Dell Business Analysis: Organisation and Effectiveness

dell Business Analysis governance and EffectivenessSummaryThe interrogation is ab fall out atomic number 18na of scattering hold wariness at dingle Computers, UK. My invent is more practical in nature, hearing the Distri furtherion reassign of dingle, dickens at a strategical and an operational level. I would be analysing the occupation function on its capacity and effectiveness, comparing with the dissimilar industry performers. I would closely be comparing the function against Sony Electronics, the most regard name in multi- communicate dissemination network genus Acer, pioneer of mensurate computing harvestings and proprietary brands like Advent.The look aims to analyse and issue the dispersal line of business of Dell in UK, dissemination ravish of its competitors, qualification and effectiveness of Dells dispersion channel as compargond to its competitors. And based on the look into and analysis propose recomm wind upations to enhance its effect iveness.The literature review piece of the dissertation explores the definition of distribution, channel, and distribution channel and distribution channel focus. A protrude from that the section as well examines the activities and the levels of distribution channel. The latter half of the section foc expends on the distribution strategy adopted by Dell, Sony and Acer. Research is conducted by means of case study as well as survey. Case study analysis incorporates the study and effectiveness of the distribution strategy of Acer, Sony and Dell. Two set of questionnaires ar intentional to collect info from the end client and the channel partners. Apart from that secary information is subprogramd from from books, journals, gild reports and documents, government websites whereas primary data is collected by means of survey questionnaire distributed channel partners and the end nodes. In all 50 questionnaires are collected duly filled out of 60 questionnaires creation se nt out to the end customer whereas the questionnaire for the channel partners was send to 50 channel partners out of which totally 30 responses were received. Questionnaires were sent out exploitation survey distribution military run of a web site. Care was concurn to ensure that diverse demographic is covered for the survey.The research has its own drawbacks such as the work limited to the English merchandise place. Financial and term constraints of my semester mean that Im non able to conduct a global research that would be more k like a shoting in this case. A nonher limitation is most of my work is conducted through a personal observation mode as such it is prone to my personal bias. Thirdly distribution channel model is a clear piece of company information. As far as information on the competitors distribution channel is implicated its bit difficult.CHAPTER 1 IntroductionThis ch smarter allow for inclose the topic, specify the key aim and objectives of the diss ertation, discuss the research draw close and state the dissertation outline. The key aim of this chapter is to establish the foundation for the research topic by giving out basic information.1.1 IntroductionThe research is about study of distribution channel counsel at Dell Computers, UK. The dissertation is more practical in nature, studying the dissemination bank lines of Dell, twain at a strategic and an operational level. I would be analysing the business function on its efficiency 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 network Acer, pioneer of value computing harvests and proprietary brands like Advent.Dell Inc. is a multibillion dollar, multi subject area technology firm that manufactures, develops, look ats and supports personal computing and reckoner connect products. Dell has seen a rapid growth to become one of the top terce vendors in the PC manufacturing industry, and has seen a actual increase in deal out price and mart value.While many other companies were unable to get over the demands of the competition, Dell has proven succeederful in such an environment.The main key to success to Dell has been its two innovative practices that is taper gross sales and establish-to- found business model. This model is simple as a concept but highly complex to execute, especially in the present conditions of rapid growth and win over. Dell has continually re-create and extended its business model while striking a balance between apply and edibility.Dell made changes in its design, manufacturing, procurement, and logistics processes to reduce the costs, and to speed up the entire distribution dodging. It has expanded into International markets and it started qualification notebook and server product lines which has led to extraordinary profits for dell, and has given a great market value for th e company. Dell has r distributivelyed 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 change magnitude by 40 meters. Dells market capitalization has r all(prenominal)ed $100 billion.1.2 Research aim and QuestionsThe primary purpose of my research work is to analyse the role distribution carry play in the functioning of a business, both in the long run and in the short run. My study is to present a detailed explanation of the unique distribution channel adopted by Dell Inc., analyse its efficiency and effectiveness, identify accomplishable loopholes and put forth recommendations for development.My study is being undertaken with an aim to answer the following research questions* How are the discordant distribution conduct organised within Dell Inc.?* How does it compare with its competitors?* How effective and competent is this channel trouble at De ll?