Dell Business Analysis: Organisation and Effectiveness

dingle Business Analysis Organisation and posture abridgmentThe investigate is ab turn up playing field of statistical distri exactlyion opera hatow focussing at dingle Computers, UK. My work is more practical in nature, examine the scattering conduct of dingle, both at a strategical and an running(a) level. I would be analysing the wrinkle hunt d receive on its skill and effectiveness, beneathsidevas with the different application per determineers. I would mostly be compargon the function a namest Sony Electronics, the most respected name in multi- duct scattering lucre Acer, originate of value computing harvests and proprietary defacements like Advent.The se veer c in wholly fors to analyse and subject field the statistical distribution television crease of Dell in UK, distribution line of descent of its competitors, faculty and effectiveness of Dells Distribution product line as comp atomic number 18d to its competitors. And based on the e xplore and digest propose recomm windupations to enhance its effectiveness.The literature review region of the thesis explores the exposition of distribution, broadcast, and distribution channel and distribution channel management. unconnected from that the section besides examines the activities and the levels of distribution channel. The latter half of the section foc mathematical functions on the distribution dodging adopted by Dell, Sony and Acer. Research is conducted by means of matter contract as well as deal. Case study analysis incorporates the study and effectiveness of the distribution outline of Acer, Sony and Dell. Two set of questionnaires ar designed to collect selective reading from the end customer and the channel objet dartners. Apart from that stand byary info is used from from books, journals, comp any(prenominal) reports and documents, government weathervanesites whereas patriarchal data is collected by means of survey questionnaire permeate d channel partners and the end customers. In all 50 questionnaires ar collected duly run acrossed turn up of 60 questionnaires be send push through to the end customer whereas the questionnaire for the channel partners was send to 50 channel partners out of which only 30 responses were received. Questionnaires were sent out victimisation survey distribution works of a web site. C ar was becomen to ensure that diverse demographic is covered for the survey.The look has its own drawbacks such as the work limited to the English grocery. fiscal and time constraints of my semester mean that Im non able to conduct a globular research that would be more apt in this case. An former(a) limit point is most of my work is conducted through a in the flesh(predicate) observation regularity as such it is pr ace to my personal bias. Thirdly distribution channel model is a sensitive piece of familiarity information. As off the beaten track(predicate) as information on the competitors distribution channel is concerned its moment difficult.CHAPTER 1 IntroductionThis chapter will introduce the go onic, specify the learn aspire and objectives of the talk, discuss the research greet and state the dissertation outline. The key drift of this chapter is to establish the foundation for the research topic by giving out basic information.1.1 IntroductionThe research is active study of distribution channel management at Dell Computers, UK. The dissertation is more practical in nature, studying the Distribution tracks of Dell, both at a strategic and an operational level. I would be analysing the melodic line function on its aptitude and effectiveness, comparing with the other industry performers. I would mostly be comparing the function against Sony Electronics, the most respected name in multi-channel distribution mesh topology Acer, pi singleer of value computing proceedss and proprietary brands like Advent.Dell Inc. is a multibillion dollar, multi bailiwic k technology firm that manufactures, develops, covers and hold backs personal computing and computer relate products. Dell has seen a rapid egression to become one of the top three vendors in the PC manufacturing industry, and has seen a substantial change magnitude in share price and grocery value. speckle some other companies were unable(p) to handle the contends of the competition, Dell has proved successful in such an surround.The main key to success to Dell has been its dickens progressive practices that is sharpen sales and build-to-order business model. This model is simple as a concept but highly complex to execute, especially in the present conditions of rapid growth and change. Dell has continually re spic-and-spaned and extended its business model darn striking a balance between control and edibility.Dell do changes in its design, manufacturing, procurement, and logistics swear outes to reduce the comprises, and to speed up the entire distribution sch ema. It has expand into International markets and it started devising nonebook and server product lines which has led to st graze profits for dell, and has given a great market value for the company. Dell has rileed sales of $18.2 billion by the year 1998, with a profit of $1.46 billion, and Dells market share in the PC market grew from 3% in 1995 to 9.2% in the year 1999 with stock price increasing by 40 times. Dells market capitalization has r distributivelyed $100 billion.1.2 Research aim and QuestionsThe autochthonic purpose of my research work is to analyse the role distribution convey play in the functioning of a business, both in the spacious run and in the short run. My study is to present a detailed description of the quaint distribution channel adopted by Dell Inc., analyse its efficiency and effectiveness, identify possible loopholes and put forth recommendations for development.My study is being undertaken with an aim to answer the following research questions* H ow are the various distribution carry organised within Dell Inc.?* How does it compare with its competitors?* How effective and in effect(p) is this channel management at Dell?