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Model Of Electronic Commerce On Dell Corporation Marketing Essay

Chapter 1.0: INTRODUCTION

Information and communication technologies (ICT) specifically internet is the basic tools for economic development. It is interesting to know that networks have always been at the centre of successful economy. Electronic commerce is specific use of those networks for the purpose of business. Electronic commerce is about moving the physical activities such as supply, production, distribution, to the networked electronic environment.

1.1: Definition of E-Commerce

E-Commerce is conduct of business and financial transactions by electronic means. It is a way of sharing, maintaining, and conducting, business relations through telecommunication networks. E-commerce encompasses many diverse business activities both in business-to-business markets and in business-to-customer markets. BLAIR (1999) argued that there is no doubt electronic commerce is going to have prolonged effects on business sector, Government consumers and on the way people live and work. Ecommerce presents enormous challenges to the twenty first century. Those countries that whole-heartedly embrace e-commerce will get great benefit from it.

1.2: Importance of E-Commerce

There is no question that e-commerce will represent portion of the global economy over next five year. To achieve its maximum growth businesses are required to establish a market leadership that can be obtained by implementing an effective system of electronic commerce not just with the other businesses but also with the customers. The extensive growth of the internet, beyond its initial base in the military and academic communities, has been unprecedented. Kosiur (1998) states that over the past few years, the number of computers attached to the internet has been doubled annually It is now established argument that the use of internet is increasing throughout the world.

Figure 1.1: Diagram showing internet users in the world growth 1995-2010

1.3: Emerging internet technology

Internet is a vital system, which has established successful e-commerce and global trade. Internet has now become essential and gone into reality, which was seen visionary in early 1970’s and1980’s. It is the use of internet, which has proven whole world as a global village as it was stated by Marshall McLuhan in 1962.

US President Bill Clinton also highlighted this technology and made a statement as;“ when I took office, only high energy physicists had ever heard of what is called world wide web....now even my cat has its own page” (Bill Clinton,1996).

It is the internet that provided such a powerful platform, which changed the way; we do our business and communicate with each other. It is now clear that those companies who want to be at the leading edge of the world competition cannot ignore the importance of electronic commerce any more. It has been realised that e-commerce is reshaping every single bit of the global business sector, that is way the use of electronic commerce is gradually increasing throughout the world. If we talk about European countries, the usage of internet business activities has gone up in last decade considerably. Companies are using their resources to develop a good mechanism of e-business within a company, which will help organisations to run all major business activities over the internet.

1.4: Interaction between internet and E-Commerce

Electronic commerce, which is known as e-commerce, is relatively a new emerging area of interest both for the business management. There has been written a lot of books and articles about this hot topic of electronic commerce. Ecommerce is being seen as a fastest method of trading worldwide. Importance of electronic commerce can be seen in many different contexts e.g., it could improve the overall performance of an organisation by establishing and implementing strong relationship with their suppliers, (B2B) and customers (B2C) through the use electronic communication.

Figure 1.2: Bar chart showing US retail E-Commerce sale 2008-2014

Business to business (B2B) model includes all application and business activities that are intended to enable or improve the relationship between the companies. The main application and activities contains exchange of products, services, information, in between the business by electronic mean. Business run on business-to-business model can get many benefits from it. It reduces the cost increases sales and availability of the products, and is more time efficient. On the other side Business-to-customer (B2C) model is one of the easy and convenient way of selling to the customer on internet. It provides the competitive advantage to the vendors and gives better knowledge of customer needs, increase customer loyalty, decreases sale costs,

.

E-Commerce is growing day by day throughout the world especially in United States. The situation is even more promising in Great Britain, and France, where the revenue from E-Commerce is expected to be increased by 27% and 24% respectively. In Spain, the second quarter of 2009 represented the highest growth in B2C Ecommerce 16% over the past 12 months.

.

