Category: Dell

From the case study, it is clear that the auto industry will work differently on several processes and strategies if designed by Dell’s model of virtual integration. The concept of virtual integration is an organizational strategy concerned with integrating a firm’s internal functions with both suppliers and distribution outlets not only to achieve coordination across organizational boundaries, but also to spur operational efficiency and customer responsiveness (Abebe, 2007; Applegate, Austin, & Soule, 2009).

It is evident from the case study that many auto manufacturers experience inefficiencies in their relationships and interactions with their supply chain partners due to maintaining a costly inventory buffer in the hope of minimizing market uncertainty (Applegate et al., 2009). However, upon the adoption of Dell’s model of virtual integration, the automakers will depend more on emerging information technologies (e.g., internet technologies) as well as inter-organization information networks to obtain an on-time delivery of raw materials continuously, hence successfully dealing with the problem of having to maintain a costly inventory (Abebe, 2007).

In the same vein, Dell’s model of virtual integration will assist companies within the auto industry to minimize the amount of finished product inventory by sharing information with customers in real-time to manufacture vehicles to customer orders (Abebe, 2007). In this light, the aggressive employment of technology to facilitate information sharing between auto manufacturers and customers will not only reduce working capital but also minimize exposure to inventory obsolescence, leading to competitiveness in the design, manufacture, and sale of automobiles (Applegate et al., 2009).

To expand on the above, it is clear from the case study that virtual integration of the supply chain will assist auto manufacturers to adopt an effective just-in-time (JIT) purchasing framework, whereby vehicle components will be held under suppliers’ inventory and will only be transacted into the manufacturer’s location moments before they are used for production or to assemble motor vehicles. Extant literature demonstrates that such a strategy not only contributes to substantial capital savings since auto manufacturers do not require to have a huge amount of capital to hold small inventories but also frees up precious factory space which can then be reallocated for production expansion and improvement activities (Abebe, 2007).

One of the challenges that continue to face players in the automobile industry is to consolidate their product development activities often found across diverse geographic locations (Applegate et al., 2009). According to these authors, the use of technology is necessary not only to overcome the constraints normally imposed by geography on information flow but also to ensure that teams in different continents across the world can work together as if they were in the same building. Consequently, designing the auto industry by Dell’s virtual integration model will facilitate the use of cutting-edge information and communication technologies to ensure that such diverse production units can interact and share information in real-time (Serve, Yen, Wang, & Lin, 2002).

It is a well-known fact that most auto manufacturers make use of a network of dealership channels to market their products to the end consumers (Applegate et al., 2009). While it may not be possible to do away with the dealer channels due to the nature and scope of the auto industry, players within the industry can make use of Dell’s virtue integration model with the view to eliminating several dealership tiers in their supply chain and subsequently reducing product-to-market time (Serve et al., 2002).

Available literature demonstrates that, as product life cycles get shorter and customer’s inclinations shift quickly, “businesses focus on virtually integrating with their customers and suppliers in order to get a direct feedback on the specific market requirement and build new products that meet these emerging needs” (Abebe, 2007 p. 197). Consequently, by reducing the dealer tiers to a bare minimum in line with the virtual integration model, players in the auto industry will position themselves at a vantage point not only to create a relationship with customers but also to get direct feedback on their needs and requirements with the view to continuously improving and fulfilling future automobile demand.

Moving on, it is evident from the case study that most firms within the automobile industry have been grappling with the challenge of blurring the traditional boundaries in their value chain, particularly among several tiers of suppliers, manufacturers, dealers, and customers (Applegate et al., 2009). This challenge has been costly to their operations, thus the need to consider other frameworks and strategies that could be successfully used to blur the boundaries.

Virtual integration is one such strategy that could be used by vehicle manufacturing companies to blur the boundaries in the value chain through the use of technology. By successfully adopting the virtual integration model, these firms will not only have the capacity to coordinate their operations to achieve new levels of efficiency and productivity but will also benefit from the focus and specialization that drive virtual organizations (Applegate et al., 2009; Serve et al., 2002). Extensive coordination and specialization arising from real-time information sharing with suppliers and customers will enable automobile manufacturers to identify growing demands and forecast future markets, leading to increased competitiveness and productivity (Abebe, 2007).

Lastly, available literature demonstrates that “adopting a virtue integration strategy enables the organization to focus on its core competence, availability of more resources and faster time to market for new products” (Abebe, 2007 p. 198). Since automobile manufacturing companies such as Ford and General Motors operate in very competitive and dynamic environments (Applegate et al., 2009), it is generally felt that they could work differently upon the adoption and implementation of Dell’s virtual integration model, particularly in terms of enhancing the speed and the level of coordination across various functional units within the firms as well as with other supply chain partners to take full advantage of faster time to market for new car models.

Such an orientation will enable players within the automobile industry to concentrate on their core competence and establish close supplier partnerships to outsource their non-core business processes with the view to shifting their critical resources toward strategic decisions and customer satisfaction.

Overall, it is evident from the case study that the adoption and implementation of the virtue integration model is the way to go for the automobile industry if players are to maintain competitiveness, efficiency, and productivity in their supply value chain.

References

Abebe, M.A. (2007). To integrate or not to integrate: Factors affecting the adoption of virtual integration strategy in organizations. Business Strategy Series, 8(3), 196-202.

