The experiential leadership project will observe Dell, Inc. with its headquarter in Texas, United States, its missions and products, its roles and strategies, which lead to taking higher positions in the technological market, and the impact of Dell’s founder, chairman, and CEO, Michael S. Dell on the development of this organization.
Dell is considered to be one of the leading PC manufactures, which provide population with reliable computers and all the necessary computer-related products since the end of the 20th century. Many employers play significant roles within this company, however, the role of Michael Dell remains to be the major one as he is the person, who founded Dell and believed that this organization can achieve unbelievable success.
Dell Computer Company and its leader Michael S. Dell is a good example of the organization that has achieved success and gained the reputation of a really reliable organization that provides the best computer technologies and never wants to stop but to develop day by day.
Discussion
General Description of the Company
Nowadays, computer industry plays a very important role in the life of every citizen. Many computer makers try to use all possible opportunities to present proper technologies and computer products and satisfy each customer. Dell Computer Company is “the second worldwide in market share and consistently the leader in liquidity, profitability, and growth among major computer systems companies” (Fulmer and Conger 160).
Each organization has to have a mission in order to complete it and improve own actions. The mission of Dell is to sell computer technologies directly to their customers, enlarge their services, and provide only personalize assistance to show the customers their sincere care for each client.
Taking into consideration the visions of the company like extensive care about the customers, the development of new products and services is obvious for this organization. If primary products were personal computers and the obligatory for these computers devices, nowadays, Dell provides people with various computer technologies, which may improve and make easier customers’ lives.
More than 50,000 people work at Dell Computer Company, and more than 2 billion of interactions happen between Dell and its customers (Company Facts para.6). These numbers prove successful reputation of the company and make the organization improve their work in order to attract the attention of more people and help them make the right choice during the selection of the computer technologies.
Methodology
In order to gather reliable facts and information about Dell Computer Company and its leader, Michael Dell, certain data collection and analysis methods have been used. With the help of the interview with Mr. Dell, it turns out to be clear that his work and contributions to the development of computer technologies are really great and indispensable.
According to Mr. Dell (2007), the work of their company has to be changed to reinvent their business and get success among their customers and shareholders.
The observation of the official website of Dell Computer Company is another helpful means that provide us with a chance to get more quantitative data. www.dell.com presents certain facts about Dell’s cooperation with other business organizations, introduces numbers concerning how many companies run on Dell, and tells about the reasons of why Dell is regarded as a significant part of computer technologies development.
Data analysis methods are used to evaluate gathered information and represent the already processed data in an appropriate way. The interview with Mr. Dell has been re-read for several times in order to get clear understanding of his true intentions as for the role of his company in the lives of each citizens and the development of the technological world.
Numerous competitions take place very often, this is why Dell Computer Company has to use its potential and best ideas to win the competitors and present the best services. To evaluate properly this kind of information, event analysis, discourse analysis, and content analysis have been used.
External and internal analysis
Computer technology is one of the largest fields, where many competitions between the manufactures take place. The major competitors of Dell Computer Company are Apple, Acer, Sony, Samsung, Hewlett-Packard (HP), and Asus. HP is the organization that mainly deals with printers; and Mr. Dell (2007) states that in spite of the fact that HP is the number one worldwide, their concentration on printers provides Dell with a chance to return their leading positions and produce suitable in all senses computer machines.
Competitions between the companies of the same field is a good chance for each organization to prove own abilities and skills. For example, one of the most effective steps, which have been taken by Dell Computer Company, was the creation of Idea Storm, a web site, where customers share their propositions, suggestions, and ideas of how to improve Dell’s services and make them really helpful for the users.
With the help of online access, Dell may also provide everyone with the necessary information about its products and services. Illustrations and examples of Dell’s technologies is a good decision to attract the customer and prove that this organization and its products are worthy of attention.
The major point is that Dell Computer Company always thinks about own customers, this is why the employers try to produce the best services with the best guarantees in order to present to their consumers the best time with these technologies.
If the company wants to achieve success on the computer market, it is also necessary to create appropriate atmosphere within a company and between the employers and employees.
Organization’s culture and chosen methods play a very important role in success achievement: (1) reduction of bureaucracy should encourage workers to pay attention to such ideas like honesty and respect; (2) increasing of services capabilities should happen due to the development of the strategy BUILD-COOPERATE-BUY; (3) broadening of the company is caused by too complicated organization, and only well-intentioned people can be hired.
Analysis of Michael Dell’s leadership style
The philosophy of Michael Dell is spread over the whole company: Dell will listen to each customer and will respond. Many things have to depend on customers, and in order to succeed, it is obligatory to listen and to meet customers’ demands. Such philosophy is the one that helps Dell Computer Company to amaze its customers and never disappoint them with their choice.
The point is that Michael Dell is one of those leader, who completely understands own role and own place in the company. He left his position for a couple of years; however, within a short period of time, the board asked him to come back and to make certain changes to improve the company (Dell para. 4). Mr. Dell even does not want to hide his emotions and his proud of being back to the company as CEO, because his return is a great please for both his company and himself.
He, as a founder of Dell, creates such kind of strategy that may certainly satisfy his workers and the customers. From the very first days of the company’s existence, Mr. Dell offers to direct all actions of their organization on meeting their customers’ demands. His behavior and his actions mostly dealt with direct reports in order to utilize human resources, solve conflicts, and motivate people to change and improve.
When Mr. Dell takes CEO position for the second time, he comprehends that the company spread too fast, and it is not that rational to rely on direct reports. More people are hired to different departments in order not to change the attitude to the work and to each employee but still to control the situation and make necessary improvements (Dell papa. 8).
Conclusion
After a thorough analysis of Dell Computer Company and the style of Mr. Dell leadership, I come to the conclusion that the chosen by this person way of organizing the work is effective enough and may serve as a good example of proper vision, philosophy, and attitude to customers and employees.
The idea to create a web site, where customers’ demands are taken into account in order to improve the quality of Dell’s products and serves is really brilliant. Another successful move was to hire more people in order to reduce direct CEO’s control and get more time to analyze and to evaluate.
To my mind, Dell Computer Company is one of those, who does not actually need any additional recommendations, because all the necessary actions have been already made, and the only advice that could be given is not to lose the chosen philosophy, pay more attention to clients’ needs, and demonstrate how properly organized plan become real and bring positive results.
Dell, Michael. We’re Willing to Change Everything. SPIEGEL. 2007.
Fulmer, Robert, M. and Conger, Jay, A. Growing Your Company’s Leaders: How to Great Organizations Use Succession Management to Sustain Competitive Advantage. New York: AMACOM, a Division of American Management Association, 2004.
Dell Computer Corporation has been a leader in the personal computer industry for decades. The success of the corporation has led to rival companies re-engineering their operations to overcome competition. Rivkin et al. (1999) claim that Dell remains a company to beat in the personal computer industry despite the initiatives the rival companies have taken. Numerous factors have contributed to the success of the Dell Computer Corporation. They include the company’s distribution model as well as sales and marketing strategy. This paper will discuss Dell’s competitive advantages, its resources and capabilities, competitors’ effort, and the reasons it has been difficult for rivals to outdo the company.
