin 10,957 9,261 11,396
SG&A 7,102 6,465 7,302
R&D 665 624 661
Total operating expenses 7,767 7,089 7,963
Operating income 3,190 2,172 3,433
Investment and other income, net 134 (148) (83)
Income before taxes 3,324 2,024 3,350
Income tax provision 846 591 715
Net income 2,478 1,433 2,635
5-5
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Balance SheetDELL INC.
Statement of Financial Position
(in millions)
Annual Results
FY09 FY10 FY11
Assets:
Cash & cash equivalents $8,352 $10,635 $13,913
Short-term investments 740 373 452
Accounts receivable, net 4,731 5,837 6,493
Financing receivables, net 1,712 2,706 3,643
Inventories, net 867 1,051 1,301
Other 3,749 3,643 3,219
Total current assets 20,151 24,245 29,021
PP&E, net 2,277 2,181 1,953
Investments 454 781 704
Long-term financing receivable, net 500 332 799
Other non-current assets 3,118 6,113 6,122
Total assets: 26,500 33,652 38,599
Liabilities & Stockholders Equity:
Short-term borrowings 113 663 851
Accounts payable 8,309 11,373 11,293
Accrued and other 3,736 3,884 4,181
Short-term deferred services revenue 2,701 3,040 3,158
Total current liabilities 14,859 18,960 19,483
Long-term debt 1,898 3,417 5,146
Long-term deferred services revenue 3,000 3,029 3,518
Other non-current liabilities 2,472 2,605 2,686
Total liabilities: 22,229 28,011 30,833
Stockholder's equity: 4,271 5,641 7,766
Total liabilities & equity: 26,500 33,652 38,599
5-6
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Ratios AnalysisDELL INC. Selected Financial Data & Ratios (in millions, except per share data and ratios) (Unaudited)
Yearly results for liquidity, Profitability, Solvency, and Activity Ratios
FY09 FY10 FY11
Liquidity:
Net working capital ratio 5292 5285 9538
Current ratio 1.356 1.278 1.489
Quick ratio 1.30 1.22 1.42
Cash Ratio 0.611 0.58 0.737
Activity Ratios:
Account Receivable Turnover Ratio 12.91 10.01 19.55
# of Days Account Receivable outstanding 28.27 36.46 18.67
Fixed Assets turnover ratio 26.83 24.25 31.48
Inventory turnover ratio 57.83 45.50 42.60
Average # of days inventory outstanding 6.31 8.02 5.56
Operating Cycle 64.14 53.53 51.16
Total Assets turnover Ratio 2.305 1.57 1.59
Profitability:
Return on Investment 0.28% 0.12% 0.17%
Gross margin 17.93% 17.50% 18.53%
Operating margin 5.44% 3.82% 5.44%
Return on Assets 3.83% 2.11% 2.84%
Net profit margin 4.05% 2.70% 4.28%
Solvency Ration:
Debt Ratio 0.838 0.832 0.798
Debt to equity ratio 5.2 4.96 3.97
5-7
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Common Size Analysis
FY09 FY10 FY11
Income Statement:
Net revenue $61,101 100% $52,902 100 $61,494 100
Cost of revenue 50,144 82 43,641 82 50,098 81.46811
Gross margin 10,957 18 9,261 18 11,396 18.53189
SG&A 7,102 12 6,465 12 7,302 11.87433
R&D 665 1 624 1 661 1.074902
Total operating expenses 7,767 13 7,089 13 7,963 12.94923
Operating income 3,190 5 2,172 4 3,433 5.582658
Investment and other income, net 134 0 -148 0 -83 -0.13497
Income before taxes 3,324 5 2,024 4 3,350 5.447686
Income tax provision 846 1 591 1 715 1.162715
Net income 2,478 4 1,433 3 2,635 4.284971
Vertical Analysis
5-8
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Horizontal Analysis Balance sheetDell Incorporation Horizontal Analysis of Balance sheet
FY09 FY10 FY11
Assets:
Cash & cash equivalents $8,352 $100 $10,635 27.33 $13,913 30.82
Short-term investments 740 100 373 -49.59 452 21.17
Accounts receivable, net 4,731 100 5,837 23.37 6,493 11.23
Financing receivables, net 1,712 100 2,706 58.06 3,643 34.62
Inventories, net 867 100 1,051 21.22 1,301 23.78
Other 3,749 100 3,643 -2.83 3,219 -11.63
Total current assets 20,151 100 24,245 20.31 29,021 19.96
PP&E, net 2,277 100 2,181 -4.21 1,953 -10.45
Investments 454 100 781 72.02 704 -9.85
Long-term financing receivable, net 500 100 332 -33.6 799 140.66
Other non-current assets 3,118 100 6,113 96.05 6,122 0.147
Total assets: 26,500 100 33,652 26.98 38,599 14.7
Liabilities & Stockholders Equity:
Short-term borrowings 113 100 663 486.72 851 28.35
Accounts payable 8,309 100 11,373 36.87 11,293 -0.703
Accrued and other 3,736 100 3,884 3.96 4,181 7.64