Applegate, L.M., Austin, R.D., & Soule, D.L. (2009). Corporate information strategy and management (8th ed.). Burr Ridge, IL: McGraw/Irwin.

Serve, M., Yen, D., Wang, J.C., & Lin, B. (2002). B2B-Enhanced supply chain process: Toward building virtual enterprises. Business Process Management, 8(3), 245-253.

Introduction

Dell is a Texas based Company that manufactures different types of computer systems. It manufactures products such as personal computers and servers, network switches, personal digital assistants or PDAs, data storage devices, televisions, computer peripherals, software for the computers and other IT related applications and products including support and help desk services. In 2007, the company had revenues of more than 57 billion USD. The company has divisions in a number of countries such as UK, Germany, Australia and many more. The company has about 95,000 employees worldwide. This paper provides a PEST analysis of the company and explains external environment forces such as the Political, Environmental, Social and Technology in which the company operates (Dell UK, 2008).

PEST analysis tool provides an understanding of the external forces that the company faces. The tool helps organizations to develop an understanding of the forces that can affect the company. Based on the analysis, a suitable strategic plan can be implemented to achieve sustained growth. The PEST tool helps on providing the big picture (PEST, 2008).

Political Forces

Kirkpatrick (2006) has commented that governments across the world are encouraging the use of IT solutions and are devoting adequate budgets to allows state and legislature bodies to buy computers and IT hardware. According to Gartner reports (Gartner. 28 November 2006), IT boom still continues as more and more companies upgrade their computers, servers and other hardware. The report also suggests that stricter laws regarding the manufacture and sale of computers. The magazine suggests, “Laws designed to curb the environmental impact of computer parts will disrupt complex global supply chains unless companies themselves are more stringent”.

The RoHS Directive (RoHS, 2008) regulates the dismantling and recycling of waste electrical and electronic equipment by restricting the use of hazardous substances used in their manufacture. The UK implementing laws came into force on 1st July 2006 and since that date, products put on the market in the UK must not contain any of six listed hazardous substances, measured against prescribed concentrations.

The government has enforced stricter legislations to stop cartel from forming and some companies from obtaining a dominating share in the market.

Environmental Forces

The market environment in which the company operates is very competitive. There are many manufacturers such as Hewlett-Packard, Sun Microsystems, Gateway, Apple, Lenovo, Sony, Acer, Toshiba, Asus and many more. The company is among the top five manufacturers in the world (Fortier, 2008).

With increased competition, Dell is forced to cut prices some of its products. Another major environmental force is the Grey market that has a major chunk of the personal computer market. There are reports that these computers are made by important components such as RAMs and circuit board by evading the import duty and some part of the tax that is saved is passed on to the customers and hence there is a steady market for assembled computers. (Fernandes, 2004)

Social Forces

While owning a computer is considered as a business necessity, there is a growing demand for sleek products in attractive designs, combined with advanced features. Devices such as flat monitors that cost more than double a CRT tube monitor are in demand by some customers. There is also an increased demand for sleek laptops, notebooks with red and other colours that are attractive (Oscar, 2008). In many remote villages and developing countries such as India, there is an increased social awareness of using the computer to empower illiterate villagers. This is a positive social force that would help IT hardware and product companies (Kalam, 2005).

An interesting trend that has appeared is that developing countries such as India, that was never a leader in the field of engineering and technology has emerged as a leading IT power. There are many countries such as Infosys, Mastek, Wipro, Patni that are based in India an have development centres across the world and even in UK Many people in UK feel that with development and service support centres moving away from UK to India, Korea and other countries, citizens of UK are losing their jobs. (Kanellos, 2005).

Technology Forces

The IT hardware and service market is extremely volatile and rapid technology changes are the norm. With Intel and Microsoft dominating the chip and the operating system market, there are a number of other players. Dell does not make its chips or create the operating system, but it has to offer products with chips such as Intel and AMD and operating system such as Microsoft Windows, Open Office, Unix, Linux and others (Dell UK, 2008).

Key Note estimates that, in 2004, the total UK computer hardware market was worth £11.82bn at end-user prices, a rise of 5.6% on 2003 (Key Note Report, 2005). According to the report, the technology has moved to configurations with Intel Dual Core and AMD’s Athlon and others. There is a clear market segmentation and the main segments are: home, small and medium business, large business and public sector. These sectors have different technology requirements and the home and individual user markets sees a higher requirement for multimedia enabled and web compliant systems that can operate with high broad band connections. Screen resolution, speed of the processor, audio quality, disk space, wireless connectivity, optical devices support and others assume greater importance. There is also an increase in demand for gaming devices and Dell is not a major manufacturer of such devices. (Key Note Report, 2005).

Conclusion

The paper has discussed the PEST external forces that effect Dell computers. The study has given details of how these forces can impact the company.

References

Fernandes Clyde. 2004. Abacus ‘Schemes’ Gray Market’s Downtrend. Web.

Dell UK, 2008. Solutions overview. Web.

Fortier Paul J. 2008. Computer System Performance Evaluation and Prediction. Elsevier Publications. ISBN 8181476190

Gartner. 2006. PC makers must follow world’s strictest green laws. Web.

Kanellos Michael. 2005. Looking behind India’s tech boom. Web.

Kalam Abdul. 2005. Empowering Rural India: The Financial Express. Web.

