Matching Dell
Matching Dell
Matching Dell
Case Analysis
By Group C1
Aabhaa I P Ankit Thakrar Gaurav Singh Gururaj Nayak M P Prashanthi Priyanka
New Enrants(Low) As the capital requirements are high the barriers are more for the new entrants.
Industry Rivalries(High)
Supplier Power(High) Few Substitutes available for the WINTEL in the market so no bargaining power for the industry
IBM Compaq Hewlett-Packard Gateway
Buyers power(High) Many brands existing which are competing with the prices So will have high bargaining power
Challenges
Competitors narrowing the gap between the prices (Exhibit 10A and 10B & refer Observation 5). Large dependence on US for the sales. Need to increase the sales globally (Exhibit 2a and 2b). Need to invest more in R&D as the technology advances (Refer Observation 4) Competitors trying to replicate the Direct Model of Dell. Authorized Assembly Program (AAP)-IBM Extended Solution Partnership Program (ESPP)-HP Optimized Distribution Model (ODM)-Compaq Significant weakness in targeting student segments and educational institutions where the segment contributes only 5% of the total sales. Buyers cant physically touch and see the product.
Days of inventory
80 60 40 20 0 70.4 34.2 7 49.4 10 Days of inventory
Assuming that the taxes, dividends etc. are absent, the net income percentage is considered to be the profit of the companies. From the graph, it can be seen that Dell has the 2 nd highest profit percentage, which is slightly less than that of IBM.
Conclusions
The current market trends in the computer industry, for PCs are driven by ever changing consumer needs, wants, and demands. So the company needs to adapt constantly to satisfy their consumers. So now by direct model it has adopted, though a very profitable model need to be modified further considering the challenges in the coming years.