Figure 1.3: Bar chart showing Business-to-Customer E-Commerce sales in Europe

from 2006-2011

1.5: Social aspects of E-Commerce

Ecommerce is not just useful for the business world but it also bring enormous changes to social aspects of people by increasing communication between businesses and peoples via internet, high living standard, availability of public services, etc.

1.6:Merits of E-Commerce

The Merits of Electronic Commerce can be concluded as follows;

E-Commerce has proved its important where time is an essence.

It is more cost effective as compared to the other traditional commerce methods.

Its appearance in the global markets as a pioneer opened a lot of different horizons for both the customers and the businesses as well.

It increases the availability of business information throughout the world.

It increases the relationship between business and its customers.

Being an essential business plan for a company in order to survive and stay competitive in global business markets.

CHAPTER 2.0: METHODOLOGY

Main purpose of the research is to analyse and evaluate the importance of Business-to-Customer model of electronic commerce (B2C) on Dell incorporation. In order to fulfil the purpose of the research these merits has been analysed as follows:

2.1: Objectives

Benefit of the electronic commerce

Features of B2C model

Implementation of B2C model of electronic commerce.

Implementation of B2C model of electronic commerce and comparison of Dell performance year to year.

Customer attitude toward e-shopping

Both primary as well as secondary source of information have been used to elaborate the information related to the topic.

2.2: Consumer behaviour

A fully structured questionnaire has been used as the primary source of information. It provides the basic information, which has been used to find out today,’s customer trend towards e-shopping. It has been used to analyse and evaluate the glorious future of Business to Business model of electronic commerce. It helped to find out how the consumer behaviour is changing time to time by understanding issues. These can be summarised as follows;

The psychology of how customer think, feel, reason, and select between different alternatives (e.g., brands, products, )

How the customer is influenced by the changing environment.

Customer behaviour while shopping online.

How the customer motivation and decision is influenced by these newly developed marketing strategies.

In order to find out the impact of Business-to-Customer model of Electronic Commerce on Dell incorporation the information has been gathered using different secondary source of information (e.g., journal, strategic policies of Dell incorporation, Dell company online sale comparison review, Dell incorporation financial statement information, newspaper articles, etc.).

2.3 Ratio analysis technique

In order to analyse the financial information of Dell incorporation ratio analysis has been used. It has been used as one of the most popular technique for financial analysts.

2.3.1 Definition

Ratio analysis is one of the most important methods of financial analysis, which convert the quantities into ratios to get the meaningful comparison. It compares the ratios of one company with another company in same industry, or present ratios can be compared with the past periods in the same company.

2.3.2 Method

Ratio analysis technique has been calculated by subtracting first year net sale and net income from its second year. Ratios are then compared with each other to find the trend. Net sale and net income quantities were gathered from Dell annual financial reports. Ratio analysis technique is applied on these data to find out the relevant ratio. It is then compared with the ratios of other consecutive years of the same company to find out the trend.

2.3.3Limitations

It is based on the historical information provided in Dell incorporation financial statements.

It does not provide information about any future action done by the Dell management. The ratios can be distorted if Dell management change its accounting policies.

Creative accounting or window dressing can easily manipulate ratio analysis.

.

2.4 Business Analysis

2.4.1 SWOT Analysis

Strengths, weaknesses, opportunities, and threats (SWOT) is a business analysis tool that has been used to analyse the strategic position and environment of Dell Corporation.

SWOT Framework

Internal Analysis

Strengths

Weaknesses

Opportunities

Threats

External Analysis

.

Fig 2.1: showing SWOT framework diagram

2.4.2 Strengths

Strengths are those qualities, which enable Dell Company to fulfil its targets. These qualities develop basis on which continued success can be established or sustained. After analysis of company management policies, it has been concluded that Dell incorporation has enough qualities in the form of resources and capabilities in order to continue its success.

2.4.3 Weakness

These qualities can prevent the Dell to fulfil its mission. Weaknesses can deteriorate the Dell continued success or growth.