Key Note Report, 2005. Computer Hardware – Market Report: Key Note Report, UK.

Kirkpatrick David. 2006. Dell in the penalty box. Fortune: 100 Fastest-Growing Companies 2006. Web.

Oscar Castillo. 2008. Trends in Intelligent Systems and Computer Engineering. Lecture Notes Electrical Engineering. Volume 6. ISBN: 978-0-387-74934-1.

PEST. 2008. PEST Analysis: Understanding “Big Picture” Forces of Change. Web.

RoHS. 2008. RoHS Directive and the UK RoHS regulations. Web.

XPS One, 2008. Dell: XPS One Desktop, Features. Web.

In the competitive environment it takes huge sums of money, sometimes over long periods, for media campaigns to be really effective. DGS (Gaming System for Dell Computer) is an innovative product which needs creative and unique media campaign to attract potential consumers. Advertisers, on the other hand, should take the attitude that it is indeed possible to know what works, and what doesn’t and why. As a result they can confidently reject attempts to obscure their inquiries or fob off their concerns about whether their advertising is working. Belief in the exclusive power and province of the tribal medicine man belongs to an era that has passed (Evans et al, 2004).

The media campaign budget will be based on purchase of media time and space. The main media selected for campaign are TV, press and the Internet. Also, the budget will involve all direct and indirect costs of the campaign. The budget should be aligned with the goals and aims of the campaign. The budget process sets up procedures (financial regulations) for authorizing expenditure and the headings under which money can be expended. The accounting system provides information on the levels of actual expenditure against budgeted expenditure. Taking into account experience and success of Dell’s competitor Sony, it will require $127M for media campaign. Dell should be able to get much more effectiveness out of their media campaign budget and out of working with their advertising agency And consumers should be able to accept, without necessarily feeling threatened, that advertising does influence which brands they choose, especially when it does not matter to them personally which brands they choose. Indirect costs will involve personal and administration costs. Usually, it takes 25% of the budget ($31,75M for Dell).

The appropriate media for the selected strategies and budget will be TV, press and the Internet. The main advantage of TV and commercials is that moving color pictures of actual scenes, people and products have a realism which his not possible via other media. Any effort is necessary for a viewer to absorb television advertising. Commercials will help to reach wide target audience and inform potential buyers about the new product. A television advertisement can be timed to the hour, day, week or program. The advertisement can be repeated every few hours, daily, weekly, etc. A special attention should be given to TV ads. One of the seductive attractions of 15-second commercials is that advertisers can get more repeat exposure for the same ad budget than they can with a 30-second ad (Evans et al, 2004).

Press is another powerful medium for a new product. This media is cost-effective where offering has broad appeal. It can create an impact and be persuasive. It allows more scope for testing than TV and can use advertorials – ad and editorial combined. The advantage of this medium is that it supports TV and the Internet and persuades potential buyers to try a new product. It can also offer postal response route.

The Internet medium is important for such product as a gaming system because many potential consumers are advanced Internet users looking for innovative products and solution via this channel. Web banner require low production costs; can use free banner ad exchange schemes or negotiate charges per click through; get more than a response (Evans et al, 2004).

Billboards and posters will be used in big cities around the country in order to ensure high response rate. Also, it is necessary to use repetition in promotion campaign because it is as important as the promotion itself. Research has shown that over 95 percent of people forget the exact message within six weeks of seeing it.

Budget for Dell Gaming System (Total budget – $127M)

References

Evans, M., O’Malley, L., and Patterson, M., (2004), Exploring Direct & Customer Relationship Marketing, 2nd edition, London: Thomson

Dell gaming system will be positioned as a unique product proposing unique advantages and benefits to potential consumers. The positioning will be based on symbolic concepts: self-image enhancement and ego identification, sense of belongingness and social importance. The aim of positioning is to establish trustworthiness, confidence, and competence for customers. Personalization, innovation, and technology will be the core of positioning strategy. The buyer perception of benefit-generating attribute will be based on unique design and stylish image of the Dell gaming system appealing to a wide target audience. Dell should create a unique image of the game and a sense of belonging to new generation. Product peculiarity of new product is that the product design is its own form of positioning. This positing strategy will locate brand in the customers’ minds over other brands in terms of product attributes and technological benefits. The relationships between target markets will be based on brand perception and self image of consumers. Self-views of potential buyers arising from the individual level emphasize dimensions or attributes that are personally important and differentiate oneself from others. Their identity is based on personal experience and preferences, tastes and cultural values. For this reason, personalization will be the main attributes of positioning strategy. Personalization is a crucial or such products as gaming systems because a sense of belonging and personal image important factors for gamers which influence their decision to purchase and consume the product. (McDonald & Christopher, 23).

The advertisement must be informative enough to enable potential customers to make a decision to purchase. The objectives of marketing communication are (1) to locate the brand in minds of consumers, (2) to promote the new product, (3) to create a unique image of the product, (4) to persuade buyers try the product, (5) to position the product. The company’s logo and marketing communication will appeal to customers persuading them to try Dell gaming system (McDonald & Christopher, 23). Effective positioning will differentiates each variety from the others. Also, Dell gaming system should take into account a frequently used benefit positioning strategy which exploits reliability and benefit positions. The objectives are to inform potential buyers about benefits and prices, uniqueness of the product and its features.

