Dell Case in China

“Dell’s problems in China”

Case Analysis

By

SALEH ALHARBI

433107091

INTRODUCTION

This is a case analysis about “Dell’s problems in china” .in this case, there will be an evaluation for Dell Company marketing strategy and financial analysis, an assessment for china computer market from different aspects and how well dell performed in china.

DELL

Dell is a company that has been founded by Michael Dell in US at 1984 specialized in computer hardware. As Dell progressively growing, they entered to UK market in 1987. Afterward, Dell have an IPO with a value of $ 29,750,000. In 1995, Dell Entered China Market. In 2001, Dell has become the largest PC manufacturer worldwide.

MARKETING STRATEGY

Dell innovation has introduce a new marketing strategy “Direct Sales Model” creating one of Dell competitive advantage in front of others. Dell will provide the customer with made computers based on their needs. In addition to that there will be an after sales service to give highly support to customers. Direct model will allow Dell to have just in time product controlling the supply chain and minimizing inventory turnover up to five days which will highly reduce the cost. Continuing Dell innovation, “Web model” has been introduced which will open a new supporting channel to the direct model to catch new segment customers who they are surfing internet in highly attractive interface allowing computer customization, ordering, payment, and up to door delivery. Dell has a target to branch into new market mainly to supply the needs of the customers. Dell has differentiation by entering into printers US market offering a bundling model of printer, scanner and copier. Later on, they transited to do collaborations with some companies to get an access for more customer understanding.

FINANCIAL ANALYSIS

Dell over the time has a progressively increasing revenues up to 1996. Afterward the revenues has rapidly growing. In addition to that, there were a fluctuating in sales growth rates as illustrated in Figure 1. The common size income statement analysis shows that on average Dell cost of goods sold (COGS) is 77% of sales and remaining 23% for the gross margin while the net income and operating income are reaching 5% and 8% respectively.

Figure 1 Dell Net Revenue (millions $) [Source: Exhibit IV] and Sales Growth Rate [My analysis]

Table 1 Average Common Size income