5-1

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

E15Dell Strategy Formulation Analytical Frame Work And Financial Statement Analysis

5-2

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Introduction of Dell Dell, Inc. is an American multinational information technology corporation based in 1 Dell Way, Round, Texas, United States, that develops, sells and supports computers and related products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest technological corporations in the world, employing more than 103,300 people worldwide. Dell is listed at number 41 in the Fortune 500 list.

5-3

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Vision and Mission • Vision Statement:• "Dell is committed to being a good neighbor in the

communities we call home. We must continue to grow responsibly – protecting our natural resources and practicing sustainability in all its forms – and improve the communities where we live and work through our financial and volunteer efforts."

• MISSION STATEMENT:• Dell's mission is to be the most successful Computer Company in the world at

delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of.

• Highest quality• Leading technology• Competitive pricing• Individual and company accountability• Best-in-class service and support• Flexible customization capability• Superior corporate citizenship• Financial stability

5-4

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Income StatementDELL INC.

Statement of Operations

(in millions)

Annual Results

FY09 FY10 FY11

Income Statement:

Net revenue $61,101 $52,902 $61,494

Cost of revenue 50,144 43,641 50,098

Gross margin 10,957 9,261 11,396

SG&A 7,102 6,465 7,302

R&D 665 624 661

Total operating expenses 7,767 7,089 7,963

Operating income 3,190 2,172 3,433

Investment and other income, net 134 (148) (83)

Income before taxes 3,324 2,024 3,350

Income tax provision 846 591 715

Net income 2,478 1,433 2,635

5-5

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Balance SheetDELL INC.

Statement of Financial Position

(in millions)

Annual Results

FY09 FY10 FY11

Assets:

Cash & cash equivalents $8,352 $10,635 $13,913

Short-term investments 740 373 452

Accounts receivable, net 4,731 5,837 6,493

Financing receivables, net 1,712 2,706 3,643

Inventories, net 867 1,051 1,301

Other 3,749 3,643 3,219

Total current assets 20,151 24,245 29,021

PP&E, net 2,277 2,181 1,953

Investments 454 781 704

Long-term financing receivable, net 500 332 799

Other non-current assets 3,118 6,113 6,122

Total assets: 26,500 33,652 38,599

Liabilities & Stockholders Equity:

Short-term borrowings 113 663 851

Accounts payable 8,309 11,373 11,293

Accrued and other 3,736 3,884 4,181

Short-term deferred services revenue 2,701 3,040 3,158

Total current liabilities 14,859 18,960 19,483

Long-term debt 1,898 3,417 5,146

Long-term deferred services revenue 3,000 3,029 3,518

Other non-current liabilities 2,472 2,605 2,686

Total liabilities: 22,229 28,011 30,833

Stockholder's equity: 4,271 5,641 7,766

Total liabilities & equity: 26,500 33,652 38,599

5-6

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Ratios AnalysisDELL INC.  Selected Financial Data & Ratios  (in millions, except per share data and ratios)  (Unaudited)  

 Yearly results for liquidity, Profitability, Solvency, and Activity Ratios

FY09 FY10 FY11

Liquidity:

Net working capital ratio 5292 5285 9538

Current ratio 1.356 1.278 1.489

Quick ratio 1.30 1.22 1.42

Cash Ratio 0.611 0.58 0.737

Activity Ratios:

Account Receivable Turnover Ratio 12.91 10.01 19.55

# of Days Account Receivable outstanding 28.27 36.46 18.67

Fixed Assets turnover ratio 26.83 24.25 31.48

Inventory turnover ratio 57.83 45.50 42.60

Average # of days inventory outstanding 6.31 8.02 5.56

Operating Cycle 64.14 53.53 51.16

Total Assets turnover Ratio 2.305 1.57 1.59

Profitability:

Return on Investment 0.28% 0.12% 0.17%

Gross margin 17.93% 17.50% 18.53%

Operating margin 5.44% 3.82% 5.44%

Return on Assets 3.83% 2.11% 2.84%

Net profit margin 4.05% 2.70% 4.28%

Solvency Ration:

Debt Ratio 0.838 0.832 0.798

Debt to equity ratio 5.2 4.96 3.97

5-7

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Common Size Analysis

  FY09 FY10 FY11

Income Statement:  

Net revenue $61,101 100% $52,902 100 $61,494 100

Cost of revenue 50,144 82 43,641 82 50,098 81.46811

Gross margin 10,957 18 9,261 18 11,396 18.53189

SG&A 7,102 12 6,465 12 7,302 11.87433

R&D 665 1 624 1 661 1.074902

Total operating expenses 7,767 13 7,089 13 7,963 12.94923

Operating income 3,190 5 2,172 4 3,433 5.582658

Investment and other income, net 134 0 -148 0 -83 -0.13497

Income before taxes 3,324 5 2,024 4 3,350 5.447686

Income tax provision 846 1 591 1 715 1.162715

Net income 2,478 4 1,433 3 2,635 4.284971

Vertical Analysis

5-8

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Horizontal Analysis Balance sheetDell Incorporation Horizontal Analysis of Balance sheet

  FY09 FY10 FY11

Assets:

Cash & cash equivalents $8,352 $100 $10,635 27.33 $13,913 30.82

Short-term investments 740 100 373 -49.59 452 21.17

Accounts receivable, net 4,731 100 5,837 23.37 6,493 11.23

Financing receivables, net 1,712 100 2,706 58.06 3,643 34.62

Inventories, net 867 100 1,051 21.22 1,301 23.78

Other 3,749 100 3,643 -2.83 3,219 -11.63

Total current assets 20,151 100 24,245 20.31 29,021 19.96

PP&E, net 2,277 100 2,181 -4.21 1,953 -10.45

Investments 454 100 781 72.02 704 -9.85

Long-term financing receivable, net 500 100 332 -33.6 799 140.66

Other non-current assets 3,118 100 6,113 96.05 6,122 0.147

Total assets: 26,500 100 33,652 26.98 38,599 14.7

Liabilities & Stockholders Equity:

Short-term borrowings 113 100 663 486.72 851 28.35

Accounts payable 8,309 100 11,373 36.87 11,293 -0.703

Accrued and other 3,736 100 3,884 3.96 4,181 7.64

Short-term deferred services revenue 2,701 100 3,040 12.55 3,158 3.88

Total current liabilities 14,859 100 18,960 27.59 19,483 2.75

Long-term debt 1,898 100 3,417 80.03 5,146 50.59

Long-term deferred services revenue 3,000 100 3,029 0.96 3,518 16.14

Other non-current liabilities 2,472 100 2,605 5.38 2,686 3.109

Total liabilities: 22,229 100 28,011 26.01 30,833 10.07

Stockholder's equity: 4,271 100 5,641 32.08 7,766 37.67

Total liabilities & equity: 26,500 100 33,652 26.98 38,599 14.7

5-9

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

SPACE MATRIX

5-10

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Boston consulting group or BCG matrix

Asia

Region Revenues Profit Percentage of Revenue

Growth rate Relative e Market Share

Americas $32,940M $2,978M 66.94% 21% 75%

Europe $10,787M $818M 21.922% 61% 20%

Asia-Pacific $5,478M $458M 11.133% 29% 10%

Total $49,205M $4,254M 100% 100% 95%

Rel

ativ

e m

arke

t S

hare

5-11

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

SPACE MATRIX CONT.6

5

4

3

2

1

-6 -5 -4 -3 -2 -1 1 2 3 4 5 6

-1

-2

-3

-4

-5

-6

FSConservative Aggressive

Defensive Competitive

IS

ES

CA

5-12

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

THE INTERNAL-EXTERNAL (IE) MATRIX

The E

FE T

otal

Weighted

Score

The IFE Total Weighted Score

Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III

3.0 to 3.99

Americas

Europe

Medium IV V VI

2.0 to 2.99

Dell

Low VII VIII IX

1.0 to 1.99

Asia-Pacific

Hold and Maintain

5-13

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

THE INTERNAL-EXTERNAL (IE) MATRIX CONT.