Also, the objective of marketing communication is to position Dell gaming system on the global scale. One of the main functions of global and international promotional activity is of course to influence the perceptions of the consumer. Dell gaming system maintained policy of product standardization in order to sell them around the world under the same brand. It will help to meet the needs of a particular customer and provide specific personal service for every supplier and customer. The objectives for Dell gaming system is to initiate co-operative marketing with agents and big retailers in the big cities around the country, to increase market share, to expand regionally with both media and sales personnel, to constantly achieve cost benefit through an expanding provider network. Press Releases will help to inform potential consumers about the product line and its advantages. Marketing mix will be based on on-line and offline advertising and promotion. In addition, marketing communication will help to educate consumers and sales personal about the product and announce news (McDonald & Christopher, 29). It will create awareness and attitudes, product preferences and a buying intention. These factors and views will help consumers to create a unique identity, distinguish what is a ‘good’ and ‘bad’ for them.

Works Cited

McDonald M., Christopher M. Marketing: A complete Guide. Palgrave Macmillan, 2003.

Problem Statement

Dell, a leading computer manufacturer has been facing the heat in its operations on different counts for couple of years. The top management is well aware of the issue and has taken quite a few steps as well, while adopting innovative methods of strategic management. The erstwhile images Michael Dell and Rollins were considered to be the reasons behind the slowdown in overall operations, but it seems things have not improved too much even after the frank admission by the top bosses in the presence of all the managers. Under changes market dynamics, the Dell philosophy that ‘every product should be profitable from day one’ doesn’t appear quite in line with the competitive pricing witnessed these days.

Alternatives before the Company

In view of the prevailing practices at Dell, there are a number of issues which might require slight adjustments.

1. Dell has certainly taken firm steps towards containing the sense of discontent amongst the workers. But, the high expectations from the workers and managers still appear to be putting lot of pressure on the workers. To expect that everybody would be able to display the qualities of a walking database, will not be an ideal expectation. Therefore, while motivating the workers to deliver their best, the company, would do well to put off some of the pressure. This can be done by relaxing the individual/ team targets and instead focusing more on strengthening the market base.
2. The belief that ‘every product should be profitable from day one’ has also come under severe criticism from peers. No doubt, Dell has successfully implemented such a policy in the past, but over the years the level of competition has increased to such an extent that quite often companies take it for granted that the initial period would be more of a penetration exercise in the market. The penetrative pricing policy leaves little room for guaranteed profitability. Therefore, the company might well have to lower the standards of expectations.
3. Significant investments in product development and future technologies is another area where Dell needs to focus more, in order to take lead in product differentiation. Taking on the competition becomes much easier if the company is able to place its product with distinguishing features and technologies.

Analysis of the Alternatives

1. Lowering the expectations will certainly help the workers to have some more breathing time, and they can focus more on rejuvenating their energies, which in turn will help Dell. But, at the same time, such a step might also lead to a sense of complacency amongst the workers, which can harm the interest of the company in the long run. Therefore, regular monitoring and corrective approach should also be a part of such a step.
2. If the company is not able to earn profits from day one, this would certainly reflect on the overall revenue earning of the company, and it might take some time before the accounting books once again come into black. But on the other hand, if the company is able to establish itself in a new market, such a compromise on profits will be more than made up by the company, as it will be able to have loyal customers.
3. Product development and future technologies will certainly take away a huge portion of Dell’s revenues. The R&D investment does not appear productive for many years, which in turn will affect the overall profitability of the company. But, once the company is known to have an established R&D facility, it will help in attracting more customers and investors.

Abstract

Founded in 1984 by Michael Dell, although having a simple concept in selling computers directly to customers, Dell is “one of the world’s top suppliers of personal computers”, offering products for a wide category of consumers including government sectors and enterprises. (“Dell Company Description,” 2009). A leading brand in the world, Dell has been the No. 1 PC supplier to small and medium businesses in the United States for 10 years in a row,(“Company Facts,” 2009), wherein addition to personal PCs, Dell offers network servers, data storage systems, printers, Ethernet switches, and peripherals such as displays and projectors. (“Dell Company Description,” 2009).

With 78,900 employees and $61,101 million annual sales (“Dell Financial Statements,” 2009), Dell is one of the biggest computer companies in the world, sharing the leading position with companies such as Hewlett-Packard and IBM. Being a leader in innovative approaches, whether in business models, environment sustainability, or technological innovation, Dell maintained its strong position in a way that distinguishes the company from the others, at good times and bad times, and as it was stated by Michael Dell, the founder and the current Chairman of the Board and Chief Executive Officer, “We’re being very disciplined in managing costs, generating profitability and cash flow, and investing in ways that separate Dell from others, today and when the economy inevitably improves.” (“Michael S. Dell,” 2009).

Introduction

In the fast-changing world of business, it can be said that companies reflect the essence of their founders. It cannot be more agreed if taking the example of Dell, Inc. and its founder Michael Dell. From selling stamps at the age of twelve to an estimated wealth of $15.5 billion, is more than three decades and a journey where his company in a timeline of a little more than two decades,” became number one in the world, with a 17.6 percent worldwide market share” (Holzner, 2006). Nevertheless, the path was not that easy as it might sound. In that regard, this paper provides an analysis of Dell, Inc. showing that Dell’s path to greatness was paved with technology, innovative business models, social and environmental concern, and commitment.