Short-term deferred services revenue 2,701 100 3,040 12.55 3,158 3.88
Total current liabilities 14,859 100 18,960 27.59 19,483 2.75
Long-term debt 1,898 100 3,417 80.03 5,146 50.59
Long-term deferred services revenue 3,000 100 3,029 0.96 3,518 16.14
Other non-current liabilities 2,472 100 2,605 5.38 2,686 3.109
Total liabilities: 22,229 100 28,011 26.01 30,833 10.07
Stockholder's equity: 4,271 100 5,641 32.08 7,766 37.67
Total liabilities & equity: 26,500 100 33,652 26.98 38,599 14.7
5-9
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
SPACE MATRIX
5-10
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Boston consulting group or BCG matrix
Asia
Region Revenues Profit Percentage of Revenue
Growth rate Relative e Market Share
Americas $32,940M $2,978M 66.94% 21% 75%
Europe $10,787M $818M 21.922% 61% 20%
Asia-Pacific $5,478M $458M 11.133% 29% 10%
Total $49,205M $4,254M 100% 100% 95%
Rel
ativ
e m
arke
t S
hare
5-11
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
SPACE MATRIX CONT.6
5
4
3
2
1
-6 -5 -4 -3 -2 -1 1 2 3 4 5 6
-1
-2
-3
-4
-5
-6
FSConservative Aggressive
Defensive Competitive
IS
ES
CA
5-12
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
THE INTERNAL-EXTERNAL (IE) MATRIX
The E
FE T
otal
Weighted
Score
The IFE Total Weighted Score
Strong Average Weak
3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
High I II III
3.0 to 3.99
Americas
Europe
Medium IV V VI
2.0 to 2.99
Dell
Low VII VIII IX
1.0 to 1.99
Asia-Pacific
Hold and Maintain
5-13
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
THE INTERNAL-EXTERNAL (IE) MATRIX CONT.
Region Revenues Profit Percentage of Revenue
IFE Score
Americas
$32,940M $2,978M 66.94% 3.5
Europe $10,787M $818M 21.922% 2.8
Asia-Pacific
$5,478M $458M 11.133% 1.2
Total $49,205M $4,254M 100%
5-14
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
Key External Factors Weight Rating Weighted Score
OpportunitiesDemand for personal computers continues to grow. 0.100 3 0.300
Many customers switching from desktops to notebooks 0.050 4 0.200
Microsoft desires to partner with Dell. 0.100 4 0.400
Consumer electronics is a profitable business. 0.050 2 0.100
Higher consumer spending in the US. 0.025 2 0.050
Incorporated managed and professional services. 0.025 2 0.050
Global enterprise systems. 0.050 3 0.150
Training and certification program. 0.025 2 0.050
Financial services offered. 0.025 3 0.075
Growth in the color printer market. 0.025 2 0.050
Threats
Alliance in the PC industry 0.050 3 0.150
Higher oil prices could crimp consumers’ spending. 0.050 3 0.150
Commercial demand fails to accelerate. 0.025 2 0.050
Competitors are strong. 0.150 3 0.450
Slow growth in the PC market. 0.100 2 0.200
Component price fluctuation 0.025 4 0.100
Price for computing power has decreased. 0.025 3 0.075
Computer market has broadened. 0.050 3 0.150
Currency fluctuations in the international markets. 0.050 2 0.100
TOTAL 1.00 2.85
5-15
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
Competitive Profile Matrix's Apple HP Dell
Critical
Success
Factors
Weight Rating Weighte
d Score
Rating Weighted
Score
Rating Weighted
Score
Market Share
Price
Financial
Position
Product Quality
Consumer
Loyalty
Advertising
Management
Global
Expansion
0.10
0.10
0.15
0.15
0.15
0.04
0.06
0.06
0.14
0.05
2
2
3
4
4
4
4
2
4
3
0.20
0.20
0.45
0.60
0.60
0.16
0.24
0.12
0.56
0.15
3
3
4
3
2
2
3
2
2
2
0.30
0.30
0.60
0.45
0.30
0.08
0.18
0.12
0.28
0.10
4
4
3
3
3
3
3
3
2
3
0.40
0.40
0.45
0.45
0.45
0.12
0.18
0.18
0.28
0.15
Total 1.00 3.02 2.71 3.06
5-16
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
GRAND STRATEGY MATRIX
5-17
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
QSPMStrategic Alternatives
Key Internal Factors Weight Build another
manufacturing plant in
the US.
Expand marketing efforts
in Asia and Europe
Strengths AS TAS AS TAS
Built-to-order personal computers sold directly to customers. 0.100 --- --- --- ---
Direct sales via mail, phone orders, and the Internet. 0.050 --- --- --- ---
Built-to-order personal computers eliminate markups of
resellers.