2.4.4: Opportunities

Opportunities will come from the environment in which the Dell Company is operating. These arise when company can take benefit of conditions in its environment to plan and execute those strategies that enable it to become more profitable.

2.4.5 Threats

Threats arise when conditions in external environment make it harder for the company to sustain its growth. Threats are uncontrollable and when they occur the stability and survival of the company can be at stake.

2.4.6 Limitation of SWOT analysis

2.4.7 External limitations

There are certain limitations, which are not in the control of Dell incorporation these include;

Implementation of new Government law and legislations.

Control over raw material

Price increase of raw material

Change in economic environment

2.4.8 Internal limitations

Dell incorporation can face the following internal limitations. Which are stated below;

Lake of skilled people.

Insufficient resources

Poor relationship with other companies in same industry.

Poor internal control.

CHAPTER 3.0: ANALYSIS

3.1: Emergence of new business strategies

There are two main strategies, which have emerged, so-called cost-efficiency-strategy and customer-centric-concept. Cost efficient strategy achieves its competitive advantage by cost leadership, specialisation, and applying appropriate supply chain processes. On the other hand, customer centric approach is about the efficient chain processes with diversification and seeks to build a relationship with the customers not just emphasising on price but also value for money.

CUSTOMER

INTERNET

ONLINE TRANSACTION SERVER

AUTHORIZATION NETWORK

WEB SITE

Acquaring Merchant bank

Issuing consumer bank

Fig 3.1: Flow chart showing the process of electronic commerce.

Electronic business supports both strategies it is cost effective by providing new distribution channels and services. On the business-to-customer side, online shopping and customer relationship management has been argued as promising sources of future revenue. This is the case, which seems to be more prominent in Dell incorporation.B2B & B2C.

3.2: Dell background

Dell incorporation is a multinational company that was founded by Michael Dell in 1984 with the capital of $ 1000. It sells computer and other computer related products and provides services to its customers. It is one of the largest technological incorporation in the business world. Michael Dell started his business as personal computers limited with the aim that by selling personal computer systems directly to the customer.

Dell Incorporation pioneered the concepts of selling personal computers directly to the customers. In 1988, the company change its name from “PCs Limited” to “Dell Computer Corporation”. In 1989, company set up its first on site programme. In 1989, company tried to sell its products indirectly through warehouses but it was not successful, and company refocused on its most successful model of electronic commerce business- to-customer sales model. Then finally, in 1996, Dell Incorporation began selling its computers via web site.

Therefore, the process of taking order over the internet was much more similar to the other one, which they called as “Dell on the phone”. Through this method customer were allowed to make the personal systems of their own choice by using the configuration option. Dell Incorporation business-to-customer model of electronic commerce also allowed the customer not just check the status of their orders online but also offered them after sale services as well. This online sales model (B2C) of electronic commerce brought certain advantages in Dell Incorporation which are listed below,

3.3: Advantages of online sale

It automated the purchasing process

Dell Company found itself able to tackle with great volume of sale without increasing key staff.

Sales of the company gone up without significant increase in cost

Cost saving were also made as the company bill start shrinking.

.improved after sale services

Increased customer satisfaction by providing specification options.

Company gained the competitive advantage by the proper implication of information communication technology.

3.4: RATIO ANALYSIS OF PREVIOUS YEARS

In other words Dell Incorporation golden period started when company began trading over the internet in 1996. Then after in 1997,one third of its orders were received over the internet and the company sale were reached up to $7.8 billion, and growth in sale was about 47% as compared to the last year(1996), and 123% increase as compared to the 1995.

Financial year ended (in millions)

y/e jan,1995

y/e jan,1996

y/e feb,1997

Net sale

$3475

$5296

$7759

Net income

$149

$272

$518

Table 3.1: Net sale and net income from financial year ended 1995 to financial year ended 1997

Fig 3.2: Bar chart showing net income from 1995 to 1997

The strategy of online sale not just affected the sale revenue of the company but also brought even more good results in company’s net income by reducing its cost to sale and hence increased the net profitability of the Dell incorporation in 1996 and 1997 respectively with the percentage, which was even better, then the percentage increase in net income.