Competitive Advantages
One of Dell’s competitive advantages is its mastery of the “direct model” strategy. Dell Computer Corporation deals directly with corporate clients. A majority of the rival companies like Compaq, Hewlett-Packard (HP), and International Business Machine (IBM) sell their products through retail stores, resellers, and distributors (Rivkin et al., 1999). The ability to contact customers directly allows Dell to manufacture computers that meet the needs of individual clients. According to Rivkin et al. (1999), Dell’s sales and marketing strategy enable it to identify potential clients. The company has divided its customers into two categories: transaction buyers and relationship buyers. The approach allows the company to have a personal touch with each group of clients.
Resources and Capabilities
The success of Dell Computer Corporation lies in its capacity to manufacture personal computers that meet consumer needs within a short period. The company can process customers’ orders and deliver products within one and a half days. Besides, Dell can handle large orders. The ability to respond to customers’ demands within a short period ensures that the corporation establishes a good rapport with clients. The company has a pool of suppliers who ensure that it receives raw materials on time. Effective communication with suppliers has helped Dell to reduce inventory days. The company can quickly direct supplies to appropriate locations. For instance, if its customers require monitors, Dell can instruct Sony to deliver them to clients directly without passing via its facilities. According to Rivkin et al. (1999), Dell has a customized website that enables it to liaise with suppliers. The company uses the site to share manufacturing and ordering information with vendors.
Rivkin et al. (1999) argue that Dell has encouraged its suppliers to establish production and storage facilities near its assembly plant. As a result, Dell can easily access all the raw materials that it requires to manufacture personal computers. The products and services that Dell Computer Corporation offers contribute to its success. The company produces two brands of desktop computers. It targets both individual and corporate clients. Besides selling hardware, the company provides numerous services to customers. It installs proprietary and off-the-shelf software. The company also provides financial and asset management services. Rivkin et al. (1999) cite firm infrastructure as one of the resources that contribute to the success of Dell Computer Corporation. The company has a team of seasoned managers sourced from renowned technological companies. They help to streamline operations within the company and monitor market trends.
Competitors’ Effort
The domination of Dell Computer Corporation in the personal computer industry has led to rival companies reviewing their strategies. IBM, Gateway, HP, and Compaq have come up with initiatives aimed at competing with Dell. Rivkin et al. (1999) claim that IBM embarked on a strategy to change its distribution channel. The company came up with an Authorized Assembly Program (AAP) that aimed at cutting down on the level of inventory. Eventually, the company managed to enhance the delivery speed of customized personal computers. Besides, the program eliminated the “need for resellers to “tear down” new personal computers to meet customer needs” (Rivkin et al., 1999, p.10). Apart from working with partners, IBM came up with ways to sell personal computers directly to customers. The company established an independent division called “Ambra” that manufactured and sold low-end personal computers. Later, the company opened a website that enabled it to sell standardized computers directly to customers.
Compaq established an optimized distribution model (ODM) aimed at enhancing its relationship with distributors (Rivkin et al., 1999). The model helped the company to reduce the duration of price protection from seven to two weeks. Additionally, Compaq was able to minimize inventory. Later, the company launched the DirectPlus program that enabled it to market customized computers directly to companies. Even though the program helped Compaq to sell directly to small and medium enterprises, it affected the company’s relationship with resellers. The company had to entice dealers by promising commissions for referrals.
HP launched the Extended Solutions Partnership Program (ESPP) to counter competition that Dell Computer Corporation waged (Rivkin et al., 1999). The program enabled the company to increase the production and sales of personal computers. Additionally, HP established a website that allowed customers to order products directly. However, the company did not sell directly to customers. Instead, it relied on resellers. ESPP helped HP to cut down on the duration of price protection and defects. In 1998, the company established a website dubbed HP Shopping Village. It aimed at using the site to sell refurbished computers directly to clients. However, it continued to sell new personal computers via resellers; a move that did not augur well with many business customers.
Gateway came up with numerous initiatives to overcome competition from Dell and slow growth. The company established Gateway Major Accounts, Inc. that targeted educational, corporate, and government institutions (Rivkin et al., 1999). It also created multiple stores across the United States. The move helped to increase its sales volume. Besides, clients could view the company’s goods and place orders.
Challenges in Matching Dell
Despite the efforts that the rival companies have made, it is hard for them to match Dell Computer Corporation. The companies have managed to overcome the issue of the price differential. However, inventory turnover remains a significant competitive advantage for Dell. One of the reasons why competitors are unable to match Dell is the inability to sell directly to customers. Compaq, IBM, HP, and Gateway have to depend on resellers. Even though companies like Compaq and IBM have tried to reduce their inventories, they have not managed to ensure that products are readily available. In some cases, customers have complained that they could not find particular makes of Compaq and IBM personal computers. Besides, the companies have been forced to reconsider their decisions to remain in good terms with retailers, resellers, and distributors. Some dealers have threatened to terminate relations with the companies if they do not change their strategies. In some instances, the rival companies have ended up popularizing Dell Company indirectly. For example, in 1997, the media headlines regarding the effort by Compaq and Gateway signified the success of Dell Computer Corporation. The indirect popularization of Dell has made it difficult for rivals to match the company.
Reference
Rivkin, J., Porter, M., Bruin, C., Chappel, M., Galizia, T., & Worrell, L. (1999). Matching Dell. Boston, MA: Harvard Business School Publishing.
Dell Technologies is a US-based company specializing in digital transformation through the provision of focused and customized IT infrastructure and solutions. Through the successful merger with EMC, the company has been able to create highly stratified IT solutions through its subdivisions such as Virtustream, VMware Inc., Clients Solution Group Boomi Inc., and RSA Information Security (United States Securities and Exchange Commission, 2018).
Among the notable focused technology solutions include all-flash arrays, data centers, hyper-converged infrastructure, and hybrid cloud among others. The company has embraced innovation in the product and service charter. Among the notable products or services designed, developed, manufactured, and sold by Dell Technologies are categorized into VMware, client solutions, and infrastructure solutions.
The client solution products include personal computers, branded peripherals, notebooks, projectors, and monitors among others. These products are designed and manufactured by the company. The second category of product charter is the infrastructure solutions offering information storage in the form of big data and cloud solutions through its Virtustream (United States Securities and Exchange Commission, 2018). The last category of product or service charter is VMware, which provides networking, mobility, cloud, compute, and security-related infrastructure software to different businesses. For instance, the vSphere, vSAN, vRealize, and VMware Cloud are successful product lines. All the products and services sold by the company are produced or created internally.
Company Sales, Inventory, and Accounts Receivable
From 2015 to 2018, sales have steadily increased for Dell as evident by rising net revenue from $54,142,000 to $78,660,000 in the three years (United States Securities and Exchange Commission, 2018). The rising sales could be attributed to expanded markets, increased product ranges, and a diverse market approach. For instance, in the last three years, Dell has introduced or modified more than ten different product lines to increase its market presence.
The inventory has also steadily increased in the last three years from $8,901,000 in 2016 to $23,387,000 in 2018 (United States Securities and Exchange Commission, 2018). The rise in inventory could be attributed to the increasing cost of doing business associated with a company dependent on new technology. Moreover, the global economic swings have increased inflation, which translates to the high cost of running a business.
Lastly, the account receivable has also experienced positive growth of about 10% annually for the last three years. The increase in accounts receivable could be associated with the benefits of Dell’s expansionary business strategies rolled out in 2015 and product diversification. In addition, the company’s 2016 operational efficiency streamlining strategies seem to be paying off (United States Securities and Exchange Commission, 2018). The sales, accounts receivable, and inventory is positively related, that is an increase in one element results in a similar displacement on the other two elements. For instance, sales determine the value of account receivables and vice versa.