* What force out be done to set about it better?The four research questions are the guiding blocks of my entire research and all of the work would be done, keeping them in view.Distribution Channels within DellI would be aspect at Dells innovative distribution channel management which has literally revolutionised the importance of Direct change in the consumer electronics s stride. Direct trade is still the primary distribution machine within Dell. I would be documenting the evolution of this concept within Dell decently from its customized sales regime during PCs Limited to the complex and sophisticated systems that it employs currently. I would be presenting a visual of the entire distribution ne devilrk that it stands at today.Comparison with its competitorsI would be comparing the dynamic distrib ution systems of its arch rivals. Sony and Acer are the brands that I would be concentrating upon. I would be looking at the strategies adopted in different economies, though my primary stringency would be on the English markets.Efficiency and EffectivenessI would be conducting an efficiency and effectiveness test of Dells powerful distribution network against its competitors. This would be an empirical study. I would be concentrating on the parameters of Customer Satisfaction and vendor relationship management.RecommendationsFinally, I would be putting forth recommendations for future developments on with the cost benefit analysis of such implementations.1.3 Research approachThe study is conducted by collecting secondary data and primary data. Secondary data is collected from books, journals, government websites, company documents whereas primary data is collected by means of survey questionnaire distributed among channel partners and the end customers. Participants of research would be intermediaries in the distribution network and the end customer. In order to select the participants the study has made use of stratified random sampling method in order to make sure that major demographic segments are be while selecting the samples (Rao Skinner, 1996).Questionnaire design harps of two parts. The first part contained the demographic information while the second part dwelled on each of the subjects perception on each variable using five point likert eggshells from 1 ( strongly Agree) to 5(Strongly Disagree).The study did not hold any assistance from a third party or any other institution. In order to collect data the study made use of web portal survey to distribute survey and get responses. The system was designed in such a way that the respondent reach to submit all the answers. Out of 60 questionnaires, responses for 50 surveys were obtained. The duration for the survey was kept as two weeks, a reminder mail was being sent to the respondents at the end of week one to remind them.1.4 immensity of the studyOrganizations know been under firing strategic changes over the foregone decade. More so in the past couple of years. The current recession has proved that danger management and strategic planning are most vital for an brass sections long lasting and self-sustaining performance. My work will strive to highlight one such areas of strategic thinking and inform the senior management about the benefits relate.1.5 Research ScopeMy work would primarily be concentrated on the UK market. Though Dell is a global corporation with intermediaries present across the globe, all working towards forming an effective value drawstring to maximize business potential and ensure efficiency in operations UK being the second biggest market after the US will be a superior general approximation of the entire organizational behaviour. Furthermore, the cosmopolitan nature of London and demographic diversity ensures that it would be a close est imate of the general population.1.5 terminus ad quem of ResearchI intend to undertake my research as comprehensively as possible. As in any research work, inherent are some unavoidable drawbacks in my study. Few of them are* financial and condemnation Constraints As outlined before, the scope of my work is limited to the English market. Financial and time constraints of my semester mean that Im not able to conduct a global research that would be more apt in this case.* Personal bias. closely of my work is conducted through a personal observation method as such it is prone to my personal bias. However as the person who is to do the entire research right from formulation of research questions to recommending solutions, I would be most qualified to comment on the topic.* Information Constraints. Distribution channel model is a sensitive piece of company information. Though I have secured entrance fee to Dell, wherein I could do all the data dig myself, the extent of information t hat I would be able to muster about the rivals model is still to be seen.1.5 Dissertation outlineThe social organization of the dissertation is as followsChapter 1 Chapter 1 sweep up introduction to the topic, followed by design background into the research topic. This beginning chapter in any case lays bare aims and objectives of the research followed by structure of the thesis. Apart from that this chapter as well as gives information on the research approach adopted and the limitations of the research.Chapter 2 The literature review section of the dissertation explores the definition of distribution, channel, and distribution channel and distribution channel management. Apart from that the section also examines the activities and the levels of distribution channel. The latter half of the section focuses on the distribution strategy adopted by Dell, Sony and Acer. The final section compares the distribution strategy by all the three players.Chapter 3 The thesis then moves on to methodology section wherein the research model, research framework and data collection methodology is discussed. Questionnaire method is used to collect the necessary data from the consumer.Chapter 4 This chapter explores data findingsChapter 5 This chapter presents the conclusion.Chapter 6 This includes references using Harvard referencing styleChapter 7 This includes the Appendix1.6 SummaryThe chapter introduced the topic of the dissertation, specified the key aims and objectives of the research. Discussed the research approach in form of secondary and primary data collection through the means of questionnaire and distinctly stated the limitations of the research in brief. The chapter also outlines the research