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Sales- $55,908 million for fiscal year ended 2/03/2006
Net income $3,572 million for fiscal year ended 2/03/2006
Cash flow from operating activities- $4,839 million for fiscal year ended 2/03/2006
Total assets $23,109 million for fiscal year ended 2/03/2006
Number of employees- As of 02/03/2006 Dell had approximately 65,200 regular employees
External Business Forces
Dell Products
Dell offers a variety of products, but their emphasis is on: Desktop computers, notebook computers, network servers, network storage devices. Dell also offers other consumer electronics and software along with service programs.
Dell’s competitors
Dell’s major competitors are IBM, Hewlet-Packard, Gateway, Apple, and Sony
Dell’s customers
Dell’s variety of products allows them to cater to many different groups. Dell’s focus has remained on the business and government contracts, but they offer products to suit individuals, schools, and small businesses as well.
Dell’s suppliers
Dell has two main suppliers critical to operations, Intel and Microsoft. Intel is the major supplier for processors and Microsoft is the primary supplier of operating systems and software.
Dell’s Labor Force
As of February 3, 2006, Dell had approximately 65,200 regular employees and DFS had approximately 900, compared to approximately 55,200 for Dell and 800 regular employees for DFS as of the end of fiscal 2005. Approximately 26,200 of these employees were located in the U.S., and approximately 39,900 were located in other countries.
Dell’s Capital Market
Dell sells its products and services to its customers through sales representatives, telephone based sales, and online sales through www.dell.com. For large corporations and institutional customers Dell has a field sales division which has consultants to help the customer optimize their info structure. For smaller consumers dell uses marketing in mass media, selected print and television, as well as the internet. Dell uses the direct business model to provide direct and continuous customer feedback.
Dell’s Strategy to Gain Competitive Advantage
Dell’s Business Strategy
Dell’s business strategy combines its direct customer model with a highly efficient manufacturing and supply chain management organization and an emphasis on standards-based technologies. This strategy enables Dell to provide customers with superior value, high quality relevant technology, customized systems, superior service and support, and products and services that are easy to use and buy. Dell is in a highly competitive market where price is a determining factor so cost leadership is their main concern.
Dell’s Critical Processes
A. Supply chain management is most to Dell’s success. Acquiring and assembling multiple computer components is what Dell is. Dell has to keep a close working relationship with suppliers to promote a smooth running operation. It is also important for Dell to keep up with all the technological advancements in the consumer electronics industry through their suppliers.
B. Infrastructure processes are vital to operations. Dell depends on its information technology and its manufacturing infrastructure to achieve organizational goals.
C. Customer service and support services processes ensure good communication between dell and its customers. A solid relationship with customers will promote operational efficiency.
Accounting information associated with critical processes
A. Supply chain management: cost of goods sold, revenues, inventory, and accounts payable.
B. Infrastructure: maintenance expense and research development and engineering expenses.
C. Customer service and support services: warranty expenses, accounts receivable, advertising expense, and selling and administrative expenses.
Accounting methods and risk associated with critical business processes
A. Cost of goods sold: could not find in notes
B. Revenues: Revenues are recognized on date of shipment
C. Inventory: Inventories are stated at the lower cost or market with cost being determined on a FIFO basis.
D. Accounts payable: could not find in notes
E. Maintenance expense: could not find in notes
F. Research and Development: Research and development is expensed as incurred
G. Warranty expense: Recorded at time of sale for the estimated cost that may be incurred during the time of limited warranty.
H. Accounts receivable: The allowance method is uses for uncollectible accounts
I. Selling, general, and administrative expense: Include such as sales commission, marketing and advertising cost, and contractor services. Advertising is expensed as incurred.
Managements view of internal control
Management’s assessment of the effectiveness of Dell’s internal control over financial reporting as of February 3, 2006 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their Report of Independent Registered Public Accounting Firm included in “Item 8 — Financial Statements and Supplementary Data.”