Risk Factors Associated with Dell
Dell Technologies operate in a dynamic market characterized by several risks. The first risk is potential competitive pressures, which may affect the profitability, revenues, and share position. Since the company operates in a highly advanced business environment characterized by innovative software and hardware services that are perfect substitutes, Dell is threatened by the activities of aggressive competitors such as HP. For instance, the risk of competitive pricing, product diversification, and innovation might reduce the profits if the company does not have effective ways of encountering competition.
Another challenge is an overreliance on third-party vendors who supply components of different products for the company. Due to limited or single-sourcing contracts, an event of failure on the part of these vendors might adversely affect the aspects of cost, reliability, delivery, and availability of Dell’s products in the market. At present, the company has a complex supply chain that is dependent on the activities of these vendors. The third risk Dell is facing is the unpredictable global economic conditions and currently financial instability in the business market. Due to persistent unfavorable market swings as a result of past and possible global financial meltdown, Dell is faced with the risk of reduced profitability or net revenue.
The company’s success at present and in the future is heavily dependent on its ability to effectively execute its short and long-term growth strategies. Any failure on the side of business planning or strategy execution might have diverse business effects in terms of competitiveness, sustainable financial performance, and customer satisfaction. Over the years, Dell has applied merger and acquisition as a business strategy for expanding market presence and increasing revenues (United States Securities and Exchange Commission, 2018).
When the company fails to effectively implement the acquisition or merger strategy, it is exposed to diverse operational challenges and potential increment in the cost of doing business. Since most of Dell’s product and service lines are dependent on technological innovation, a potential challenge in managing the transitional process in the creation of more advanced or effective options might jeopardize the product performance in the market, which translates to reduced profits.
Lastly, the company is faced with the risks of inability to sustain the international market revenue, which currently accounts for 51% of Dell’s total revenues (United States Securities and Exchange Commission, 2018). Miscalculations in the internationalization business strategies might have serious and long-term negative effects on the company’s net revenues. For instance, a change in the global market seasonal trends will have a direct impact on Dell’s sales mix that integrates customer, product, and geographical location.
Income Statement Discussion
The five items in Dell’s income statement are net revenues, gross margin, operating loss, earnings per share, and net cash provided by operating activities. Net revenue has increased steadily for the last three years. The gross margin has equally increased from the year 2015 to 2018. However, the operating loss reduced by more than 30% over the three years. The DHI Group’s basic earnings per share experienced positive growth in the same dimension over the last three years.
Lastly, the net cash provided by operating activities experienced fluctuations characterized by a decrease in 2016 and a steady increase in the following years. The increase in revenues, gross margins, net cash provided for operating activities, and earnings per share could be attributed to the increased profitability of the company in the last three years (United States Securities and Exchange Commission, 2018). For instance, the revenue stream expanded steadily over the same period. As a result, the operating loss had to reduce due to increase revenue or strengthened equity or company capitalization.
Disclosure Requirements
Dell Technologies has to disclose the foreign currency risks and interest rate risks. Since the company is based in the US and listed on NASDAQ, it is required to provide full disclosure using the US GAAP accounting standards. Dell has to report any deviation. This explains why Dell keeps referring to the existing non-GAPP measures in disclosing fair competition practices in the financial statement.
The company made two departures from the US GAAP standards in recognizing revenues and costs associated with sales. Another departure was noted in determining gross profit and revenue. The company added back differed related costs and revenue with a residual value guarantee (United States Securities and Exchange Commission, 2018). In addition, the non-cash interest and stock-based compensation are expunged from non-GAAP expenses and per share information.
Reference
United States Securities and Exchange Commission. (2018). Dell Technologies Inc. Web.
Dell Computers was named after its founder and Chairman Michael Dell (Hoovers 2012). The company began functioning in the early 80s to design and manufacture computers. Michael believed in efficiency. He created a company that had extremely efficient operations and responded to customer needs very fast.
The highlight of his business model was the ability of customers to make their computers to their preferred designs. Customers could log on to the company website and choose their preferred features when placing an order. The company would then ship the new computer to the customers’ address. During the 90s and early 2000, Dell was the leading computer company worldwide.
Its woes began when customers began to slow down on their PC purchases. Dell no longer sold as many computers and its growth was slow and painful. Things became worse when the company’s legal trouble began. Advanced Internet Technologies sued Dell for knowingly selling faulty computers to its customers.
This was around the year 2010. Later, Dell got into trouble with the Securities and Exchange Commission. The company was accused of accounting fraud. The result was a restatement of its financials over a five-year period ending 2007. The company also paid several hefty fines to the SEC. As expected, its stock price declined tremendously.
An incident involving a Dell laptop that caught fire during the year 2006 also damaged the company’s public image. This incident led to a move by the company to recall batteries that were suspected to be faulty. Though Sony was the company responsible for manufacturing the batteries, Dell still took the fall for the faulty batteries.
Profits at Dell reached an all time low in 2009. Since then, the company has been re-organizing and re-aligning its business. There has been an attempt to diversify from the PC industry, given the slow growth of the market. The company hopes to attain much needed growth by focusing on corporate IT solutions rather than lone customers. In line with this, it has acquired several smaller companies. These include Perot Systems, sonicWALL, AppAssure and Force 10 Networks.
This paper seeks to explore expansion into the tablet market as a strategic option for Dell Inc. This paper adopts the Balanced Scorecard as the major tool of analysis.
Competition
Dell’s major competitors are Hewlett Packard (HP) and Apple Inc. Apple Inc has created a niche with its innovative products. It is currently the market leader in tablet PCs and smart phones. Customers wait eagerly to acquire new Apple devices (Business Wire 2011). This rarely happens for other PC companies, least of all Dell. The company has invested heavily in Research and Design and it has paid off handsomely. The market has not received any other tablet with so much enthusiasm. The company stock price has also taken an upward trend (Vaitilingam 2005).
HP on the other had has experienced growth due to its merger with Compaq and outsourced operations. The company transferred its laptop manufacturing to China, where labour is cheaper. This enabled it to grow its profit margins and overtake Dell in PC sales. Appendix A shows the industry statistics for the years 2009 and 2010. HP was ahead by 8%-9% during the years under review. This trend has not changed much (Digital Trends 2011). Evidently, if Dell is to regain its market leadership, it has to come up with some new strategies.
The Technological Environment
There has been a slow-down in the purchase of Personal Computers worldwide. The uptake of smart phones and tablets is the major cause of this trend (Canalys 2012). People are moving to a world of convenience and PCs do not fit well into this world. The immobility of PCs has driven customers to seek flexible options such as tablets and smart phones.
Currently, the market leader in the tablet market is Apple Inc with its iPad. It therefore follows that if Dell wants to beat competition, it has to respond to market needs. There is no gain in continuing to manufacture PCs when demand is declining.
Appendix B shows evidence of the shrinking PC market and growing tablet market. This means that any computer company seeking growth in this age should seriously consider selling tablets instead of the traditional PCs. This paper seeks to explore the feasibility of tablet making and its implications for Dell.
