Business Risk Evaluation for Dell Computer Corporation

Topics: Generally Accepted Accounting Principles, Strategic management, Income statement Pages: 7 (1596 words) Published: February 4, 2009
BUSINESS RISK EVALUATION FOR DELL COMPUTER CORPORATION

OPERATIONAL ANALYSIS:

For the fiscal year ending February 2008, Dell's net revenue totaled $61.1 billion, and its net income was $2.9 billion. The company's total assets valued $27.561 billion, with cash and equivalents making up the largest portion, which totaled $7.764 billion. The company's cash flow in operating activities was $3.949 billion, and had approximately 88,200 total employees, including around 82,700 regular employees and 5,500 temporary employees.

PRODUCTS:

Dell offers a broad range of products, including innovative technology and services that consists of desktop PC's servers and networking products, storage, mobility products, software and peripherals and services. Desktop PC"s remains the main source of revenue: 32.0% of net revenue. This is a 1.2% decrease from 2007, preceded by an 8.1% decrease from 2006. As the revenue from desktop PC's was decreasing, sales from mobility products rose. The revenue from mobility products made up 28.5% of the net revenue. This is a 12.6% increase from 2007, preceded by a 7.7% increase from 2006. �

EXTERNAL BUSINESS FORCES

_COMPETITORS_

Dell's current direct competitors include Hewlett-Packard, Lenovo, IBM, Gateway, Apple, Acer, CDW, EDS, EMC, Software House International, Insight (software spectrum), Softchoice and Digital River. In 2007, Dell lost 1.9 points of share due to the competitive environment. The company lost share in the U.S. and internationally because their growth did not meet overall PC systems growth. This was mostly due to strong competitive pressure in their lower priced desktops and notebooks. There was also a slight reduction in Dell's international desktop shipments, compared to 5% increase in the worldwide desktop industry. At the end of calendar 2007, the company continued to be the top supplier of personal computer systems in the U.S. and the number two supplier worldwide.�

_CUSTOMERS_

Dell's customers consist of small-to-medium businesses and individuals, large corporations, healthcare, government, and education accounts. The company's customer base come from the five key areas it has focused to develop its growth strategy:

Small and medium business: striving to provide better IT solutions

Enterprise: striving to become industry leader in simplifying information technology for consumers,

Global consumers: striving to provide better and broader markets global sales growth

Emerging countries: striving to achieve an increase in investments and growth.

Notebooks: striving to reclaim notebook leadership,

SUPPLIERS

Dell purchases a number of components from a limited number of sources. Dell will establish a working relationship with a single source or a limited number of sources if they believe it is beneficial due to performance, quality, support, delivery, capacity, or price. A high volume of quality components from third-party suppliers is needed for Dell's manufacturing process. Any defective supply can decrease product reliability and hurt the company's reputation. Dell's reliance on suppliers makes them susceptible to industry shortages and less control over delivery schedules. Dell continues to develop its inventory and manufacturing business model to benefit from component cost declines. The company also negotiates with our suppliers in a variety of areas: availability of supply, quality, and cost. These continuous supplier negotiations maintain Dell's ability to respond quickly to changing market conditions. The efficient supply chain management reduced inventory risk through the mutually beneficial purchase arrangements with suppliers.�

LABOUR

At the end of Fiscal 2008, we had approximately 88,200 total employees, which is a decrease from approximately 91,500 total employees at the end of Fiscal 2007. In the first quarter of Fiscal 2008, Dell started an assessment on costs, from product development and procurement through service and...
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