Analyzing the Phenomenon

A necessary component accompanying entrepreneurship is a risk factor. In that regard, having a starting capital for investments cannot save the business from failure. Business should be accompanied by innovative ideas. This statement is proven through Dell’s path, whether in terms of the technological product itself, or the chosen business model to deliver it.

Interestingly enough, for a company specializing in computer technologies, the rise of Dell was not associated with technological breakthroughs. It can be seen that Dell started upgrading and customizing computers, where the main manufacturer at the time – IBM, was selling the computers un-customized and at the same time was not able to cover the demand for its machines. (Holzner, 2006, p. 4). Moving to sell its pure computers, the case can be said to remain the same, as mostly the pure computers meant configuring and assembling computers, where the parts were coming manufactured from “its parts makers in Taiwan, China, and Malaysia” (Breen, 2007).

In that regard, the aspect that distinguished Dell from its competitors was the replacement of the traditional distribution chain. As a digression, it should be noted that “In those early days of the PC marketplace, PCs were still sold largely through retailers like ComputerLand and others.” (Holzner, 2006, p. 5). The approach taken by Dell was eliminating the intermediary link. Quoting Dick Hunter, the company’s Vice President of Dell Americas Operations at the time, “Speed is at the core of everything we do.” (Breen, 2007).

This was specifically true, as, in addition to directly managing its sales, Dell eliminated warehouses carrying minimal inventory during its operations. As of 2007, despite Dell assembling 80,000 computers every 24 hours, “it carries no more than two hours of inventory in its factories and a maximum of just 72 hours across its entire operation.” (Breen, 2007). Selling directly to customers was also a faster way to receive feedback, as stated by Michael Dell, “Our Company was founded on the simple premise that by selling personal computer systems directly to customers, Dell could quickly understand their needs and provide the most effective computing solutions to meet those needs.” (Holzner, 2006, p. 10).

The financial model was also a vital factor for Dell’s success, where the payment system implemented by Dell in receiving the payment from the customers immediately while paying the suppliers after 36 days of customer’s payment, allowed achieving a cash-conversion cycle eliminating the need to finance its operation. (Breen, 2007).

In that regard, establishing a business model that works, Dell did not only excel in selling their products but also sought ways to make their products distinguishable and innovative. Promoting innovations, “Each year, Dell honors the outstanding inventors among its employees”, where “each invention represents an innovative approach designed to benefit Dell customers.” (“Inventors of the Year,” 2009). Additionally, Dell contributes to promoting new technical standards, establishing a solid ground for future innovations. Among the standards, the adoption of which was driven by Dell, are developments such as DisplayPort interface, formatting standard for sorting RAID configuration, and system management instrumentations. (“The Role of Standards,” 2009).

Other areas of Dell’s excellence include implementing interaction with the customer (“Company Facts,” 2009), remote assistance offerings, and the movement to other areas such as handhelds, printers, and liquid crystal display (LCD) TVs. (Holzner, 2006). However, one of the major steps taken by Dell should be considered in its initiatives regarding environment protection, through recycling programs and going green manufacture.

Dell Going Green

One of the approaches implemented by Dell, which contributed to the overall success of the company, is its environmental concern. The environmental concern, as well as the utilization of resources, can be seen as a major concern that was going global in the last decades. In that regard, Dell can be seen among the leaders in implementing the environmental approach into their strategy.

Starting in 2004, Dell was the first company to “publicly release a global recycling goal, culminating a three-year dialogue with a coalition of socially responsible investment (SRI) advocates.” (Baue, 2004). Although this was not the first Dell recycling initiative, it was the first to establish this approach within the company’s mission, where “Dell committed to increasing its recovery rate of used computer products for fiscal year (FY) 2005 by 50 percent over its rate for FY 2004,” (Baue, 2004).

The direction established by Dell was followed by another huge step toward environmental protection, where Dell’s recycling program in collaboration with Goodwill industries, was gradually introduced through the period starting from2004 to more states and is continuing to expand. Dell’s partner – Goodwill is a “leading nonprofit provider of education, training, and career services for people facing economic challenges, including people with disabilities, those who lack education or work experience and other job seekers.” (“Who We Are,” 2009). The result of their collaborative effort – Reconnect, is a free program, where the users can drop-off unwanted computer equipment in a specific location available throughout the country.

The program’s main goals can be seen through the specific capacities of each location introduced. Nevertheless, the main ideas are simple, recycle, reuse and educate. Taking the example of New Jersey and Philadelphia, where the program was introduced in 2007, the program’s goal consisted of diverting “diverting more than four million pounds of used computers and computer equipment from area landfills over the next year; and provid[ing] consumer education on the importance of environmentally-responsible computer disposal.” (“Dell and Goodwill Launch Free Computer Recycling Service for Consumers in New Jersey And Philadelphia,” 2007). The amount of diverted equipment varies from area to area, whereas the main principles of work remain the same.

Additionally, as a part of Goodwill’s direct competencies, the program also provides job opportunities, for people with disabilities and other employment barriers. In that regard, it can be seen that these efforts established Dell among the leaders of waste reduction and recycling in North America, wherein 2007, Dell was the winner of NRC (National Recycling Coalition)”Recycling Works Award.” (“Winners of NRC’s “Recycling Works” Award,” 2009). Additionally, following the tradition of being among the pioneers in the commitment to responsible waste management, in May 2009, “Dell today became the first major computer manufacturer to ban the export of non-working electronics to developing countries as part of its global policy on responsible electronics disposal.” (“Dell Takes Strong Stance Against Exporting E-Waste,” 2009).