structure specifying the content of each chapter.Chapter 2 Literature ReviewDuring my research, I would primarily be looking towards the concepts of Distribution Channel and its management. I would be guided by the various contributions in the field, though my work w ould primarily be influenced by the theories and suggestions of Philip Kotler in the area. A Professor of Business Studies at the Kelloggs Business School, Kotler is much regarded as the Father of Modern Marketing. My work also coincides with various other management thinking like Consumer Behaviour, Relationship Management, Marketing Mix and Optimization, among others.2.1 exposition2.1.1 DistributionKotler (1996) states that distribution is a key element in the merchandising mix (place amongst the 4Ps). It is the systems and practices in use which make a product or helping available to the consumer of such a product or service.2.1.2 ChannelChannel is defined as a set of interdependent organizations involved in the process of making a product or service available for consumption or use (Gorchels, West, Marien, 2004). It can also cross physical movement, warehousing, possession of the product, presale transaction, post-sale activities order bear upon, credit and collections and other different types of support activities (Gorchels, West, Marien, 2004).2.1.3 Distribution ChannelThe Distribution Channel is the chain of intermediaries, each of them deprivation on the product or service to some other intermediary until it reaches the consumer.The business dictionary defines it asThe route by which a product or service is moved from a producer or supplier to customers. A distribution channel usually consists of a chain of intermediaries, including wholesalers, sellers, and distributors, that is designed to beam goods from the point of ware to the point of consumption in the most efficient way (Dictionary, 2010)Another definition of Distribution channel statesA root word of independent and interdependent organizations involved in the sale and movement of goods and operate to the end users may be called a distribution channel or network (Gorchels, West, Marien, 2004).More specifically, a distribution channel is* The transfer of goods from shaper to the end user.* Route of a company for distributing the goods.* The process of moving goods from the manufacturer to the consumer.* A supply chain consisting of all parties in between return to the end user.2.2 Types of channel membersThe activities in the distribution channel can be carried out by the trafficker himself or it can be carried out by specialist organizations. The specialist organizations and the channel members can be reason into two types.* Resellers* Specialty Service Firms.Resellers are the companies which usually buy and take the ownership of the products from the manufacturer with the intention of selling to end consumers. An organization can have one or more than one reseller in the chain. The network or chain of resellers is known as reseller network. The resellers can be progress classified intoRetailers A seller sells the product this instant to the end customer.Wholesalers Wholesalers buy the products from manufacturer or other wholesalers and then th ey sell the products to the retailers.Industrial Distributors They are the ones who sell products from one business to other, they are suppliers who buy the goods and sell it to another firm.Specialty service firms are organizations that do not take the ownership of the products. They also let additional work along with the products. Specialty firms can beAgents and brokers They are the firms which bring together the suppliers and buyers and mediate the sale and they commit a fee for this kind of service.Distribution service firms They provide function which help with the movement of goods in the distribution channels like transportation, processing and storage of goods and products.Others They are the firms which provide other services to the channels in distribution like insurance, routing assistance and so onThe distribution channels consist of many parties among which each of them is trying to meet their objectives. Relationships between channel members should be strong wit h each others especially on which they are depending for the further distribution of product.2.3 LevelsThe arrangement of the distribution channels can be classified into two types* Independent channel arrangements.* Dependent channel arrangements.Independent channel arrangementsIn this type of arrangement the channel members negotiate deals with others which do not resolving power in the binding of the relationships. Channel members are free to make arrangements which they spirit is in their own and trounce interest. An individual member decides what is best for them and not the entire channel.This is also called conventional distribution arrangement and often material conflict as each member decides what is best for him and not in concern with the entire channelAs shown in the figure 2 there are four levels of distribution channels. Channel 1 is called the direct marketing channel which is the distribution of products or services from the manufacturer to the customer. The best example for this channel is Dell which does not makes use of any intermediaries to distribute its products to end customers there are no retailers, ingredients or wholesalers. The channel does not have any intermediaries. This type of channel helps to eradicate the bare cost and also helps to have good control over the quality and marketing.The other three channels fall in the category of mediate marketing channels.As shown in the figure 1, the second channel has one intermediary, if the market is a consumer market the one intermediary is basically a retailer. Electronic consumer goods market of UK is an example of second type of channel arrangement. In this type of distribution arrangement the companies sell good to large retail chains, example would be Sony, Canon, and HP selling their electronic goods to large retail chains such as Dixons. These retailers in return sell the goods to the end customer.As shown in the figure Channel 3 consists of two levels which are the wholesa ler and the retailer. The role of the wholesale in this channel is to buy the products