The Balanced Scorecard
Learning and Innovation
Dell has been accused of spending very little on research compared to its competitors. Currently, the company is spending almost one percent of its revenues on Research. Over the past three years under study, Dell’s R&D budget never exceeded 1% (Shapiro & Balbirer 2000). The result is that Dell has brought very few new products to the market in the recent past. In contrast, Apple and HP spent 2.6% and 3% of their revenues on research respectively.
However, on taking a closer look at the financials, we discover that Dell has actually increased its R&D budget by 12% from the year 2010. This is evident in its opening of a research centre in Silicon Valley in May 2011. This is an indication of the attempt to catch up with its competitors. Dell has realized that it can no longer ignore or lag behind in market trends.
While Dell was opening up a research centre in 2011, HP had opened its third research centre in Singapore in 2010. HP already owned two other centres in England and California respectively. This indicates how far behind Dell is lagging behind compared to its competitors. In terms of patents, Apple is leading the pack with over 2000 patents in its name. This has been the driver for its new product development over time.
Dell attempted to enter the tablet market in 2011, but quickly withdrew (Watson & Head 2001). The tablets it had fronted, Streak 7 and Streak 5 did not meet consumer expectations or needs. They were the wrong size and had no originality. They resembled copycats of Apple’s pads. There was also massive competition from android-based tablets, which the Streak could not match.
Financial Modelling (Learning &Growth)
Increase in the Research and Development budget would benefit Dell financially. If the company can come up with a tablet that is unique and meets consumer needs, then it could regain its market leadership. The company is said to be preparing a new tablet for this year. This tablet will make use of Windows 8. Microsoft is yet to release this new operating system. The system is being custom made for tablets. However, Dell needs to consider the fact that other manufacturers are also waiting in line for this new software.
Appendix C is an example of a scenario created using financial modelling. We obtained the figures from the financial statements and adjusted them according to our assumptions.
If Dell increases the R&D budget by 2% as shown in Appendix C, and creates a tablet suitable for a niche market, the company could increase sales by 20%. Using the created financial model, if Dell also experiences an 18% increase in expenses, then the net result would be a 124% increase in net profit. The assumption is that all other things except tax are held constant (Chorafas 1995). The tax provision is increased by 1%.
Appendix D presents the worst-case scenario. If Dell increases the R&D budget by 2% and fails to achieve a 20% growth, then the resultant net profit growth would decrease to 61%. Dell would achieve a 61% growth when sales grow by 10% and expenses by 9%. Though there is a risk of reduced growth, it is worth taking (Holmes & Gee 2008). If Dell’s investment in R&D pays off, it will pay off greatly.
Internal Business Perspective
Efficiency in internal business processes stem from learning and innovation and create customer satisfaction. Dell needs to work on two major objectives in this perspective. The first is to increase the quality of its accounting and financial reporting. This is especially important given its recent problems with the Securities Exchange Commission.
The company can do this by hiring qualified accounting staff and giving them autonomy to do their work. In order to measure the achievement of this goal, Dell can employ an external auditor to carry out a review of their reports, aside from the annual audit. Dell should also create and enforce a new ethics guideline.
Another strategy to achieve this objective would be to set up an ethics committee. This committee would be responsible for promoting ethical behaviour in the business. It would receive and address all complaints concerning ethics. It would also reward good ethical behaviour and punish violators of the ethical code. These measures will promote ethical behaviour in Dell.
Secondly, Dell can improve on its supply chain management to reduce incidences of delay and decrease cost of sales (Williams 1993). Previously, the company engaged in of selling faulty computers to customers knowingly. The company was also involved in an incident where it recalled several batteries because one of its laptops caught fire.
These accusations led to lawsuits, which tarnished Dell’s corporate image. Many customers lost confidence in their products. A weakness in Dell’s quality control system cost the company customer loyalty. The outsourcing of customer call centres also made the problems worse.
Dell is making some progress towards the improvement of its internal business perspective. This is evident in the opening of the Dell Supply Chain Management Institute in China. This institution has the mandate to research and develop innovative supply chain solutions for Dell and other manufacturing clients. This is a step closer to maximum supply chain efficiency. It is also a revenue-generating centre for Dell.
Customer Perspective
In the past, Dell excelled at satisfying its customers. The company eliminated all intermediaries and dealt with its customers directly. This enabled it to meet the customers at their point of need. Dell was also able to lower significantly the cost of sales, hence delivering cheaper quality computers to customers (New York Times 2011).
Trouble began when the scale of operations expanded and Dell could not maintain the quality. In an attempt to reduce costs further, the company outsourced its call centres to China. This alienated its customers. They could no longer get responses to their issues fast enough. The outsourcing also removed the personal touch associated with Dell.
Customers drive sales and market share. Dell needs to please its customers if it is to make any money. In the tablet market, Dell has yet to please customers. The Streak tablets failed miserably and received terrible customer reviews. Following its strategy of shifting to corporate clients, Dell can create a tablet that is friendly to business executives and managers.
The new tablet would be integrated with their PCs such that no matter where they are, the executives can access their work. With this strategy, Dell can create a niche for itself and avoid competing with Apple. It will also conform to its strategy of integrating corporate Internet Technology. Dell can market these tablets because executives who are conversant with Windows OS will find it easier to work with a tablet running on Windows rather than any other Operating System.
There is a growing market for Tablet computers among individual and corporate clients. Market research companies project a continuing increase in demand until the year 2015.
Appendix E also indicates that the tablet sales as a percentage of PCs are projected to rise to 61% by 2015 (Et Forecasts 2012). This means that six in every ten PC users will own a tablet three years from now. Though Apple is currently the market leader, there is still a large untapped market for Dell to enter.
Financial Perspective
The Financial Perspective relates to shareholder satisfaction. Lenders and creditors are also concerned with the financial perspective. Dell’s share price has not been performing well in the market since its troubles with the SEC began.
This means that shareholders cannot rely on the current stock price for motivation. Other stakeholders such as creditors also look to the financial statements for an indication as to the status of Dell (Barker 2001). To assess the financial health of Dell, we compute several financial ratios. Appendix F shows the ratios over time, from 2009 to 2011.
The return on capital is an indicator of how efficiently management is using stakeholders’ funds in the organization. Capital refers to both owners’ equity and non-current borrowing. Dell’s return on Capital has shown a 4% increase between 2010 and 2011. This growth is small compared to the year 2009. However, it is positive to see that the ratio did not decline.
The gross operating margin is obtained by deducting cost of sales from sales revenue (Buckley 1998). It is an indicator of how well the company controls its cost of sales. Dell has managed to maintain its gross margin between 17% and 18%. This is not a good sign given the difference in company performance over the three years (Gitman & Madura 2001). There should be a significant difference between the performance in 2009 and 2011. Management should review their cost of sales and create innovative ways to reduce it hence increasing the gross margin.
The Earnings per Share (EPS) refers to the profit attributable to the owners’ equity (Brealey & Allen 2003). It indicates how efficiently management is using shareholders’ funds. For some investors, this criterion determines whether they invest in a company. Dell posted the lowest EPS in 2010 of $0.73. The company posted the best EPS in 2011. This shows slight improvement. However, there is room for improvement to catch up with industry leaders.
The current and quick ratios are measures of liquidity. They are indicators of how able the company is able to meet its short-term obligations. They can be used as proxies for the cash flow position of the company. Dell has managed to maintain healthy current and quick ratios throughout the three years. This means that the company is not likely to run into short-term cash-flow problems. This is a good indicator especially to short-term creditors such as suppliers and banks.