In a parallel approach in the same direction, Dell took the lead in fulfilling the commitment made in 2007, in “becoming the “greenest” technology company on earth.” (James, 2007) In an interview conducted in 2007, David Lear, Dell’s director of worldwide environmental affairs established the vision of the company in integrating the best environmental practices into Dell’s products and services. In a year, Dell in addition to breaking the records in recycling volumes, as a part of the Reconnect program initiatives, the company demonstrated its intention in fulfilling the promise of becoming the greenest company in the world.

First of all, the company became “the first major computer manufacturer to offer Silver 80 PLUS-certified power supplies”, where their newest desktop at the time was able to save “up to 47% in annual energy costs without losing performance.” (Heimbuch, 2008). Accordingly, the achievement of the company includes partnering with the Climate Group as a part of the zero-carbon initiative through reducing energy consumption and implementing carbon-neutral operations, “powering corporate headquarters with 100% green energy and showing themselves to have the lowest carbon intensity of the Fortune 50.” (Heimbuch, 2008).

The latter initiative was implemented in practice, where Dell’s two facilities in Austin and Oklahoma were completely running on renewable energy. Buying renewable power from the companies, Dell managed to power 100%of the 2.1 million-square-foot global headquarters campus to more than 10,000 employees. This was achieved through gas-producing Waste Management and the wind energy produced by TXU Energy. (Green, 2008).

Following such steps, it can be obvious that in terms of leadership and commitment, Dell established new standards and never stopped challenging itself by establishing new goals and new responsibilities. Dell’s philosophy, “make a better product, and it will naturally be greener” (Levinson, 2009) is indicative of the company’s approach wherein the middle of the company’s environmental initiatives, Dell did not lower the bar in terms of innovations. The company’s latest development was to implement LED (light-emitting diode) in notebooks’ displays, where LEDs do not contain mercury, provide longer battery life and make notebooks more power-efficient. (Levinson, 2009). In that regard, through becoming green, Dell did not forget about innovation in the products and the services it provides.

Conclusion

It can be concluded that the greatness of Dell does not come from a single factor or idea, but rather from a combination of simple ideas combined with entrepreneurial talent. The main aspects outlined in the paper demonstrate an exemplary case, which is the importance of business processes in the seemingly technological industry. In that regard, it can be stated that, with the availability of merely an idea without a thorough method of implementation and delivery, the idea might finish being an abandoned patent or printed documentation. Another aspect is the concern for the future.

Dell’s pioneering approach in the field of environment protection can be seen as not only a philanthropic initiation, but also as a real concern in terms of resources’ dependence and competitive advantage. In business today various sectors of one industry are dependent on each other, and their success can be based on other factors such as natural resources’ availability.

Additionally, being the first in implementing a certain program or environmental initiative provides a competitive advantage, which on one hand establishes a niche for specific products associated with the company, e.g. green computers, and on the other hand serves the company’s brand, which certainly has a financial equivalent. In that regard, a direct link can be seen through Dell’s high sales position and its position in the list of the country’s most admired companies leaving behind such companies as Microsoft and Apple.

Finally, it can be said that the analysis of the Dell phenomenon demonstrates that the company’s excellence is not derived purely from its industry sector. On the contrary, the models implemented by Dell were derived from a business context, where lessons can be learned for any company in any business sector.

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Who We Are. (2009). Reconnect. Web.

Winners of NRC’s “Recycling Works” Award. (2009). National Recycling Coalition. Web.

This memo recommends Dell to focus on creating value activities to increase its competitive advantage. One possible way is to target the customer needs regarding the adherence to new digitalization standards, such as cloud-based services. This way, the company can digitally compete for new customers with its rivals, simultaneously increasing the retention of the existing customer base. Another possible functional strategy revolves around answering the replacement demand regarding smartphones or tablets. The ability to supply a variety of substitutional products has a great potential to attract new customers while increasing brand reputation and market share.

Background

Since its establishment, Dell has achieved great success as a company that specializes in the PC market. However, in 2013, Dell found itself struggling to maintain a competitive advantage (Investopedia 2021). To retaliate, Dell’s management decided to restructure the company, assuming the main weaknesses to be the poor attitude toward customers and stakeholders. The assumption was supported by the public scandal of 2013 and stakeholders’ unwillingness to allow the restructuring to occur privately, which was required due to instabilities in the U.S. economy (Investopedia 2021). In the past, Dell has had a public relations problem. They have not always maintained healthy relationships with customers and investors causing mistrust and ethical concerns.

Discussion

Dell’s poor attitude toward stakeholders and customers resulted in a reputation loss due to low business transparency and customer service outsourcing. In addition, the contemporary U.S. economy’s issues forced Dell to restructure privately, distancing from America-based operations. Consequently, global strategies following Dell’s return to the public should include promoting the company’s ethical and social responsibilities and orienting toward the global environment. In the former case, Dell’s reinforcement of the brand’s reputation can be done through the extensive marketing campaign of the ethical changes it implemented during reconstruction (Isabelle et al. 2020, 30). Regarding the latter, Dell already has factories worldwide. To avoid unfavorable circumstances in the U.S. market, it should continue to increase its market share in other countries. It will also help to improve the customer base, which will be in accord with the current industry phase.