So that from very first day the Business-to-customer model of electronic proved to the company that it is not just about to increase company sale but it also cost effective.

Fig 3.3: Bar chart showing the net income from 1995 to 1997

Year 1996

Increase percentage of net sale = ($5296- $3475)/ $3475 * 100

In (1996) = 52% (rounded)

Increase percentage of net income = ($272-$149) / $149 * 100

In (1996) = 83% (rounded)

Year 1997

Increase percentage of net sale = ($7759-$5296) / $5296 * 100

In (1997) = 47% (rounded)

Increase percentage of net income = ($518-$272) / $272 * 100

In (1997) = 90% (rounded)

Year 1997 compared with 1995

Increase percentage of net sale = ($7759-$3475) / $3475 * 100

In (1997) compared with = 123% (rounded)

(1995)

Increase percentage of net income= ($518-$149) / 149 * 100

In (1997) compared with (1995) = 248% (rounded)

According to the Dell spokesperson Bob Kaufman, about half of the company revenue comes from the site. After implementing the Business–to-customer model of electronic commerce net income of the company were increased by 83% in 1996 and 90% in 1997 respectively. And it is what they said in their annual financial report 1997,that our net income grow faster then sales as we continued improve costs and to capture economics of scale. However, it is the internet how served the company more then just a powerful medium and brought more results then it was expected. Dell incorporation in its annual financial report 1997 said, the year was extraordinary in any measure.

Same trend could be seen from 1997 to 2001 where company continued growing in all of its respects. Net revenue was raised from $7.8 billion in 1997 to $31.9 billion in 2001 and the company net income was raised from $ 518 million in 1997 to $ 2310 in 2001.

Financial year ended (in million)

1997

1998

1999

2000

2001

Net Sale

$7759

$12327

$18243

$25265

$31888

Net Income

$518

$944

$1460

$1860

$2310

Source: Dell annual reports from 1997 to 2001.

Table 3.2: Net sale and net income from financial ended 1997 to financial ended 2001.

Fig 3.4: bar chart showing net sale from 1997 to 2001

From 1997 to 2001 percent, increase in sale was 47% in 1997, 59% in 1998, 48% in 1999, 38% in 2000, and 26% in 2001.

Therefore, the company ended up 20th century with extraordinary results and strengthened its reputation about its product and services. It was their statement in annual financial report 1999, that “ our use of internet to make it easier for the customers and suppliers to do business with Dell, and to help reduce costs of us all, remains among the most advanced in any country”(Dell annual financial report, 1999).

Fig 3.5: Bar chart showing the net income from 1997 to 2001

The promise made by the Dell incorporation to its shareholders, customer, supplier, and to the other stakeholders was fulfilled when Dell announced the increase in its net income with percentage of 82% in 1998, 55% in 1999, 27% in 2000, and 24% in 2001.

Year 1998

Increase in net sale = ($12327- $7759) / $7759 * 100

= 59%

Increase in net income = ( $944 - $518) / $944 * 100

= 82%

Year 1999

Increase in net sale = ($ 18243 - $ 12327) / $ 12327 * 100

= 48%

Increase in net income = ($1460 - $944) / $944 * 100

= 55%

Year 2000

Increase in net sale = ($ 25265 - $ 18243) / $18243 * 100

= 38%

Increase in net income = ( $ 1860 - $ 1460) / $1460 * 100

= 27%

Year 2001

Increase in net sale = ($ 31888- $ 25265) / $25265 * 100

= 26%

Increase in net income = ($2310 - $1860) / $1860 × 100

= 24%

The strategy of online sale not just increased the revenue of Dell incorporation but also reduced the extra costs of employment and other expenses. It enabled the Dell to grow faster in its entire segment and made it more profitable compared to the other computer system providers and Dell incorporation ended up last five years of 1990s in a charismatic fashion.