* What nooky be done to buzz off it fracture?The four research questions are the guiding blocks of my entire research and all of the work would be done, keeping them in view.statistical distribution sways within DellI would be looking at Dells innovative distribution channel have a go at itment which has literally revolutionised the importance of Direct Marketing in the consumer electronics space. Direct market is still the primary distribution mechanism within Dell. I would be documenting the evolution of this concept within Dell well(p) 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 network that it stands at today.Comparison with its competitorsI would be comparing the dynamic distribution 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 econ omies, though my primary concentration 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 hereafter developments along with the cost benefit analysis of such implementations.1.3 Research approachThe study is conducted by pile up 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 ergodic sampling method in order to make sure that major demographic segments are equal while selecting the samples (Rao Skinner, 1996).Questionnaire design consists of two parts. The first part contained the demographic information while the second part dwelled on distributively of the subjects perception on each variable exploitation five point likert outgos from 1 (Strongly Agree) to 5(Strongly Disagree).The study did not require 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 micturate 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 Importance of the studyOrganizations have been undergoing strategic changes over the past dec ade. More so in the past couple of years. The current recession has proved that risk management and strategic planning are most vital for an compositions long lasting and self-sufficient performance. My work will strive to highlight one such areas of strategic thinking and inform the cured management about the benefits have-to doe with.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 chain to maximize business potential and ensure efficiency in operations UK being the second biggest market after the US will be a global approximation of the entire organisational behaviour. Furthermore, the cosmopolitan nature of London and demographic diversity ensures that it would be a close estimate of the general population.1.5 Limitation 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 Time 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. Most of my work is conducted through a personal observation method as such it is prone to my personal bias. How constantly as the person who is to do the entire research sort out 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 chafe to Dell, wherein I could do all the data mining myself, the extent of information that I would be able to muster about the rivals model is still to be seen.1.5 Dissertation outlineThe structure of the dissertation is as followsChapter 1 Chapter 1 encompass introduction to the topic, followed by brief background into the research topic. This beginning chapter as well as lays bare aims and objectives of the research followed by structure of the thesis. Apart from that this chapter also 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 trio players.Chapter 3 The thesis then leads 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 clearly stated the limitations of the research in brief. The chapter also outlines the research structure specifying the contents of each chapter.Chapter 2 belles-lettres ReviewDuring my research, I would primarily be looking towards the concepts of Distribution Channel and its management. I would be channelize by the various contributions in the field, though my work would 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 often regard ed 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 Definition2.1.1 DistributionKotler (1996) states that distribution is a key element in the trade mix (place amongst the 4Ps). It is the systems and practices in use which make a product or service 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 do a product or service available for consumption or use (Gorchels, West, Marien, 2004). It can also encompass physical movement, warehousing, ownership of the product, presale transaction, post-sale activities order processing, credit and collections and other different parts of support activities (Gorchels, West, Marien, 2004).2.1.3 Distribution ChannelThe Distribution Channel is the chain of intermediaries, each of them passing on the product or service to 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 middlemans, retailers, and distributors, that is designed to transport goods from the point of production to the point of consumption in the most efficient way (Dictionary, 2010)Another definition of Distribution channel statesA group of independent and interdependent organizations involved in the sale and movement of goods and services 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 manufacturer to the end user.* dispatch 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 prod uction to the end user.2.2 Types of channel membersThe activities in the distribution channel can be carried out by the marketer himself or it can be carried out by specialist organizations. The specialist organizations and the channel members can be categorized into two types.* Resellers* Specialty Service Firms.Resellers are the companies which usually deprave 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 further classified intoRetailers A retailer sells the product directly to the end customer.Wholesalers Wholesalers cloud the products from manufacturer or other wholesalers and then they 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 anoth er firm.Specialty service firms are organizations that do not take the ownership of the products. They also leave alone additional services along with the products. Specialty firms can beAgents and brokers They are the firms which bring unitedly the suppliers and buyers and mediate the sale and they charge a fee for this kind of service.Distribution service firms They provide services which help with the movement of goods in the distribution take 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 etc.The distribution channels consist of many parties among which each of them is trying to meet their objectives. Relationships between channel members should be strong with each others especially on which they are depending for the further distribution of product.2.3 LevelsThe ar plyment of the distribution channels can be classified into two types* I ndependent channel arrangements.