Region Revenues Profit Percentage of Revenue

IFE Score

Americas

$32,940M $2,978M 66.94% 3.5

Europe $10,787M $818M 21.922% 2.8

Asia-Pacific

$5,478M $458M 11.133% 1.2

Total $49,205M $4,254M 100%  

5-14

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

EXTERNAL FACTOR EVALUATION (EFE) MATRIX

Key External Factors Weight Rating Weighted Score

OpportunitiesDemand for personal computers continues to grow. 0.100 3 0.300

Many customers switching from desktops to notebooks 0.050 4 0.200

Microsoft desires to partner with Dell. 0.100 4 0.400

Consumer electronics is a profitable business. 0.050 2 0.100

Higher consumer spending in the US. 0.025 2 0.050

Incorporated managed and professional services. 0.025 2 0.050

Global enterprise systems. 0.050 3 0.150

Training and certification program. 0.025 2 0.050

Financial services offered. 0.025 3 0.075

Growth in the color printer market. 0.025 2 0.050

Threats      

Alliance in the PC industry 0.050 3 0.150

Higher oil prices could crimp consumers’ spending. 0.050 3 0.150

Commercial demand fails to accelerate. 0.025 2 0.050

Competitors are strong. 0.150 3 0.450

Slow growth in the PC market. 0.100 2 0.200

Component price fluctuation 0.025 4 0.100

Price for computing power has decreased. 0.025 3 0.075

Computer market has broadened. 0.050 3 0.150

Currency fluctuations in the international markets. 0.050 2 0.100

TOTAL 1.00   2.85

5-15

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

Competitive Profile Matrix's Apple HP Dell

Critical

Success

Factors

Weight Rating Weighte

d Score

Rating Weighted

Score

Rating Weighted

Score

Market Share

Price

Financial

Position

Product Quality

Consumer

Loyalty

Advertising

Management

Global

Expansion

0.10

0.10

0.15

0.15

0.15

0.04

0.06

0.06

0.14

0.05

2

2

3

4

4

4

4

2

4

3

0.20

0.20

0.45

0.60

0.60

0.16

0.24

0.12

0.56

0.15

3

3

4

3

2

2

3

2

2

2

0.30

0.30

0.60

0.45

0.30

0.08

0.18

0.12

0.28

0.10

4

4

3

3

3

3

3

3

2

3

0.40

0.40

0.45

0.45

0.45

0.12

0.18

0.18

0.28

0.15

Total 1.00 3.02 2.71 3.06

5-16

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

GRAND STRATEGY MATRIX

5-17

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

QSPMStrategic Alternatives

Key Internal Factors Weight Build another

manufacturing plant in

the US.

Expand marketing efforts

in Asia and Europe

Strengths AS TAS AS TAS

Built-to-order personal computers sold directly to customers. 0.100 --- --- --- ---

Direct sales via mail, phone orders, and the Internet. 0.050 --- --- --- ---

Built-to-order personal computers eliminate markups of

resellers.

0.025 --- --- --- ---

Built-to-order personal computers greatly reduce the costs

and risks associated with carrying large stocks of parts,

components, and finished goods.

 

0.050

 

---

 

---

 

---

 

---

Dell is the current PC industry leader. 0.100 3.0 0.300 2.0 0.200

Dell has regional and manufacturing plants globally. 0.050 1.0 0.050 4.0 0.200

Dell is a well-known brand name. 0.050 4.0 0.200 3.0 0.150

Dell’s direct-to-consumer strategy has given the company a

substantial cost and profit margin over its rivals.

 

0.050

 

 

---

 

---

 

---

 

---

5-18

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

QSPM strengths and weakness (cont.)Dell has a good relationship with the company’s large

corporate and government customers and continues to focus

on these sales and service relationships.

 

0.025

 

1.0

 

0.025

 

2.0

 

0.050

Dell holds 29.1% of the total market for personal computer

sales in the Americas, putting Dell ahead of its competitors.

 

0.050

 

3.0

 

0.150

 

2.0

 

0.100

Dell’s built-to-order manufacturing process results in rapid

inventory turnover and reduced inventory levels.