Financial year ended (in millions)

2002

2003

2004

2005

Net sale

$31168

$35404

$41444

$49205

Net income

$1246

$2122

$2645

$3043

Table 3.3: Net sale and net income from financial ended 2002 to financial ended 2005.

2006

2007

2008

2009

Net sale

$55908

$57420

$61133

$61101

Net income

$3602

$2583

$2947

$2478

Table 3.4: Net sale and net income from financial ended 2006 to financial ended 2009.

Fig 3.6: chart showing the net sale from 2002 to 2009.

3.5: Dell in 21st century

Beginning of 21st century was also in charismatic way and Dell Company hold 1st position as a computer systems company in the United States and 2nd position worldwide. In all company annual financial reports, Dell appreciated its model of direct sale to the customer, which brought significant changes to the business nature and structure. Soon they realised that use of internet in Dell corporation was one of the critical susses factor in continued growth and success of Dell.

The year of 2002 was not same like the all previous years and for the first time in Dell company history sale declined by 2%. Although the difference was a little and compared with 1990s was still good but the company took this matter really seriously and promised to its shareholders, customer, and suppliers that though the reduction in sale was because of the US political issues which happened in September 11, 2002, but still company will improve its performance in coming period.

Fig 3.7: Bar chart showing the net income from 2002 to 2009.

Moreover, they just proved it later on when from 2003 to onward company net sale again started increasing year to year. Dell raised its sale by 14% in 2003, 17% in 2004, 19% in 2005, 14% in 2006, 3% in 2007, and 6% in 2008, -0.02% in 2009, and company net income also increased along with its sale with an appropriate percentage

Year 2002

Percentage decrease in net sale = ($31168-$31888) / $31888 × 100

= -2%

Percentage decrease in net = ($1246 -$2310) / $ 2310 × 100

Income = -46%

Year 2003

Percentage increase in net sale = ($35404- $31168)/ $ 31168 × 100

= 14%

Percentage increase in net = ($2122- $1246) / $ 1246 ×100

Income = 70 %

Year 2004

Percentage increase in net sale = ($41444- $35404) / $35404 × 100

= 17%

Percentage increase in net = ($ 2645- $ 2122) / $ 2122 × 100

Income = 25%

Year 2005

Percentage increase in net sale = ($49205- $41444) / $41444 × 100

= 19%

Percentage increase in net Income= ($3043-$ 2645) / $ 2645 × 100

= 15%

Year 2006

Percentage increase in net sale = ($55908-$49205) / $49205 × 100

= 14%

Percentage increase in net = ($3602-$3043) / $ 3043 × 100

Income = 18%

Year 2007

Percentage increase in net sale = ($57420-$55908) / $55908 × 100

= 3%

Percentage decrease in net = ($2583- $3602) / $ 3602 × 100

Income =- 28%

Year 2008

Percentage increase in net sale = ($61113-$57420) / $57420 × 100

= 6%

Percentage increase in net = ($2947-$2543) / $ 2543 × 100

Income = 16%

Year 2009

Percentage decrease in net sale = ($61101-$61113) / $61113 × 100

= -0.02%

Percentage increase in net = ($2478-$2947) / $ 2947 × 100

Income = -16%

Dell computers net sale in last 15 years shows a steady and gradual increase which is a good sign of company overall performance and shows us the better strategies from the management.

Fig 3.8: graph showing the increase in net sale from 1995 to 2009

Company sale increased with the significant percentage from 1995 until 2008 and then after there was a slight difference from 2009 because company performed its activities under the period of recession.

Dell incorporation net incomes increased gradually from 1995 to 2001 but there was a decline in 2001 and then after company reform its activities and again started increasing its net income from 2001 to 2006.

Fig 3.9: graph showing the increase in net income from 1995 to 2009.

The period of 2007 was the period near to recession and from 2008 to 2009 was actually under recession where many large companies were going under the cessation or administration in such horrible circumstances still company maintained its performance.