Potential for Growth
Sales revenue is the driver for financial growth. Without sales, a company cannot make profits and therefore cannot survive. Appendix G shows Dell’s performance in comparison with competitors between 2010 and 2011.
Dell is behind HP by 2% in 2010 and by 4% in 2011. Unfortunately, Dell has suffered a 12% decline in units shipped due to the decline in PC sales. HP lost only 3%. Overall, the PC shipment reduced by 6.1% during the period under study.
Dell needs to come up with a strategy to beat declining sales before its cash flow starts suffering (Grundy 1998). The proposed introduction of a tablet computer could close the gap between HP and Dell.
Limitations of the Balanced Scorecard
The balanced scorecard is a very useful model in performance management. However, users should consider several shortcomings. First, implementing the Balanced Scorecard is a time-consuming process. The implementers must study the business in question thoroughly. They then proceed to establish the strategic direction of the business and its broad goals and objectives. After doing this, they must come up with objectives for each of the perspectives, bearing in mind that each objective builds on another.
Eventually, the team must create measures of performance. These KPIs will show whether the company is on track to achieve its goals or not. They will determine the control action to be taken. This process involves numerous meetings with managers at different levels. It also involves great planning and monitoring to ensure success. Some businesses may not have enough workers to dedicate such time to performance measurement.
The Balanced Scorecard is a subjective measure. Companies develop their own KPIs. There is no standard measure of progress. Therefore, there is a chance that implementers could choose the wrong KPIs for a business. If the wrong indicators are chosen, then the measures will be meaningless. The business could be moving in the wrong direction while thinking they are moving in the right direction. Managers should think carefully about the KPIs they choose to use. If they face difficulty in creating their own, they could benchmark with other companies in the industry.
The third disadvantage of the balanced scorecard is the resistance faced from employees during implementation. Employees like to maintain the status quo. Therefore, implementing a balanced scorecard may be viewed as an unnecessary change. If they do not understand the benefits, employees can sabotage the implementation process. This is especially because they are at the operational level of the business. Engaging employees in continuous dialogue to get their views can counter this limitation.
The Balanced Scorecard is not a comprehensive model of performance measurement because it ignores competitors. The model considers the internal affairs of the business while placing little emphasis on competitors and suppliers. Due to this limitation, it is advisable to use the Balanced Scorecard with other models, which consider environmental influences.
The implementation of a Balanced Scorecard requires a lot of commitment from the top executives. The leadership of the business must be on board and inspire the other employees. If the leadership is not on board, then the process will fail. Managers and business executives should be informed beforehand. They should also be made to understand exactly how the process would work.
Strategic Options- Ansoff Matrix
The Ansoff matrix presents four options for a company’s strategy. They are Market Penetration, Product Development, Market Development and Diversification (Scholes 2008). I would recommend that Dell pursue two strategies simultaneously. The company should practise Market penetration and Product Development.
The creation of a tablet computer for its current market is a type of product development. Dell will use its current competencies in PC manufacture to meet new customer needs. The company will require further research to ensure the product meets consumer needs. However, the manufacture of a tablet PC is not very new territory for Dell sine it is competent in PC manufacture. If the company can find an efficient way to manage the supply chain like it did with PCs, then it will succeed in this segment.
Dell may need to benchmark its new tablet computers with Apple, the current market leader. This will enable it to obtain an idea of what features customers are willing to pay for. It will also prevent Dell from making the same mistakes it made with its first tablet, The Streak. However, it should not copy the competitor’s product. The R&D team should come up with an innovative design that meets customer expectations at a low price.
The demand for tablet computers has been accelerated by the new flexible working hours and need for mobility. Information has also become an important source of competitive advantage. With the internet, people can keep informed wherever they are. Tablet computers facilitate the satisfaction of this need for information. Success in the computer industry is shifting from a focus on PCs to a focus on tablets. Dell has to keep up with the industry or fall out of the race.
Market penetration involves defending the organization’s current market share. Dell has experienced decline in computer sales to the point that HP has overtaken it to be the market leader in computer sales. This is a disturbing situation. Dell needs to take strategic actions to maintain its current market share. Such actions could include increased advertising, re-branding, following up on current clients to enhance loyalty and improving customer care.
Dell’s customer care department has been criticized previously for failing to be responsive to customer needs. Dell has seen its customers complain on several websites. This together with the media’s emphasis of the problem has left Dell with no choice. The company needs to make drastic changes to this department if it is to maintain the current market share.
Adopting a market penetration strategy will enable Dell to maintain its current position while a product development strategy will enable Dell to attain sales and revenue growth. If these two strategies are implemented correctly, Dell will experience an increase in profitability. The customers and other stakeholders will all be pleased with the company.
Strategic Implementation
Dell needs to consider several things before adopting any strategy. The company needs to ensure that there is a market for its product, that that product meets customer needs, that the critical internal business processes are functioning properly and that the organization possesses the necessary capabilities (Miller 1998).
In order for a consumer group to meet the definition of a market, they must demonstrate that they need or want the product. Secondly, this group must also demonstrate the ability to purchase the product if it was available.
Research in the technology world has shown that there is a ready market for tablet computers. Projections indicate that tablet sales will beat PC sales by 60% in the next three years. This means that the recommended strategy is feasible. The only thing Dell needs to do is to carry out a detailed market survey to ensure that the new tablet meets customers’ needs and expectations.
The critical business processes involved in this project are supply chain management and quality management. Dell has already learnt a lesson about the importance of quality through experience. The company is likely to employ the highest standards to ensure there is no quality malfunction associated with this product. The company has also recently set up a centre for supply chain management. This is an indicator of the healthy state of its supply chain function.
There is no doubt that Dell possesses the necessary organizational capabilities to compete successfully in this segment. The company has been successful in a similar segment, selling PCs. The tablet computer is in fact a PC with several adjustments to size and applications. This is another an indicator of the potential success Dell can have in this market.
Conclusion
Dell computers need a new strategy to help the company regain its market leadership. In the past seven years, the company has faced many problems ranging from decrease in sales to lawsuits and trouble with the SEC. All these factors led to the decline of its stock price and reduced investor confidence. This paper has employed the Balanced Scorecard to assess Dell’s current strategic position.
In the past, Dell spent very little on research. This was contrary to its competitors such as Apple invested a lot in development of new technology. In the recent past, HP and apple have reaped the benefits of advanced Research and Development. The two have developed niches and managed to oust Dell from the market leadership position. The customer perspective also suffered when Dell was sued for knowingly selling faulty computers. Loyalty was destroyed and market shares declined.
These problems together with the financial crisis directly affected the financial perspective. Dell’s annual revenues reduced. The Earnings per Share also reduced. This situation made investors to lose confidence in Dell (Fraser & Ormiston 2001). The proposed strategies seek to improve the learning and growth perspective, then the internal business perspective, customer perspective and the financial perspective.
The proposed strategy involves the entry of Dell into the Tablet PC market. This paper has shown that this market is ready for new entrants. It also possesses potential for growth in the coming years. Dell’s capabilities and core competencies can enable it to succeed in this market.
Market Penetration and Product Development strategies are suitable for Dell since they are in conformity to its current business model. Research has also shown that there is a ready market and willing consumers waiting to be satisfied. Dell should cautiously implement the above-mentioned strategies, bearing in mind the limitations of the Balanced Scorecard.
