Memorandum: Dell Business Risk Evaluation

Memorandum: Dell Business Risk Evaluation

Dell Inc., with fiscal 2005 net revenue of $49.2 billion, is a premier provider of products and services worldwide that enable customers to build their information-technology and Internet infrastructures. Dell offers a broad range of enterprise systems (servers, storage, workstations, and networking products), client systems (notebook and desktop computer systems), printing and imaging systems, software and peripherals, and global services. During calendar 2004, Dell was the number one supplier of personal computer systems worldwide as well as in the United States. Dell's global market leadership is the result of a persistent focus on delivering the best possible customer experience by selling products and services directly to customers.

Dell, a Delaware corporation, was founded in 1984 by Michael Dell on a simple concept: by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. Dell is based in Round Rock, Texas, and conducts operations worldwide through its subsidiaries. Unless otherwise specified, references to Dell include its consolidated subsidiaries. Dell operates principally in one industry and is managed in three geographic segments: the Americas, Europe, and Asia Pacific-Japan regions.

Dell recorded these numbers selected numbers on 2006 10-k.

Sales- $55,908 million for fiscal year ended 2/03/2006

Net income $3,572 million for fiscal year ended 2/03/2006

Cash flow from operating activities- $4,839 million for fiscal year ended 2/03/2006

Total assets $23,109 million for fiscal year ended 2/03/2006

Number of employees- As of 02/03/2006 Dell had approximately 65,200 regular employees

External Business Forces

Dell Products

Dell offers a variety of products, but their emphasis is on: Desktop computers, notebook computers, network servers, network storage devices. Dell also offers other consumer electronics and software along with service programs.

Dell’s competitors

Dell’s major competitors are IBM, Hewlet-Packard, Gateway, Apple, and Sony

Dell’s customers

Dell’s variety of products allows them to cater to many different groups. Dell’s focus has remained on the business and government contracts, but they offer products to suit individuals, schools, and small businesses as well.

Dell’s suppliers

Dell has two main suppliers critical to operations, Intel and Microsoft. Intel is the major supplier for processors and Microsoft is the primary supplier of operating systems and software.

Dell’s Labor Force

As of February 3, 2006, Dell had approximately 65,200 regular employees and DFS had approximately 900, compared to approximately 55,200 for Dell and 800 regular employees for DFS as of the end of fiscal 2005. Approximately 26,200 of these employees were located in the U.S., and approximately 39,900 were located in other countries.

Dell’s Capital Market

Dell sells its products and services to its customers through sales representatives, telephone based sales, and online sales through www.dell.com. For large corporations and institutional customers Dell has a field sales division which has consultants to help the customer optimize their info structure. For smaller consumers dell uses marketing in mass media, selected print and television, as well as the internet. Dell uses the direct business model to provide direct and continuous customer feedback.

Dell’s Strategy to Gain Competitive Advantage

Dell’s Business Strategy

Dell’s business strategy combines its direct customer model with a highly efficient manufacturing and supply chain management organization and an emphasis on standards-based technologies. This strategy enables Dell to provide customers with