3.6 SWOT analysis of Dell incorporation (Year 1996)

Strengths

Weaknesses

Dell model of direct sale to its customer

Extensive range of product and services

Best after sale services

Customer’s specification

Value for money

Advanced technology

Cost effectiveness

Reliability on products

Customer satisfaction

Computer maker not computer manufacturer

Huge range of products can cause embracement.

Weak business relationships with many retailers.

Dealing with great amount of supplies can create destruction

They do not have unique technology, which they can offer to the market.

Opportunities

Threats

Personal computers are becoming necessity now a day.

People becoming more familiar with computer systems.

Expand into Government and education markets.

Diversification of strategy.

Low cost and low priced system

Addition of skilled worker.

Dell is operating its business in a volatile market.

Price difference in getting smaller

Competitive rivalry.

Exposed to fluctuation in world markets.

Increasingly brand names in the competition.

Technological advancement is double edge it is a threat as

Well

Dell incorporation is one of the best personal computer makers in the world. its brand is also famous and well reputed in the world markets. Its model of direct sale to the customer provide two main advantage to its customers,

It reduces the sale cost and marketing costs by eliminating the mark up of distributors

It reduces the cost by keeping low level of inventories.

Their organisational structures enable it to achieve diversified targets. Dell allows

The integration of other components in its operating process.

On the other hand, most of the Dell strategies depend upon the other manufacturing components. Continuous updates are required to keep up with the Dell pace of development.

Internet also provide to Dell great opportunity where the customers place their order or can get the basic information. Now a days customer are demanding more laptops compared with the desktop which provide the company another opportunity in this segment.

Dell established web corporate model enable the company to have a global access to the customers and markets. By adopting the diversification strategy Dell is introducing many new products and services to its customers.

On the other side, there are many threats to the company as well. It is operating in highly volatile industry. Computer hard ware computer software

In addition, accessories are changing rapidly. It is highly important for the company to produce the products, which are high in quality and low in price.

Dell direct sale model attracts the customers because it is more cost effective. Since the other companies are able to sell computers at low price, it could effect on Dell company future growth. Growth rate in computer industry is reducing. Dell incorporation has most of the shares of computer markets. If the demand slow down it could leave adverse effect on the company. Technological advancement is two-edge sword if it is an opportunity but the same time a threat as well.

Anyway, Dell commitment to customer value, to being direct, to operating responsibly, will differentiate it from the other companies

3.7: Effects of online sale on profitability, liquidity, and investment ratios

Year 1995

Return on capital employed (ROCE) = ($ 249) / ($ 652 + $ 113) × 100

= 32%

Current ration = ($ 1470) / ($751)

= 2

Earning per share = ($ 140) / ($39)

= $ 3.5

Gross profit margin = ($ 738) / ($ 3475) × 100

= 21%

Year 1996

Return on capital employed (ROCE) = ($ 377) / ($ 973 + $ 113) × 100

= 35%

Current ration = ($ 1957) / ($939)

= 2.1

Earning per share = ($ 260) / ($93)

= $ 2.7

Gross profit margin = ($ 1067) / ($ 5296) × 100

= 20%

Year 1997

Return on capital employed (ROCE) = ($ 714) / ($ 806 + $ 18) × 100

= 87%

Current ration = ($ 2549) / ($1658)

= 1.5

Earning per share = ($ 518) / ($173)

= $ 3

Gross profit margin = ($ 1666) / ($ 7759) × 100

= 21%

Year 1998

Return on capital employed (ROCE) = ($ 1316) / ($ 1293 + $ 17) × 100

= 100%

Current ration = ($ 3455) / ($2697)

= 1.3

Gross profit margin = ($ 2722) / ($ 12327) × 100

= 22%

Fig 3.10: Bar chart showing the percentage increase / decrease in gross profit margin and return on capital employed from 1995 to 1998.

Fig3.11: Bar chart showing percentage increase or decrease in current ratio from 1995 to 1998.