0.025 --- --- --- ---
Built-to-order personal computers greatly reduce the costs
and risks associated with carrying large stocks of parts,
components, and finished goods.
0.050
---
---
---
---
Dell is the current PC industry leader. 0.100 3.0 0.300 2.0 0.200
Dell has regional and manufacturing plants globally. 0.050 1.0 0.050 4.0 0.200
Dell is a well-known brand name. 0.050 4.0 0.200 3.0 0.150
Dell’s direct-to-consumer strategy has given the company a
substantial cost and profit margin over its rivals.
0.050
---
---
---
---
5-18
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
QSPM strengths and weakness (cont.)Dell has a good relationship with the company’s large
corporate and government customers and continues to focus
on these sales and service relationships.
0.025
1.0
0.025
2.0
0.050
Dell holds 29.1% of the total market for personal computer
sales in the Americas, putting Dell ahead of its competitors.
0.050
3.0
0.150
2.0
0.100
Dell’s built-to-order manufacturing process results in rapid
inventory turnover and reduced inventory levels.
0.050 --- --- --- ---
To ensure defect free products, testing is performed by Dell
along the process and on the final computer product.
0.050
---
---
---
---
Dell has a wide range of customers including large
corporations, government agencies, healthcare, educational
institutes, small business, and individuals.
0.050
4.0
0.200
3.0
0.150
Dell is ranked # 1 by Technology Business because of its
Intel-based server satisfaction for 27 of the past 29 quarters.
0.050
---
---
---
---
Dell divides its sales and marketing force among the various
customer groups in order to meet each group’s specific
needs.
0.025
---
---
---
---
Dell advertises its products on the Internet, TV, and by mailing
a broad range of marketing publications.
0.025 --- --- --- ---
5-19
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
QSPM strengths and weakness (cont.)
Weaknesses
Dell has only two manufacturing plants and one
regional office in the United States.
0.025 4.0 0.050 2.0 0.050
Dell computers cannot be purchased in retail
stores.
0.025 --- --- --- ---
Dell has over 40 locations globally yet Dell is not
the #1 supplier in Asia Pacific, European, Middle
East, or African segments.
0.050
1.0
0.050
4.0
0.200
Dell rebrands printers purchased from Lexmark,
which is a major production cost for Dell.
0.025 --- --- --- ---
Dell is too reliant on foreign suppliers, because of
this a disruption of fuel supply could make the
price of shipping go up.
0.050
3.0
0.150
1.0
0.050
Dell is so large now that it might not be able to
grow at the same pace.
0.025 1.0 0.025 2.0 0.050
SUBTOTAL 1.00 1.20 1.20
5-20
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
QSPM strengths and weakness (cont.)
Key External Factors
Weight
Build another
manufacturing
plant in the US.
Expand marketing
efforts in Asia and
Europe
Opportunities AS TAS AS TAS
Demand for personal computers continues to grow. 0.100 2.0 0.200 4.0 0.400
Many consumers switching from desktops to
notebooks.
0.050 --- --- --- ---
Microsoft desires to partner with Dell. 0.100 --- --- --- ---
Consumer electronics is a profitable business. 0.050 3.00 0.150 1.0 0.050
Higher consumer spending in the US. 0.025 3.00 0.075 1.0 0.025
Incorporated managed and professional services. 0.025 --- --- --- ---
5-21
1. Income Statement
2. Balance Sheet
3. Ratio Analysis
4. Space Matrix's
5. BCG Matrix's
6. Internal External Matrix's IFE
7. External Factors evaluation Matrix's
8. CPM
9. Grand Strategy
10. QSPM
End Show
QSPM strengths and weakness (cont.)Global enterprise systems. 0.050 2.0 0.100 4.0 0.200
Training and certification program. 0.025 --- --- --- ---
Financial services offered. 0.025 --- --- --- ---
Growth in the color printer market. 0.025 --- --- --- ---
Threats
Alliance in the PC industry 0.050 2.0 0.100 4.0 0.200
Higher oil prices. 0.050 --- --- --- ---
Commercial demand fails to accelerate. 0.025 --- --- --- ---
Competitors are strong. 0.150 2.0 0.300 3.0 0.450
Slow growth in the PC market. 0.100 --- --- --- ---
Component price fluctuation 0.025 --- --- --- ---
Price for computing power has decreased. 0.025 --- --- --- ---
Computer market has broadened. 0.050 --- --- --- ---
Currency fluctuations in the international markets. 0.050 1.0 0.050 3.0 0.150
SUBTOTAL 1.00 0.98 1.48
SUM TOTAL ATTRACTIVENESS SCORE 2.18 2.68
Add two new manufacturing plants in the United States has the attractive score of 2.18 in comparison of the expending the business into Europe and Asia which has total attractive score of 2.68.Expand into Europe and Asia building new manufacturing plants and retail stores is therefore that the company should introduce