Reference List
Barker, R. 2001, Determining Value: Valuation Models And Financial Statements, FT Pitman, London.
Brealey, M. & Allen, J. 2003, Principles of Corporate Finance, McGraw Hill, London.
Buckley, A. 1998, Corporate Finance Europe, McGraw Hill, New Jersey.
What is your evaluation of Michael Dell’s performance in his roles as Dell’s CEO and Chairman? How well has he performed the five tasks of crafting and executing a strategy that was discussed in Chapter 2?
The performance of Michael Dell as CEO and Chairman was excellent, his dynamic leadership, innovative marketing concept, and time-worthy decision guided Dell to turn it into the global giant of the information technology-related product and services. His excellent communication and easy accessibility, emphasis on the talented people and entrust control over the subordinates turned him into a role model to the juvenile executives and he established himself as the chief strategist for direct sales approach in the IT product and service market.
From the case study, it has been evidenced that as CEO of Dell Michael Dell performed such duties and responsibilities that commercially appointed CEOs may never perform for instance he traveled door to door to meeting customers, checking their demands, scrutinizing the outcomes of different strategies and the extents of customer’s satisfaction. The unparallel leadership of Michael Dell was again proved when he shifted the responsibility of CEO to Kevin Rollins, it demonstrated the most devastating impact on the performance of the company through slowed down in 2006 and the board was bound to resettle Michael Dell as the CEO of the company including chairman of the board. Michael Dell engaged his talent and innovation at crafting & executing Dell’s strategy in a very simple format – ‘PCs could be assembled by the order directly to the customer’ this strategic vision contains four doctrines such as well-built direct customer relationship, facilitate customers to obtain the customized product, providing efficient technology along with strong supply chain for the company. Michael Dell empowered the company in an extent stage where it has enabled to deliver any added value to customers with most up-to-date technology combining best performance and efficiency that would be accountable to customers ensure them the maximum return on investment for their along with non-proprietary as well as standardized technologies carry out most excellent value for the customers.
What are the elements of Dell’s strategy? Which one of the five generic competitive strategies is Dell employing? How well do the different pieces of Dell’s strategy fit together? In what ways is Dell’s strategy evolving?
According to the given case during 2002–2007, the seven core elements such as –
Introducing build-to-order assembling services in a more and more cost-efficient way;
Close collaboration with suppliers to constrict a cost-effective solution for the supply chain;
To engage the best effort to maximize direct sales techniques to increase more and more customers,
exploring new product and services to gain further superior market share of the global IT market;
Ensuring best customer service for the Dell product along with appropriate technical support,
Continuous spending for most up-to-date research and development to ensuring better customer satisfaction meeting their appropriate needs;
All the Dell efforts always focused on product and services with standardized technologies
The low-cost strategy is the generic competitive strategies that Dell put into practice and the company is striving to endow with enormous services at a very low cost next to eradicating cost of the supply chain to deliver the sky-scraping quality of product and services as possible lower costs, all these strategies draw mutually assist Dell to gain success. Thus, Dell’s strategy has been evolving through getting higher its market creating new plants in different countries organizing its products integrating flexible computers along with simpler IT products and services that would capable the company to distinguish itself from the other competitors in the market.
Does Dell’s expansion into other IT products and services make good strategic sense? Why or why not?
It is fair enough for Dell to allow further expansion of its other IT products and services that would formulate superior strategic sense for the reason that in the concurrent time IT is no more a luxurious product, but categorized as a necessity product where Dell endow with value-added services to get together the requirements of the consumers. With the shifting dynamics of the market, if Dell keeps itself engaged in producing personal computers, its sales growth rate would defiantly decline for not to addressing the changing needs of the customers, by growing with the low-cost strategy to deliver the elevated quality of product and service integrating the competitive advantage of homogeneous technology. At this stage, Dell gained its competitive advantage by adopting skills at its directive, momentum along with efficiency that would capable to reduce cost more rapidly than all other, IT companies who are competitors of Dell.
Which company is competitively stronger—Dell or Hewlett-Packard?
Given case illustrated that Dell’s strategy has started to work with full speed by 2003 while its direct sales and build-to-order business model, as well as its strategy, has contributed the company with the largest part of well-organized procurement, assembling, and distribution ability in the global PC market where Dell enjoys an extensive cost along with profit margin advantage. At the beginning of Dell, Hewlett- Packard is a most strapping competitor in the IT product market where Dell’s global leadership proved its strength over HP where a new CEO reengineered the revitalized strategy that radically changed the gap between Dell and HP from 2006 to 2007 a gain of 18.8 % global market share where 14.9% share of Dell. In the context of the US domestic market, Dell also engaged its highest efforts to set control over HP in the financial year 2006-7 while Dell occupied 33.6% of the US market and HP has a share of 19.5 % which is outstanding about other market players, following table illustrate the strength of Del and HP-
In the US domestic market, the competitive strength of HP is next to Dell while the companies are positioned at the first and second position respectively during 1998–2007.
What issues and problems does Michael Dell need to address?
The most significant factors that Michael Dell must need to address is to explore the way of elevating sales along with strengthening the market share position with most competitive conditions where HP is at this time the major rival to Dell and it is emergence to take into account that HP is competitively stronger than Dell for trade competence. The sales of HP are constantly ever-increasing, even during the starting of the global financial crisis in 2007; HP demonstrated accelerated sales revenue growth while most of the promising competitors like Acer and Asus have failed to bit violently with Dell. On the other hand, the lack of innovation in product and service development is an additional factor for Dell that the company needed to address for its global expansion, consecutively, to attain the overseas customers more successfully, Dell must get hold of its costs that enlarge among the retail distribution where Dell would be able to utilize its best cost advantages. On the other hand, Dell needed to address its two key advantages at its supply chain management customized to the direct sales model that the company first put into practice and treated as a competitive advantage over the other competitors, the economic circumstance along with technological shifts is rapidly influence Dell to innovate its product and service.
The relationship between the managers and workers was not good at all, this led to mass layoffs which affected the company’s performance. The other problem was in the process of recruiting new employees in a bid to achieve sustainable growth and development for the Company.
The company did not have enough creative employees who could contribute new ideas on how to venture into new fields of investment. The chief Executive officer was very impatient with new products in the market; he expected quick returns which was not possible within short span of time (Lynch 433-437).
List of Alternatives
The relationship between top managers and the subordinates in any company must always be healthy for productivity purposes. From the case in Dell Company, the relationship between the top managers (the Chief Executive Officer Michael Dell and the President Kevin B. Rollins) with the subordinates was poor resulting to mass lay-off hence poor company performance (Lynch 433-437).
Any established company should always have training programs for new employees on issues related to company management; this includes marketing segmentation and sales strategies. This ensures that high level of productivity is realized.
The success of Dell relies on their improvement in the quality of goods they offer. This has to take place by incorporating new technology in the manufacturing process. This will require structuring of business plan that will incorporate new marketing and promotional strategies. There is need for patience whenever a new product is introduced into the market; this allows it time to catch up before any profit is realized (Bonoma 69-76).
Analysis of the Alternatives
Good interpersonal skills and relationship between workers is vital for effective management and running of any company. Communication is a very important factor that ensures smooth running of activities within the company. This must be encouraged amongst all employees regardless of the positions they hold.
This may as well act as a very important tool for designing communication marketing mix outside the Company. The scenario at Dell Inc clearly demonstrates the results of poor communication that ends up creating poor working environment (Ahmed 1177-1186).