Year 1999

Return on capital employed (ROCE) = ($ 2046) / ($ 2321 + $ 512) × 100

= 72%

Current ration = ($ 5807) / ($3695)

= 1.6

Gross profit margin = ($ 4106) / ($ 18243) × 100

= 22.5%

Year 2000

Return on capital employed (ROCE) = ($ 2457) / ($ 5308 + $ 508) × 100

= 42%

Current ration = ($ 7681) / ($5192)

= 1.5

Gross profit margin = ($ 5218) / ($ 25265) × 100

= 21%

Year 2001

Return on capital employed (ROCE) = ($ 2769) / ($ 5622 + $ 509) × 100

= 45%

Current ration = ($ 9491) / ($6543)

= 1.4

Gross profit margin = ($ 6443) / ($ 31888) × 100

= 20%

Year 2002

Return on capital employed (ROCE) = ($ 2271) / ($ 4694 + $ 520) × 100

= 44%

Current ration = ($ 7877) / ($7519)

= 1.04

Gross profit margin = ($ 5507) / ($ 31168) × 100

= 18%

Year 2003

Return on capital employed (ROCE) = ($ 2844) / ($ 4873 + $ 506) × 100

= 53%

Current ration = ($ 8924) / ($8933)

= 1

Gross profit margin = ($ 6349) / ($35404) × 100

= 18%

Fig 3.12: Bar chart showing percentage increase/ (decrease) in gross profit margin and return on capital employed from 1999 to 2003.

Fig 3.13: Bar chart showing increase or decrease percentage of current assets from 1999 to 2003.

Year 2004

Return on capital employed (ROCE) = ($ 3544) / ($ 6280 + $ 505) × 100

= 52%

Current ration = ($ 10633) / ($10896)

= 0.97

Gross profit margin = ($ 7552) / ($41444) × 100

= 18%

Year 2005

Return on capital employed (ROCE) = ($ 4254) / ($ 6485+ $ 505) × 100

= 61%

Current ration = ($ 16897) / ($14136)

= 1.2

Gross profit margin = ($ 9015) / ($49205) × 100

= 18%

Year 2006

Return on capital employed (ROCE) = ($ 4789) / ($ 4129+ $ 504) × 100

= 103%

Current ration = ($ 17706) / ($15927)

= 1.1

Gross profit margin = ($ 10288) / ($55908) × 100

= 18%

Year 2007

Return on capital employed (ROCE) = ($ 4789) / ($ 4439+ $ 569) × 100

= 96%

Current ration = ($ 19939) / ($17791)

= 1.1

Gross profit margin = ($ 9516) / ($57420) × 100

= 17%

Year 2008

Return on capital employed (ROCE) = ($ 3440) / ($ 3735+ $ 362) × 100

= 84%

Current ration = ($ 19880) / ($18526)

= 1.1

Gross profit margin = ($ 11671) / ($61133) × 100

= 19%

Fig 3.14: Bar chart showing percentage increase/ (decrease) in gross profit margin and return on capital employed from 2004 to 2008.

Fi3.15: Bar chart showing percentage increase or decrease in current ratio from 2004 to 2008

Fig 3.16: Line graph showing increase/ (decrease) percentage in return on capital employed from 1995 to 2008.

Fig 3.17: Line graph showing the increase or decrease percentage of gross profit margin from 1995 to 2008.

Fig 3.18: Line graph showing percentage increase or decrease of current ratio from 1995 to 2008.

CHAPTER 4.0: Conclusion

It is hard to ignore the promising and glorious future of electronic commerce in 21st century. In the near future, it will confirm itself as a major tool of sale. As we know that, the trend has changed and e-shopping is becoming more popular among customers. This trend of e-shopping will end up with more internet sale and great marketing evaluation.

Business-to-Business model of electronic commerce is in the interest of customers, suppliers, shareholders, management, and all other stakeholders of the company. It brings the following benefits;

It increases the sale of the company and end up with more profit to its shareholders

Customer needs are satisfied by providing customer specification options via internet.

