1. Dell’s Internet Objectives
Why Dell & the Internet
Dell’s Internet Objectives
Differentiate Dell
Dell is building more customer connections than its competitors
Opportunity for industry leadership
Extend the Direct Model
Dell can offer more services and information than indirect/channel
Opportunity for increased customer loyalty and penetration
Compelling Economics
Greater leverage of investments in staff, marketing, and infrastructure 1 2 3
Make it easier to do business with Dell
Reduce the cost of doing business for both parties
Enhance customer relationships`

2. Integrated Electronic Commerce
The Power of Virtual Integration
Suppliers
Dell
Customers
Integrated Electronic Commerce
Enhanced velocity throughout supply chain
Advantaged relationships
Trading inventory for information
Cost reduction for all parties

3. Dell Online History Late 1980 1994 1995 Early ‘96 Late ‘96 Early ‘97
Current ‘99
REVENUE
Q1=$5M/day
Q2=$6M/day
Q3=$10M/day
E-commerce is launched on
Q1=$1M/day
Q2=$2M/day
Q3=$3M/day
Q4=$4M/day
80,000 online visits per week
225,000 online
visits
per week
TRAFFIC
400,000 online
visits per week
2,000,000 online
visits per week
MILESTONES
Dell launches an FTP site for file downloads
launched including tech support content
Configurator generating online quotes is launched
Marketing content; Premier Pages (SM) Service begins
Online store launched
Over 200 Premier Pages (SM) Service
Over 10,000 Premier Pages
Asia/Europe launch websites
Dell Tech launched in UK; 30% online revenue int’l
INTERNATIONAL
Websites in 36 countries; Japan store launches

4. The Turning of Dell’s Business
eSupport
B2B Commerce
Customer Care
Premier Pages
Value Chain
B2C Commerce
Share data and develop common applications to eliminate redundancy and ensure consistent experience
Recruiting
Internet
Data/Common Services
Intranet
Role Specific Applications
Purchasing - supply chain management
Marketing - product site content management
Sales - order management and customer specific content
SCM - configuration management
Product Engineering - tech support content
Customer Care - service content
HR - job postings
Manage the Business Applications
Intranet applications, including:
Financial reporting
Pay and Performance Mgmt.
Benefits changes
Corp. Director

5. Dell’s Activity System
Relationship
marketing
Knowledge-
able Clientele
Direct Sales
Model
Reduced
parts &
finished goods
inventories
Transactional
marketing
Monitors
shipped
directly
Dell Online
Cost Structure
Advantage
Customized
Service
Just in time
ordering
Build-to order
computers
Few ‘touches’
per machine
Training and
education
campaign
Fewer
suppliers
One Stop
Shopping
Newer parts
than
competitors
High quality
products

6. Lessons Learned Dell On-Line Case
A good example of maintaining competitive advantage through the entire system of activities.
Provides an exploration into a company whose strategy is dependent on IT and the Internet.
Provides insight into the strategic development of systems of activities, rather than individual activities to achieve sustainability and a unique Business model that is hard to duplicate.

7. Building the Virtual Value Chain
Inbound Production Outbound Marketing Sales
Physical Value Chain
Virtual Value Chain

8. Exploiting the Virtual Value Chain
Inbound Production Outbound Marketing Sales
Physical Value Chain
Virtual Value Chain
Inbound Production Outbound Marketing Sales

9. Value Matrix: Building Relationships
Physical Value Chain
Gather
Organize
Select
Synthesize
Distribute
Virtual Value Chain
New Markets
New Markets
New Markets

10. Implications for Managers
The Law of Digital Assets
New Economies of Scale
New Economies of Scope
Transaction-Cost Compression
Rebalancing Supply and Demand