It is very important for the firm to offer training to its own workforce than recruiting them from outside the company. This ensures that the new recruits are those who are very much familiar with the company’s production processes. This also encourages smooth transition when it comes to succession within various departments. Dell had a problem with workers from outside because they were unable to adapt with the required speed to the company’s codes and principles.
For a company to keep up with the ever changing demand and supply curve, they must be ready to invest on better ways of improving the quality of their products, this also includes stepping up their technology by initiating necessary modifications with regards to quality and quantity (Kohli 53-81).
Dell’s conservative ways could not enable the company to invest hence failing to compete favorably within the market. In the business world, it’s not easy for one to get quick returns from newly introduced products. It calls for patience and proper strategizing. Dells impatience and quest for quick profit slowed their productivity and consequently affected the end results (Cravens and Piercy 2009).
Recommendations
The management should work out modalities of creating good relationships amongst the workers at all levels (Johlke and Duhan 265-267). There must be harmony within the working environment. It’s inevitably necessary for the Company to have new recruits if it expects to expand its production and improves on the level of its skilled manpower.
This can be done through training and internship programs. The company should come up with good business plan that enables it to arrest the lucrative investment opportunities. By all standards, when a new product is launched in the market, it will take a while for it to command public confidence. As such the producers must be patient and use good sales and marketing strategies.
Works Cited
Ahmed, Pervaiz. “Internal Marketing Issues and Challenges”. European Journal of Marketing; London 37(9), (2003):1177-1186.
Bonoma, Thomas. “Making Your Marketing Strategies Work”. Harvard Business Review. Harvard Business school USA (1984): 69-76.
Cravens, David and Piercy, Nigel. “Strategic Marketing”. McGraw Hill. 9th edition. 2009.
Johlke, Mark and Dale, Duhan. “Testing Competing Models of Sales Force Communication,” Journal of Personal Selling & Sales Management, United States Vol. 21 (2000): 265-277.
Kohli, Jaworski. “Market orientation: Antecedents and consequences”. Journal of Marketing, New York 57, (3) (1993): 53-81.
Lynch, Merril. “Dell Inc”. Business week, New York Feb 6, (2006):433-437
This is the third largest computer manufacturing company named after its founder Michal Dell. He founded this company in 1984 and has long since merged and acquired shares of other companies to form one of the greatest competitors of HP and Lenovo. This company has faced various challenges just like all other business investments but has, however, managed to handle them (Wunker 2011).
This has put its reputation at a higher rank compared to other companies that fail to handle such challenges. This discussion analyses the quality improvement plans adopted by Dell Company to remain on top of the computer manufacturing industry.
Mission
The mission statement of this company is a clear outline that cuts through service delivery and client satisfaction as essential tools to drive the company to unique heights. The mission statement aims at informing clients and Dell workers that the company intends to be the most flourishing computer manufacturer in the globe by delivering quality client experience in all markets the company penetrates.
This means the company is laying emphasis on the following crucial aspects (Wunker 2011). First the company aims at providing quality products that will ensure consumers get the value they deserve. Secondly, the company ensures it leads the race in the provision of modern technology to consumers. This is done through continuous upgrading and innovations that will fit the market demands.
Thirdly, the company offers competitive prices to allow consumers of all economic and social classes acquire these products. This is an essential step that aims at widening the market by providing cheap but quality services and products. Moreover, the mission statement aims at assuring customers of individual and company responsibility in all aspects of sales and services.
This is complimented by the best customer service department that is qualified to offer clients the necessary technical support (Wunker 2011). The company considers customising its products to fit consumer’s needs. This allows them acquire products of their specifications. This is Dell’s mission statement
“To be the most successful Computer Company in the world at delivering the best customer experience in markets we serve.”
Vision Statement
Dell’s vision statement focuses on the company’s ability to provide quality services to clients around the globe. This is an effective company strategy that ensures the company gains customer confidence while widening and developing its market. This statement helps clients identify the uniqueness that distinguishes this company from others.
The vision statement aims at outlining the basic elements that define this company including interactions, transactions, interpretations and all that it takes to make the future bright for the company and its clients. The vision statement is based on the manner Dell Company conducts its activities including business, interactions, interpretations and all aspects that play significant roles in determining the future.
Strategic Objectives
The main strategy employed by Dell Company is direct sales that enable it gain fast hand experience with clients. This approach has received a lot of criticisms and claims that it is inefficient and extremely slow compared to the use of middlemen. However, Dell insists on using this procedure as an effective tool of getting hold of the countless market for computer products (Wunker 2011).
This strategy has given this company some crucial information regarding best strategies that will move the company new markets. This company aims at producing quality products that are not only cheap but durable. This will develop their client’s confidence in all products from this company.
Moreover, the company uses all available opportunities to expand and widen its markets to remote and urban places around the globe. Additionally, this company adopts two strategies that determine its growth and expansion rates. Growth rate includes an increase in production through inventing new products and upgrading existing ones.
On the other hand, expansion refers to an increase in the market due to advertisements and the need to adopt new technology by developed and developing nations. Moreover, this company has effective strategies that address customer’s concerns. These strategies do not only aim at promoting sales but also ensuring customer satisfaction is guaranteed.
Even though, there has been various challenges to dispute the reliability of this company, management and customer relations departments have ensured the company’s reputation is safe (Wunker 2011).
All companies face various challenges that hinder them from implementing their plans and realising their long and short term goals. However, this company has managed to stand strong and endure inevitable challenges.
The second approach this company uses to expand is through mergers and acquisitions. This strategy is one of the long term plans that aim at expanding the company’s operations.
There is no doubt that this company will in the near future offer more than computer related services if the current trends are anything to consider. There is a bright future for this company if these strategic plans are put to use.
SWOT Analysis
SWOT analysis is a four way approach used to determine the effectiveness of a company. The process involves analysing the strengths, weaknesses, opportunities and threats the company faces in the process of implementing its vision, mission and goals. These aspects play crucial roles in shaping a company’s future by giving clues on the expected incomes and outlining crucial paths towards implementing its goals.
Strengths
Dell is without doubt one of the leading computer manufacturer in the world. Its operations cost is about $63.07 billion according to the 2012 half year financial report. This means the company has an enormous capital that enables it acquire assets from collapsing companies.
This company has so far acquired Alienware and Perot Systems in 2006 and 2009 respectively (Wunker 2011). These acquisitions would not have been possible if the company did not have adequate capital to finance these processes. Therefore, this company is flexible and allows its operations to integrate with other companies without losing its identity.
Dell Company has come under scrutiny for its ability to influence other companies to merge their operations for effective service delivery. However, this company has kept a stern face and ignored speculations and rumours.
Mergers are one of the complicated business arrangements that hinder most companies from jointly conducting various operations. However, Dell Company has never found difficulties in conducting these businesses due to trained staffs.
This company commands respect from its competitors and other unrelated companies. There is no doubt that Dell is ranked highly amongst companies that have withstood inflations and recessions at all times. It is also evident that the company experiences hurdles in various undertakings.
However, the management and other staff ensure the company upholds its mission, vision and objectives. The core competencies of this company lie on its resilience and consistency (Wunker 2011). While most companies close their operations after allegations and scandals threaten them, Dell Company has withstood a number of damaging allegations and managed to stay ahead of its competitors.
