THE PC WARS
By Team G5 (MBA B) Anoop M Paul Geo George Elias Manjima Fibin
Rajesh Krishnan Nair Shabin Sajan Ullas Udayakumar
2
ABOUT DELL INC.
Founded in Austin, Texas, U.S in November 4th 1984. Founder:
Michael Dell. Employees: 1,03,300 employees all around the world.
Dell is the third largest PC makers in the world after HP and
Lenovo. Dell is ranked 41st in the Fortune 500 companies list3
ABOUT LENEVO PVT. LTD.Founded in the year of 1984 by Liu
Chuanzhi. Lenovo was incorporated in Hong Kong in 1988 under its
previous name, Legend. Lenovo is the second largest PC maker in the
world after HP. In 2005 Lenovo acquire IBM personal computer
business and became a worldwide brand by sweep Chinese centric
image. Currently Lenovo markets Thinkpad notebooks and Thinkcenter
desktops under its brand.4
THE PC INDUSTRY OF TODAY
Strangest Industry Very Price Competitive Systems and Components
sold at low margins Rapid price fluctuations in the market. Vendors
keep low inventories Vendors contend with high Bankruptcy
Rates5
INDUSTRY PROFITS AT A GLANCE40% Notebook average profit margin
2%
30 Operating Margin 20
Netbook average profit margin
0.6%
source: Canalys estimates November 2009.
10
0
0
Other components Personal computers
Software
Microprocessors
Peripherals
100%Services
source: Profit Pools: A Fresh Look at Strategy, O.Gadiesh &
J.L. Gilbert, Harvard Business Review, June 1998.
6
DELL INC. DIRECT BUSINESS MODEL
7
DIRECT BUSINESS MODEL . . .
8
STRENGTHS OF DELLS DIRECT BUSINESS MODEL
Dell Direct Business Models Five Principles :1. Most Efficient
Path to the Customer 2. Single point of Accountability 3. Build to
order 4. Low Cost Leader 5. Standards Based Technology
Supplier Relationships Pricing low inventory cost & low
product cost Customer Relationship Management (CRM) Increased
application of Internet based technologies Low operating costs
Customer Delight the end result
9
WEAKNESS OF DELLS DIRECT BUSINESS MODELNot a computer
manufacturer, but a maker Lack of solid dealer / retailer
relationships Simple buying not possible since each product is
custom built No touch and try feeling presented to customer
Penetration of low-end market and rural market Requirement of a
Credit Card for online purchase Customers perspective of
Salesmanship High cost to bring in a Dual System Model a model
having both Direct and Retail Sales10
LENOVO PVT. LTD IMPORTATION OFFSHORE BUSINESS MODEL
11
LENOVOS THREE PHASE PLAN INNOVATION, OPERATIONAL EFFICIENCY
& CUSTOMER SATISFACTION
12
STRENGTHS OF LENOVOS IMPORTATION OFFSHORE BUSINESS
MODELMaintaining close contact with the corporate customers, while
handling all transactions through wholesalers. All operational
processes of importation and distributation done by wholesalers.
Cost of maintaining the local operation dropped when the system
came to practice. Good marketing and distribution strategy
Strategic alliance with suppliers Quick after-sales responsiveness
Effective Dual Business Model
13
WEAKNESS OF LENOVOS IMPORTATION OFFSHORE BUSINESS MODEL
Additional step in the sales process
Additional cost theoreticallyHigh delivery time Poor global
perception Ignoring the potential market14
WHAT DELL MUST HAVE . . .Improved R & D and bring in
innovations Others expenditure 4-5 % of Nett Revenue Partnership
with microprocessors companies like AMD who offer a varied
technology Strategic relations with dealers / suppliers Give a
Touch and Try to its customers Should bring in a Simple Buying
experience Rural & Low-end market-share Flexibility to Adapt
and then Adopt A Dual Business Model
15
Physical presence in potential and existing markets An inorganic
growth strategy
16
CONCLUSIONWe think that by implementing the suggestion made
above, the company Dell Inc. can overtake its competitors to become
No.1 in the market. The thing the company need the most is the
flexibility to Adapt and then Adopt as and when the market
demands.
17
BY
TEAM G5 (MBA B)18
