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Working Capital Hewlett Packard

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									             DELL COMPUTER IN
              THE 21ST CENTURY




30/10/2002                       1
 WHAT IMPRESSES YOU ABOUT
      THIS COMPANY?

   Michael Dell is the youngest and longest-
    serving CEO of a major computer company
   The strategy of the company
   The incredible rise in Dell’s stock price during
    the 1990s
   The company’s rapid rise from irrelevant also-
    ran to potential global market leadership

30/10/2002                                             2
    WHAT IS YOUR ASSESSMENT
    OF MICHAEL DELL AS CEO?
   Forming a strategic
    vision?
   Objective setting?
   Crafting a strategy
   Implementing strategy
   Leading corrective
    adjustments?



30/10/2002                    3
 WHAT ARE THE ELEMENTS OF
    DELL’S STRATEGY?
   Build-to-order               Virtual integration &
    manufacturing & mass          pioneering use of
    customization                 Internet & e-commerce
   Partnerships with             technology
    suppliers                    Demand forecasting
   Just-in-time deliver of      Research &
    inventories                   development
   Direct sales                 Advertising
   Market segmentation          Broaden product line
   Customer service              beyond PCs

30/10/2002                                                4
     WHAT DOES THE SWOT ANALYSIS
    REVEAL ABOUT DELL COMPUTER’S
             SITUATION?

   Resource strengths/capabilities/competitive
    assets?
   Resource weaknesses & deficiencies &
    competitive liabilities?
   Dell’s market opportunities
   Threats to Dell’s well-being?


30/10/2002                                        5
WHAT ARE DELL’S DISTINCTIVEW
      COMPETENCIES?

   Just-in-time inventory practices
   Build-to-order manufacturing & mass
    customization
   Virtual integration
   Value-added customer service
   Direct sales capabilities
   Leadership of the Internet & e-commerce
    technologies
30/10/2002                                    6
             WHAT ARE DELL’S CORE
               COMPETENCIES?
   Product quality
   Efficient, low-cost
    advertising
   Global manufacturing
    & global sales
    capabilities
   Market segmentation
    capabilities & skills


30/10/2002                          7
WHAT DOES A COMPETITIVE
  STRENGTH ASSESSMENT
 REVEAL ABOUT DELL, AS
 COMPARED TO COMPAQ,
 IBM, HEWLETT-PACKARD
       &GATEWAY?

30/10/2002            8
  HAS DELL’S STRATEGY
     RESULTED IN A
SUSTAINABLE COMPETITIVE
ADVANTAGE OVER RIVALS?




30/10/2002            9
      WHAT IS THE NATURE &
    SOURCE OF ITS ADVANTAGE?
   Its build-to-order
    approach
   Its direct sales
    approach
   Its attractive price
   Its ability to save
    customers money

30/10/2002                     10
          WHAT IS YOUR ASSESSMENT OF
         DELL’S FINANCIAL PERFORMANCE
                   SINCE 1995?
   Dell’s revenues grew at a compound annual rate of 48.7% from
    1995 to 2000.
   Earnings have mushroomed—from $149 million ($0.06 per share)
    in 1995 to $1,666 million ($0.66 per share or a diluted $0.61 per
    share in 2000).
   The company earned a spectacular 73% return on shareholders’
    equity in 1998, up from 64.3% in 1997 and 28% in 1996.
   Working capital is increasing, though not as rapidly as revenues
    are growing.
   The number of outstanding shares is trending downward.
   The company has little long-term debt—$508 million versus
    stockholders’ equity of $5.3 billion, a very good debt-to-equity
    ratio.
   Profit margins were improving
    30/10/2002                                                  11
                          2000    1999    1998    1997    1996    1995

Gross profit margin       20.7%   22.5%   22.1%   21.5%   20.1%   21.2%
Operating profit margin   9.0     11.2    10.7    9.2     7.1     7.2
Net profit margin         6.6     8.0     7.7     6.7     5.1     4.3

 Operating expenses:

             1996 1997 1998 1999 2000
             13.0% 12.3% 11.4% 11.3% 11.7%

S,G,&A expenses are declining as a percent of Dell’s sales revenues:
      1996 1997 1998 1999 2000
      11.2% 10.6% 9.8% 9.8% 9.4%
30/10/2002                                                               12
      WHAT ARE DELL’S
    CHANCES OF BECOMING
    THE GLOBAL MAREKET
   SHARE LEADER IN PCS? IS
    ITS STRATEGY POTENT
    ENOUGH TO OVERTAKE
     COMPAQ COMPUTER?

30/10/2002                   13
                EPILOGUE

   For the 26 weeks ended 8/2/02, revenues
    increased 6% to $16.53 billion. Net income
    totaled $958 million, up from $361 million.
   Dell Computer Corp. and EMC are expected to
    extend their one-year-old partnership on
    October 28.


30/10/2002                                    14

								
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