at bulk from the manufacturer and then sell the same to retailer in atomicer quantities. This model works best for retailers on small get over and not for big chains such as Dixons. This type of distribution channel is best when there are large number of small retailers and not big companies. Example in this case would be the checkup drugs distribution market in the UK.The fourth channel has added level to it in the form of agents who work as intermediary between manufacturer and wholesaler. The agent acts as representative for both the sides. This works in textile market. betoken 2 gives information on the four types of distribution channel. Dell follows the manufacturer to direct customer channel thus discarding the intermediaries in between.Source http//nptel.iitm.ac.in/courses/IIT-MADRAS/Management_Science_II/Pdf/1_4.pdfA direct distribution channel is where a company sells their products d irect to consumers. While direct channels were not popular many years ago, the mesh has greatly increased the use of direct channels. Additionally, companies needing to cut cost may use direct channels to avoid middlemen mark-ups on their products. Distributors, wholesalers and retailers are the primary indirect channels a company may use when selling their products in the marketplace. Companies choose the indirect channel best suited for their product to obtain the best market share it also fall by the waysides them to focus on producing their goods. Though, in practicality, a number of other players exist, they can be generalize to the above. The specific channel of distribution adopted by a company depends, to a major extent, on its business model, the industry type and the scale of its operations. As an Instance, Sony has its own set of company operated exclusive showrooms. The strong brand equity of Sony, the scale of its business and clearly identifiable product differentia tions that it enjoys with the consumers, allow it to leverage on its economies of scale and scope by operating its own outlets. Directly, this result in better margins for the company and indirectly it helps building on its already demanding brand leadership. Dell, on the other hand, relies more on online sales. This is because of the organization of its service delivery utility. Dells business model is based upon its centralised manufacturing facilities, or else than the nuclear organization at Sony. Online sales suits such a strategy by negating the high costs of transportation and register planning issues involved. A manufacturer selling a physical product might learn three channels Sales Channel, Delivery Channel, and Service Channel. In Our case, Dell uses telephone and internet as sales channels, express mail services as the delivery channel and local repair people as its service channel.2.4 Distribution Channel ActivitiesDistribution includes different range of activities (Richard Gay, 2007)* Linking many suppliers to provide wide range of consumer choice* Assist the exchange process identify the needs of the buyer in the context of product categories, quantities, range etc. and devise manufacturing, farm animal and packaging schedules to fit.* Marketing information This encompass collection, distribution and analysing marketing research information such as the past sales data about the players within the organizations marketing environment.* Promotional activities- This involves background knowledge of promotional objectives and activating the various elements of the marketing communications mix and measuring stick their effectiveness, this will encompass identify and communicate with prospects.* Pricing Deciding on the sales terms and conditions at each stage of the value chain* Risk management This includes analysis and resource sourcing regardd for involvement in the channel , the degree of control and influence and the potential benefits s uch as revenue and profit generation.* Physical Distribution Management It includes the transportation all aspects of warehousing management and information flows.Other Activities that may be part of the distribution channels are as follows* Order Generation.* Handling of Goods.* transport of Goods.* Storage of Goods.* Display of Goods.* Promotion of Goods.* Sale.* Feedback.2.5 Distribution Channel ManagementDistribution Channel Management is all about getting the product or service to the right people at the right time under the constraints of profits, efficiency and effectiveness. Successful marketing does not end when a business has developed a product or service and has found its hold target audience with a view to selling it at the right price. The next issue that needs to be faced is how they are going to distribute and sell this product/service to these people- the consumers. When a product/service is purchased by a consumer, it may have been bought directly from the busin ess, or it may have been through a number of intermediaries (wholesaler, retailer, etc.) these are known as distribution channels. Small businesses need to acknowledge the different types of distribution channels to utilize sales potential.Distribution channel management involves a skunk of channel decisions, strategic alternatives and numerous linking concepts, all of which would be explored in my research paper.Distribution channel management involves a lot of channel decisions, strategic alternatives and numerous linking concepts.The PC industry is driven by rapid scientific improvements in components, particularly microprocessors, other semiconductors, and storage devices. The improved performance of hardware has been matched historically by increased complexity of software, creating demand for the latest hardware. skeleton 2 PC Supply ChainThis means that time is a critical competitive factor in the industry in two ways* Firstly, excess armory loses value (at an estimated 10 % per month and costs money* Secondly, products incorporating the most advanced technologies are in high demand and carry a price premium.As a result, companies that minimize inventory and bring brand-new products to market faster can reduce costs, increase market share, and maintain higher margins. Two factors come into play in determining the ability of PC companies to manage inventory and introduce new products. First