Recommendations

Dell Should Adopt a Centralized Business Model Organizational Structure Approach Because It Would Benefit the Company. This Organizational Structure Has Numerous Positive Potential, With Mid-Level Management Not Having to Develop Financial Solutions. The Negative Drawbacks Are That Executives May Not Want to Share Power and Authority With Other Levels of the Company, or Mid-Level Management Decisions Will Not Be Effective or Efficient. The Consequence of Dell’s Lack of Strategy Change Is Developing a Poorly Managed Company That Has Lost Sight of Its Mission, Values, and Goals. The Company Can Adapt Its Model to Formulate Sales Channel Strategies That Optimize Sales’ Organizational Structure in Specific Multinational Markets. This Strategy Can Enable the Company to Increase Revenue and Optimize Products and Services’ Global Value to Customers.

Other Issues

In its functional strategies, Dell should focus on creating value activities to increase its competitive advantage. One possible way is to target the customer needs regarding the adherence to new digitalization standards, such as cloud-based services. This way, Dell can digitally compete for new customers with its rivals, simultaneously increasing the retention of the existing customer base (Neher 2021). Another possible functional strategy revolves around answering the replacement demand (smartphones or tablets). The ability to supply a variety of substitutional products has a great potential to attract new customers while increasing brand reputation and market share.

References

Investopedia. 2021. “How Dell Stock Ceased to Exist.” Investopedia. Web.

Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. 2020. “Is Porter’s five forces framework still relevant? A study of the capital/labour intensity continuum via mining and IT industries.” Technology Innovation Management Review, 10 (6): 28-41. doi:10.22215/timreview/1366

Neher, K. 2021. “Twelve Digital Marketing Trends For 2022 And How to Take Advantage of Them.” Forbes. Web.

Dell’s strategy involved making use of the simple rules of functional business. The first of these was to make the customer’s needs not only get met, but satisfied beyond other businesses capabilities. According to Birger (1995), the customer will always choose the goods that satisfy his needs more. They achieved this by making the products especially personalized. They also were able to cut the cost of purchase by eliminating middle men in their chain of supply. By so doing they established direct contact with the customers, from manufacture straight to the customer. This may also explain why they were able to sense the needs of the various customers and thereby respond to market changes faster than any of its competitors. Thus by understanding the customer, the company was in a better position to react to their needs (Foxall, 2005). They were also able to create a personalized experience for each customer by tailoring the product to specifications of the customers. This was easier for customers who were ordering in large quantities. This was all done in direct communication with the company, no middle-men.

The other strategy involved the product handling. By making high quality products tailored to the current needs of the customer, Dell was able to build market dominance over its rivals. They also outsourced the making of the products and their plants were reduced to assembly points. Outsourcing helps reduce costs, thus making products cheaper and profit margins higher. As a result, the company was able to eliminate the need for manufacture assets reducing its function to assembly and distribution. They also reduced the number of times staff directly handled the products, reducing the chances of quality compromise.

Dell also worked on its staff and management policies. The involvement of all stakeholders by displaying and honestly interpreting statistics for the company energized the staff. They also engaged a consultancy company to come up with useful parameters and statistics of judging performance. The result was that the company became more target oriented. This data was given in real time allowing for rapid adjustment of procedure so that they could efficiently operate. With information concerning their financial performance and especially customer needs coming, they were much better placed. Schiffman (1993) advocated for the knowledge of the customer so as to provide target specific goods, a policy that Dell followed well. This made the company united and goal oriented in step with the real situation on the ground.

So how did their strategies affect the company’s statistics? The result of competitive customer relations resulted in increased sales and rate of stock turnover. These relations include the customization, relevance of product and pricing. The fact that there were no middle men also contributes to reduced cost of sales. This happens because the middle men would add their mark up and pass on this cost to the next level of distribution, causing the end product to be expensive. The end result is the customer would find the products competitively affordable and therefore buy, increasing stock turnover and finally a higher return on equity.

Dell’s innovation and direct customer handling produced an increased stock turnover. This was also aided by the fact that they responded quickly and efficiently to technology changes thus their products did not have a long shelf life. This is a great saving on the cost of storage and handling, a cost that other company’s incurred. Therefore, by keeping stock constantly flying off directly from its assembly, the company cut off the need for developing elaborate storage assets and warehouses leaving cash open for other purposes.

The other strategy employed was the outsourcing and reduced handling by employees. This would cause a decrease in the cost of production and increase the return on investment. This is because comparatively little assets and finances were committed to turning over a large amount of stock. There was also reduced need for assets such as plants and equipment such that capital could be committed elsewhere. As a result, the company engaged only in assembly. This would be advantageous to Dell helping it to be able to use relatively little capital to give a larger output thus boosting its return on capital statistics.

The motivation and cohesion of workers and stakeholders towards a common goal of increasing efficiency helped improve the competitive nature of the company. This is important as it helps reduce the management and handling costs of employees. Also, the employees contribute a lot more than if they are not motivated. The statistical impact is that there is good return per employee and a lower administrative cost outlay. This would enable the company to be competitive as the employees feel the responsibility to make the company better.