Management become successful in obtaining its goal and targets, hence they are qualified for extra bonuses and increased salary.

Business- to – Customer model of electronic commerce is more cost effective which reduces the expenses and increases the net profit. Hence, it is resulted into better dividend to the shareholder and increased share price in stock exchange.

As analysed by considering Dell sale and income from1995-2009, it could be stated that very similar trend is happened in the case of Dell incorporation. Dell incorporation started with a little capital of just $ 1000 in 1984 and after spending capital during twenty-six years, the company earned its fortune in billion and trillion. The question is;

What exactly happened within the company, which brought such charismatic results in a short period?

The answer is very realistic and has been analysed here. Before the implementation of Business-to- Customer model of electronic commerce the company was doing its business in the traditional way. In 1995, company changed its strategy about the sale and implemented online sale. It was noticed that there was a significant difference in its net revenue and net profit. After the implementation of B2C model of electronic commerce, it brought all the benefits, which were promised by the electronic commerce. The introduction of E-commerce bust up the sale of the Dell incorporation from $ 3475 million in 1995 to $ 61101 million in 2009, which is about 18 times greater, then revenue generated in 1995.

Therefore, the implementation of B2C model of electronic commerce in Dell incorporation proved its benefit to its shareholders by increasing their dividend and share price in the market and on the other hand, the increase in sale proved the customer satisfaction about the system performance. Online sale model of Dell Company improved the customer services before and after sale. It provided customer specification option, where they could make own choice at comparably low prices. All this had increased not only customer trust and satisfaction but also earned customer loyalty with Dell incorporation.

This model of online sale increased the net revenue of the company and on the other hand, it reduced the costing year after year resulting in increase in net income. The net profit of the company had increased from $ 518 in 1995 to $ 2478 in 2008, which is five times as compared with 1995. It has been proved that the strategy of the company to sale direct to the customer because it was cost effective.

After the analysis of Dell incorporation, it can be concluded that effective implementations of electronic commerce brings enormous results to the company. It increases the sale of the company more swiftly, compared with other brick- and – mortar ones. Electronic commerce is more cost effective compared with other traditional methods of trading. It has customer’s friendly approach that brings customer satisfaction and put faith in the company products. The tendency will continue because people feel more comfortable while shopping online. On line sale has now established as significant improvement in the sale traditional style. The sale is on boom and it reflects the magnificent future of electronic commerce.

CHAPTER 5.0: Recommendations aND SUGGESTIONS

This research and analysis of the project is based upon the implementation of electronic commerce and its impact on business growth. No doubt, 21st century will be known for its information revolution accompanying electronic economy.

Firstly, it is hard for the businesses to survive in 21st century without electronic commerce. All businesses need to develop an electronic website to get in pace with this revolutionary facility. Business should accelerate their trading online with appropriate electronic commerce tools. Business organisations will use electronic tools to get proper benefit from it.

Secondly, being a customer and internet user, everyone should take the responsibility to keep electronic commerce safe and competitive so that electronic business can be more reliable in future.

5.1 Suggestions

Factors that need to be examined in the future include;

Firstly, the research and analysis project focuses only single organisation for the implementation of electronic commerce, it should be more idealistic that analysis could be extended up to two or more business set up in order to make a comparatively comprehensive analysis.

Secondly, this research analyse the impact of Business-to- customer model of electronic commerce on Dell incorporation, it could be suggested that other models of electronic commerce such as B2B, C2C, B2G, should also be used and compared .

Thirdly, this research analyse the business strategic position and its environment by using SWOT analysis, it is suggested that other analysis technique such as PESTLE, MOST, CATWOE, MoSCoW could also be applied to get a better approach.

Fourthly, the study may focus on the comparison between the online sales of the company compared with the sales through other means.

Fifthly, the research may be extended to analyse the impact of electronic commerce in different parts of the world.

Finally, the data gathered might be small, due to the limitation of resource; further studies could be done taking large number of data using other sources.

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