* Dependent channel arrangements.Independent channel arrangementsIn this type of arrangement the channel members negotiate deals with others which do not result in the binding of the relationships. Channel members are free to make arrangements which they feel is in their own and scoop out interest. An individual member decides what is best for them and not the entire channel.This is also called conventional distribution arrangement and often significant conflict as each member decides what is best for him and not in concern with the entire channelAs shown in the finger 2 at that place are four levels of distribution channels. Channel 1 is called the direct merchandise 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 on that point are no retailers, agents or wholesalers . The channel does not have any intermediaries. This type of channel helps to eradicate the excess cost and also helps to have good control over the quality and marketing.The other three channels fall in the category of indirect 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 light sell the goods to the end customer.As shown in the figure Channel 3 consists of two levels which are the wholesaler 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 smaller quantities. This model works best for retailers on small scale 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 medical 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.Figure 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 direct to consumers. While direct channels were not popular many years ago, the cyberspace has greatly increased the use of direct channels. Additionally, companies needing to cut cost s 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 cull the indirect channel best suited for their product to obtain the best market share it also suspends them to focus on producing their goods. Though, in practicality, a number of other players exist, they can be generalised 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 differentiations 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 in directly 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, rather than the nuclear organization at Sony. Online sales suits such a strategy by negating the high costs of transportation and stock planning issues involved. A manufacturer selling a physical product might require 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, quantitie s, range etc. and devise manufacturing, inventory 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 setting of promotional objectives and activating the various elements of the marketing communications mix and measuring 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 required for involvement in the channel , the degree of control and influence and the potential benefits such as revenue and profit generation.* material 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.* Shipping of Goods.* Storage of Goods.* march of Goods.* Promotion of Goods.* Sale.* Feedback.2.5 Distribution Channel ManagementDistribution Channel Management is all about acquiring 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 appropriate prey 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 business, or it may have been through a number of intermediaries (wholesaler, retailer, etc.) these are known as distribution channels. undersized businesses need to acknowl moulding the different types of distributio n channels to utilize sales potential.Distribution channel management involves a lot 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 impelled by rapid technological improvements in components, particularly microprocessors, other semiconductors, and storage devices. The improved performance of ironware has been matched historically by increased complexity of software, creating demand for the latest hardware.Figure 2 PC tot up ChainThis means that time is a critical competitive factor in the industry in two ways* Firstly, excess inventory 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 ne w 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 oftentimes 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 variety among PC companies was determined increasingly by the second factorthe structure of distribution.The traditional distributio n 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 forecasting 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 driven by ever shorter product cycles. They were either caught with short supplies of hot products, causing them to lose sales to competitors, or stuck with excess inventories of muffled sellers, which clogg ed the distribution channels and often had to be sold 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 opportunity 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 Selling directly removes two links in the supply chain where inventory could build up and also enables Dell to know its final customers, provide better service to them, and promote parallel 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 t o adjust production to demand very quickly. It also means that Dell does not purchase components and assemble PCs until it has received payment from the customer, giving the company a ostracize cash rebirth 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 macro 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. bodily spending accounts 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 ., conduct to decreased growth expectations, computer spending by other countries around the world will promising 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 $500 and a laptop for $700. Key success factors for companies in this industry continue to evolve as the industry matures. Specifically, they include* Competitive prices* Superior relationships with suppliers* harvest-time 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 followsProduct related issuesPromotions related issuePricing related issues post market related issueProduct related issuesThe nature and type of the product decides the distribution pick 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 distribution option for the channel if a product is prices in reality 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 dist ribution 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 flat coatDell 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