The cost of hiring a consultant was a worthy investment. It was a strategy of obtaining expertise and a critical outside opinion for the benefit of the company. This investment paid off as it was through this that the company was able to gain the use of statistics in their daily operation. The statistics, given in real time, helped make relevant decisions that would allow the company to react to changing market situations as they occur. The result is that they would be able to remain competitive, taking advantage of unique situations way before their competition and thus gain more sales.

References

Birger, W., (1995), Using Market Data to Infer Utilities, Consumer Research Britain. Dell Computer Corporation article, n.d.

Foxall, G. (2005.) Understanding Consumer Choice. Baingstoke. Palgrave Macmillian.

Schiffman, L.G. (1993), Consumer Behavior, Prentice Hall International, London.

Supply Chain Segmentation

• What is supply chain segmentation?
  • Supply chain segmentation is the process that implies the development of different supply chain processes, operational modes as well as policies for different channels (Thomas).
• Why is it vital for the supply chain transformation?
  • Reduces complexity (Sabri 88);
  • Increases standardization;
  • Expands integration;
  • Matches customer’s value (“Supply Chain Videocast”).

Dell used supply chain segmentation and improved its performance significantly (Thomas).

It reduces complexity as it is easier to analyze a number of simple processes. It is easier to set standards. A single process can be developed to manage the demand, supply, inventory and so on. It enables to develop an efficient operational strategy that will balance the customer’s needs with the need for efficiency.

Challenges to Supply Chain Transformation

Primary challenges to efficient supply chain transformation are the need:

• To launch a comprehensive analysis to develop an effective and comprehensive plan of transformation (Lee and Katzorke 83);
• To ensure a complete buy-in of operational managers;
• To handle the complicated supply chain growth;
• To synchronize all the systems and operations across the subsidiaries (Oliveira and Gimeno 40);
• To ensure the synchronization of financial, information and material flows (Meier 234).

Clearly, the large-scale effort is difficult to do as it is necessary to synchronize various processes across the subsidiaries and implement the change on different levels.

A Major Supply Chain Redesign

Fresenius Medical Care started the transformation of its supply chain management across Europe, Africa, Middle East and Latin America in 2009 (49).

• The Processes involved:
  • The use of the forecasting tool (Demand Planner) (Leather and Peukert 57);
  • Empowerment of the supply chain employees;
  • Motivating employees;
  • Flexible customer-oriented manufacture;
  • Creation of stock transparency.
• The results were:
  • Merger of inventories into “an EMEALA replenishment hub” (Leather and Peukert 57);
  • Consolidation of primary warehouses;
  • The increase in tax benefits;
  • Efficient operations and sales planning.

Works Cited

Leather, Peter, and Juergen Peukert. Supply Chain Transformation: A Blueprint fro Success. Web.

Lee, William B., and Michael Katzorke. Leading Effective Supply Chain Transformations: A Guide to Sustainable World-Class Capability and Results. Fort Lauderdale: J. Ross Publishing, 2010. Print.

Meier, Christoph. “Digital Supply Chain Management.” Digital Enterprise Transformation: A Business-Driven Approach to Leveraging Innovative IT. Ed. Axel Uhl and Lars Alexander Gollenia. Burlington: Gower Publishing Ltd., 2014. 231-263. Print.

Oliveira, Alexandre, and Anne Gimeno. Managing Supply Chain Networks: Building Competitive Advantage in Fluid and Complex Environments. Upper Saddle RIver: FT Press, 2014. Print.

Sabri, Ehap. Optimization of Supply Chain Management in Contemporary Organizations. Hershey: IGI Global, 2015. Print.

Supply Chain Videocast. Web.

Thomas, Kelly. “Supply Chain Segmentation: 10 Steps to Greater Profits.” Supply Chain Quarterly 2012. Web.

According to Klapper et al, supply chain management is the integrated set of functions that seek to ensure that the products of an organization reach a customer in a timely manner. Therefore, the roles of the supply chain manager at Dell computers are to ensure that the customer is satisfied with the product distribution utilized by the company.

The main roles of a supply chain manager are to ensure the effective selection and management of suppliers and to supervise efficient transportation of products from the production location through storage, though storage, and finally to the consumer (Chomilier, Samii, and Wassenhove).

Therefore, at Dell, the responsibilities of the supply chain manager are to ensure that there is effective communication between the customer, the supplier, and manufacturer of the final product.

This role leads to a high demand for supply chain managers by firms such as Dell because the supply chain managers ensure that the company’s products are efficiently distributed to various consumers in the market (Kale, 2004). These managers are also in high demand because the company has to distribute its products to diverse populations, and to do this, effective communication in the supply chain is needed.

SWOT Analysis

References

Case Study: Dell. Can The Icon of The Logistics Industry Survive in India? Chomilier, B., and Samii, R., and Wassenhove, L., The Central Role of Supply Chain Management at IFRC, [Online] Web.

Cohen, S., and Rousell, J., 2004, Strategic Supply Chain Management. New York: McGraw Hill.

Kale, S., n.d., Global Competitiveness: Role of Supply Chain Management, [Online] Web.

Klapper, L., and Hamblin, N., and Hutchison, L., and Novak, L., and Vivar, J., 2000, Supply Chain Management: A Recommended Performance Measurement Scorecard. London: Logistics Management Institute.