is the standardized, modular nature of the PC. PCs are built from standard components, using common architectural interfaces determined largely by Intel, Microsoft, and, earlier, IBM. PC makers also can outsource much of their production and purchase components from a well-established production network of contract manufacturers and components suppliers. This makes it quite easy for PC companies to introduce new PCs with the most advanced technologies. By the 1990s, PC makers could no longer gain much of an edge by virtue of design and manufacturing, as everyone had access to the same technical information and supply base. The difference among PC companies was determined increasingly by the second factorthe structure of distribution.The traditional distribution system of the PC industry is an indirect model often referred to as the channel. The PC maker sells its products to distributors, who buy products from many manufacturers and then sell them to a variety of retailers, resellers, system integrators, and others, who sell products and services to the final customer. This distribution system was an effective means for distributing high volumes of PCs with a variety of configurations to reach a broad customer base. However, it had inherent weaknesses that left it vulnerable in a time-based competitive environment.First was its reliance on market prognosticate to drive production. Even the most successful PC makers, such as IBM, Apple, and Compaq, were chronically bedevilled by their inability to accurately forecast demand in a market driv en by ever shorter product calendar methods. They were each caught with short supplies of hot products, causing them to lose sales to competitors, or stuck with excess inventories of slow sellers, which clogged the distribution channels and often had to be exchange at a loss to move them out. Even with the best forecasting, the indirect model was plagued by the need to hold inventory at each step.In the early 1990s, it was common for PC makers to have up to 90 days of inventory on hand and in the channel. The high inventory costs and lack of responsiveness of the indirect channel meant that there was an hazard for someone who could a way to circumvent the channel.The company that seized this opportunity was Dell, which pioneered a new business model based on selling PCs directly to the final customer, and building the PC only when an order was received change directly removes two links in the supply chain where inventory could build up and also enables Dell to know its final cu stomers, provide better service to them, and promote repeat or expanded sales to them.Build-to-order production allows Dell to introduce new technologies as soon as customers want them and makes it possible to adjust production to demand very quickly. It also means that Dell does not purchase components and assemble PCs until it has received recompense from the customer, giving the company a invalidating cash conversion cycle in which it receives payment from customers before it must pay suppliers.The current environment for the computer hardware industry is shaped by several big forces. Primarily, Dell and its competitors are influenced by economic, demographic, technological and national forces. Government, social, physical and national forces peripherally affect the computer hardware industry to varying degrees. The commoditization of the personal computera vital tool for business and consumer. Customers- are a key driver for the economics of this industry. Corporate expense a ccounts for 80% of all technology spending, and economic conditions decreasing business capital expenditures has a negative and direct impact on the computer hardware industry. While this industry is mature in the U.S., leading to decreased growth expectations, computer spending by other countries around the world will likely fill this void.Pricing in the computer manufacturing industry is extremely competitive. IT reflects the rapid pace of technological change and decreasing PC costs. Since 2000, the prices of chips and disk drives declined and the standardization of primary components of PCs led to a decline in PC prices. Direct sellers, including Dell, have traditionally been able to under-price indirect sellers in the industry including Compaq and HP. However, most PC vendors now offer a desktop model for less than $ viosterol and a laptop for $700. Key success factors for companies in this industry offer to evolve as the industry matures. Specifically, they include* Competiti ve prices* Superior relationships with suppliers* harvest-tide customization for business and consumer customers* Quality customer service* Excellent cost structure2.5.1 Channel IssuesSome of the channels issues that the companies face are as follows growth related issuesPromotions related issuePricing related issuesTarget market related issueProduct related issuesThe nature and type of the product decides the distribution option that should be chosen for the product. A few products require special handling. Ex. Flowers, Fragile goods etc.Promotion related issuesThe type of promotions that are required to sell the products to the customers also decides the distribution options there are products which require an extensive contact of the sales person with the customer like automobiles etc. and there are products which require no sales assistance from the sales person like milk etc.Pricing issuesThe price at which the marketer desires to sell their product also decides the distributi on option for the channel if a product is prices really less it cannot have many members in the distribution channel as each one of them looks at making their own profit in the channel.Target market issuesThe distribution channel is successful only if the product can reach the right customer. Choosing a distribution channel is the path to reach the target customer. A key decision in setting of a channel arrangement is for the marketer to choose the approach to reach his target customer in the best possible manner.2.6 Dell2.6.1 Company BackgroundDell Inc. is a multibillion dollar, multinational technology firm that manufactures, develops, sells and supports personal computing and computer related products. base out of Texas, it employ