DELL- Using E-commerce for success Founded in 1985 by Michael Dell, Dell Computer Corp (known as Dell) was the first company to offer personal computers (PCs) via mail order. Dell designed its own PC system (with an Intel 8088 processor running at 8 MHz) and allowed customers to configure their own customized systems using the build-to-order concept. This concept was, and is still, Dells cornerstone business model. By 1993, Dell had become one of the top five computer makers worldwide, threatening Compaq, which started a price war. At that time, Dell was taking orders by fax and snail mail and losing money. Losses reached over $100 million by 1994. The company was in trouble. The Solution Direct Marketing Online. The commercialization of the Internet in the early 1990s and the introduction of the World Wide Web in 1993 provided Dell with an opportunity to expand rapidly. Dell implemented aggressive online order taking and opened subsidiaries in Europe and Asia. Dell also started to offer additional products on its website. This enabled Dell to batter Compaq, and in 2000 Dell became number one in worldwide PC shipments. At that time, Internet sales topped $50 million per day (about $18 billion per year). Today, Dell (dell.com) sells about $62 billion a year in computer-related products online, from network switches to printers, employing over 88,000 people. Direct online marketing is Dells major electronic commerce (EC) activity. Dell sells to the following groups: Individuals for their homes and home offices Small businesses (up to 200 employees) Medium and large businesses (over 200 employees)

Government, education, and health care organizations Dell sells refurbished Dell computers and other products at electronic auctions (dellauction.com). Online auctions are an important sales channel. In 2006, Dell opened physical stores, mainly in reaction to customer demands. Most of Dells sales are to businesses. Whereas B2C sales are facilitated by standard shopping aids (e.g., catalogs, shopping carts, credit card payments), B2B customers obtain additional help from Dell. Dell provides each of its nearly 100,000 business customers with Premier Dell service. For example, British Airways (BA) considers Dell to be a strategic supplier. Dell provides notebooks and desktops to 25,000 BA users. Dell offers two e-procurement services to BA purchasing agents. The more basic service, Premier Dell, allows BA (and other businesses) to browse, buy, and track orders on a Dell website customized for the users requirements. The site enables authorized users to select preconfigured PCs for their business unit or department. A more advanced version, Premier B2B, supports e-procurement systems such as those from Ariba. This provides automatic requisition and order fulfillment once an authorized user has chosen to buy a PC from Dell. BA has placed the e-procurement tools on its E-Working intranet. This allows authorized staff to purchase PCs through a portal that connects directly to Dells systems. In addition to supporting its business customers with e-procurement tools, Dell also is using EC in its own procurement. Dell developed an e-procurement model that it shares with its business partners, such as BA. One aspect of this model is the use of electronic tendering to conduct bids. Dell uses electronic tendering when it buys the components for its products. In 2000, Dell created a B2B exchange at dell.b2b.com. This venture was a failure, like most other exchanges. E-Collaboration. Dell has many business partners with whom it needs to communicate and collaborate. For example, Dell uses shippers, such as UPS and FedEx, to deliver its computers to individuals. It also uses third-party logistics companies to collect, maintain, and deliver components from its suppliers, and it has many other partners. Dell is using Web Services, an

EC technology, to facilitate communication and reduce inventories. Web Services facilitate B2B integration. Integration efforts began in 2000 with other technologies when Dell encouraged its customers to buy online. The B2B integration offer combines Dell PowerEdge servers based on Intel architecture and webMethods B2B integration software to link customers existing ERP (enterprise resource planning) or procurement systems directly with Dell and other trading partners. In addition, Dell can provide e-procurement applications and consulting services. Dell also educates customers in its technologies and offers suggestions on how to use them. This is particularly true for emerging technologies such as wireless. Finally, Dell has a superb communication system with its over 15,000 service providers around the globe. E-Customer Service. Dell uses a number of different tools to provide superb customer service around the clock. To leverage customer relationship management (CRM)a customer service approach that is customer centered for lasting relationships Dell provides a virtual help desk for self-diagnosis and service as well as direct access to technical support data. In addition, a phone-based help desk is open 24/7. Customers can also arrange for a live chat with a customer care agent. Product support includes troubleshooting, user guides, upgrades, downloads, news and press releases, FAQs, order status information, a my account page, a community forum (to exchange ideas, information, and experiences), bulletin boards and other customer-to customer interaction features.

a) We can view the future of e-commerce from several different angles. Based on the case study, explain how the future of e-commerce for companies such as Dell Computer Corp is changing the business environment. (10 Marks)

b) Governments around the world have recognized the important role played by ecommerce companies such as Dell in transforming the world economy. In order to facilitate e-commerce operations, some governments have developed a framework for guiding e-commerce companies. Discus the five key principles and policies guiding ecommerce development globally. (15 Marks)

Discuss the five main characteristics of the virtual value chain for an e-commerce company such as Dell Corp. (15 Marks)