0.050 --- --- --- ---

To ensure defect free products, testing is performed by Dell

along the process and on the final computer product.

 

0.050

 

---

 

---

 

---

 

---

Dell has a wide range of customers including large

corporations, government agencies, healthcare, educational

institutes, small business, and individuals.

 

0.050

 

4.0

 

0.200

 

3.0

 

0.150

Dell is ranked # 1 by Technology Business because of its

Intel-based server satisfaction for 27 of the past 29 quarters.

 

0.050

 

---

 

---

 

---

 

---

Dell divides its sales and marketing force among the various

customer groups in order to meet each group’s specific

needs.

 

0.025

 

---

 

---

 

---

 

---

Dell advertises its products on the Internet, TV, and by mailing

a broad range of marketing publications.

0.025 --- --- --- ---

5-19

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

QSPM strengths and weakness (cont.)

Weaknesses          

Dell has only two manufacturing plants and one

regional office in the United States.

0.025 4.0 0.050 2.0 0.050

Dell computers cannot be purchased in retail

stores.

0.025 --- --- --- ---

Dell has over 40 locations globally yet Dell is not

the #1 supplier in Asia Pacific, European, Middle

East, or African segments.

 

0.050

 

1.0

 

0.050

 

4.0

 

0.200

Dell rebrands printers purchased from Lexmark,

which is a major production cost for Dell.

 

0.025 --- --- --- ---

Dell is too reliant on foreign suppliers, because of

this a disruption of fuel supply could make the

price of shipping go up.

 

0.050

 

3.0

 

0.150

 

1.0

 

0.050

Dell is so large now that it might not be able to

grow at the same pace.

0.025 1.0 0.025 2.0 0.050

SUBTOTAL 1.00   1.20   1.20

5-20

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

QSPM strengths and weakness (cont.)

Key External Factors

Weight

Build another

manufacturing

plant in the US.

Expand marketing

efforts in Asia and

Europe

Opportunities AS TAS AS TAS

Demand for personal computers continues to grow. 0.100 2.0 0.200 4.0 0.400

Many consumers switching from desktops to

notebooks.

0.050 --- --- --- ---

Microsoft desires to partner with Dell. 0.100 --- --- --- ---

Consumer electronics is a profitable business. 0.050 3.00 0.150 1.0 0.050

Higher consumer spending in the US. 0.025 3.00 0.075 1.0 0.025

Incorporated managed and professional services. 0.025 --- --- --- ---

5-21

1. Income Statement

2. Balance Sheet

3. Ratio Analysis

4. Space Matrix's

5. BCG Matrix's

6. Internal External Matrix's IFE

7. External Factors evaluation Matrix's

8. CPM

9. Grand Strategy

10. QSPM

End Show

QSPM strengths and weakness (cont.)Global enterprise systems. 0.050 2.0 0.100 4.0 0.200

Training and certification program. 0.025 --- --- --- ---

Financial services offered. 0.025 --- --- --- ---

Growth in the color printer market. 0.025 --- --- --- ---

Threats          

Alliance in the PC industry 0.050 2.0 0.100 4.0 0.200

Higher oil prices. 0.050 --- --- --- ---

Commercial demand fails to accelerate. 0.025 --- --- --- ---

Competitors are strong. 0.150 2.0 0.300 3.0 0.450

Slow growth in the PC market. 0.100 --- --- --- ---

Component price fluctuation 0.025 --- --- --- ---

Price for computing power has decreased. 0.025 --- --- --- ---

Computer market has broadened. 0.050 --- --- --- ---

Currency fluctuations in the international markets. 0.050 1.0 0.050 3.0 0.150

SUBTOTAL 1.00   0.98   1.48

SUM TOTAL ATTRACTIVENESS SCORE     2.18   2.68

Add two new manufacturing plants in the United States has the attractive score of 2.18 in comparison of the expending the business into Europe and Asia which has total attractive score of 2.68.Expand into Europe and Asia building new manufacturing plants and retail stores is therefore that the company should introduce