On the other hand, this company has an effective unique strategy that is not easily adopted by other companies. The company uses direct sales services that link it with consumers. Even though, this is an expensive and time wasting undertaking, Dell has managed to conduct it effectively and deliver incredible results. However, there are other approaches this company uses which no other company has managed to successfully use.
In addition, the demand for computers by developing nations has come an appropriate time. Dell has managed to take advantage of this rush and sells its products to most third world countries. Moreover, the prices of all products produced by this company are cheaper than those from other companies. This brings into focus the mission statement of this company and ensures the company produces cheap and high quality products.
The rush from traditional to modern technology has seen Dell contemplate on developing other computer related services like IT services and consulting. These have enabled the company conquer various challenges arising from the production of similar products by its competitors.
The diversification of services and products by this company is a strong entry point to new and existing markets (Wunker 2011). Day by day, Dell has a new product or service that meets the population demands.
Therefore, this company remains relevant regardless of trends and fashions. This is a crucial element that determines a company’s ability to sustain its operations despite the change in demand for products associated with modernisation.
Weaknesses
There is no company in the world that does not have weaknesses despite their glamourous performance records. It is evident that even the most successful companies have various weaknesses.
However, the way these weaknesses are handled determines the confidence clients have on them. A minor weakness can turn into a significant disaster if a company does not attend to it with full confidence and professionalism.
Dell Company has faced various challenges that threaten to hinder its performance and market demands. First, the 1990’s switch from ATX computer motherboards to power cables and boards that are identical was one of the issues that have never been resolved.
This forced consumers to discard their old Dell models since they no longer fitted with the new models. Any loss or damage to the old components means that the consumer has to look for spares from similar models to repair their computers. This has forced consumers to shift to other companies like that offer universally recognised spare parts.
While other companies produced parts that fit on each other, Dell insisted on producing tailor made components for their computers. This means there is no way a Dell computer can accommodate a spare part from HP or other computer companies.
This was an enormous blow to the company due to the absence of spare parts in most retail outlets (Wunker 2011). Most consumers saw this as a deliberate attempt to make them buy new components while disposing their old ones for minor technical breakdowns.
This made the company register more than one thousand five hundred complaints in 2005. Today, the number has dropped due to lack of response from the company or consumer shift to products from other companies.
Customer care is an essential aspect that determines consumer responses to products and services offered by a company. It is impossible to assess a company’s performance without evaluating the effectiveness of this department. It is through this department that companies identify their weaknesses and strengths and make necessary corrections and improvements
However, Dell Company has had more than enough complaints regarding their customer care desk. In 2006, almost half of client’s calls were either not received or redirected to irrelevant departments. Most clients sought minor clarifications like knowing retail outlets located near them.
However, their calls were unanswered or redirected to the sales department. This is an indication that there was no coordination amongst Dell’s departments. When consumers make calls they expect their queries to be addressed as soon as possible. However, this company seems to delay answering calls or directs them to other department.
Even though, this company increased its spending on this department from $100 to $150 (2006) complaints still abound regarding this department. It is evident that Dell’s website has uncountable remarks that reveal how disgusting their services are despite their assurances that the situation will improve.
In addition, the company has never been off the hooks of blackmail. The introduction of universal motherboards led to a rush by consumers to acquire products from other manufacturers (Wunker 2011). There were allegations that Dell signed a deal with Intel to buy processors from Dell and not other companies.
Even though, this issue raised a lot of controversies in the computer manufacturing industry, the matter is still unresolved. However, the U.S. Securities and Exchange Commission discovered some hanging payments made by Intel to Dell.
Dell did not disclose the details of this payment; therefore, it was assumed they were meant to settle this blackmail against other companies. However, later in 2010 this blackmail was put to public notice after Dell owned up to the allegations and was fined $100 million for fraud and conspiracy to commit economic sabotage.
Even though, the owner and other directors of this company did not admit or deny these allegations it is evident they suffered other undisclosed sanctions after paying heavy fines. Another controversy involved pricing its LE4300 gadget that was selling at $580.
This was an amazing offer meant to attract notebook consumers at the expense of other companies since the price was less than two thirds the normal market prices. The fact that this advertisement was on Dell’s website for a while before it was hurriedly pulled down showed that this company was indeed making intentional economic sabotage (Wunker 2011).
Taiwan was adversely affected by this advertisement making Dell pay handsomely for infringement of consumer provisions.
Product recalls is a common issue that Dell has never managed to handle. Whether this is intentional or not, is something debatable. However, the increase in product recalls diverts a lot of their market to other companies that rarely have this problem. In fact, some companies like HP have never recalled any of their products on the basis of poor quality.
Opportunities
These are aspects that present growth opportunities to a company despite existing challenges. These opportunities present themselves in various forms, and it is upon companies’ managements to identify them and make use of available chances.
Dell Company has numerous opportunities to expand its operations within and outside the United States of America (Wunker 2011). The acquisitions and mergers present expansion opportunities to this company that must be used to effectively expand its operations.
The presence of a massive operating capital attracts other related companies to form with Dell and integrate their operations. The advantage derived from these mergers is the ability to maintain their identities despite conglomerating their operations. In 2006 and 2009, Dell merged with Alienware and Perot Systems to expand their operations and provide quality products.
Secondly, Dell is fast expanding its computer products and now produces servers, printers, scanners, televisions, smart phones, notebooks, laptops and desktops. This gives Dell an opportunity to access all households despite their economic or social orientations.
It is evident that almost half of the world’s population has access to mobile phones or televisions. Most of these products are produced by Dell Company; therefore, Dell has managed to penetrate all corners of the globe.
The diversification of Dell’s products enables it make inestimable sales while making use of the volatile market for electronic products. In addition, Dell offers other services including computer software/hardware and IT services including consulting (Wunker 2011). The diversification of products enables companies maintain steady markets and sales despite changes in demand for one product or service.
Dell is considered the friendliest company amongst computer companies. This means that it has a lot of windows to invite other related companies to form mergers or acquire their shares. Even though, this may seem to be a blackmail approach it has nonetheless managed to put Dell at a contentious situation.
There is the need to identify similar companies to help develop branded products. This is an effective way of keeping competitors at bay while improving the quality of their products without necessarily creating other avenues for unnecessary expenses (Wunker 2011).
Dell has managed to effectively use this tactic to expand its production lines. The recent development is its intention to acquire SonicWALL through an agreement announced on March 2012.
Threats
There is no doubt that modernisation has created the need to use modern technology in various activities. This has attracted a lot of attention from many people. Consequently, computer manufacturing companies have sprung up within the last one hundred years. In addition, computer related companies have been established in different parts of the globe.
Therefore, competition amongst computer manufacturing companies has not been evitable. Even though, there are more than five known computer manufacturing companies, HP, Lenovo and Dell are the world’s leading computer companies (Wunker 2011).
Competition amongst them has created room for propaganda, blackmail and sabotage amongst these rivals. There is no company that enjoys the markt monopoly in the production, supply and sale of computers and their products.
Secondly, the production of counterfeit goods from the Middle East threatens the survival of these companies. The sale of counterfeit goods to unsuspecting clients results in wrong perceptions regarding products from a genuine company.
Even though, Dell has never suffered a blow regarding counterfeit goods, the introduction of modern technology will increase chances of producing counterfeit products by unscrupulous traders.
Recession has had a significant impact on all computer manufacturing companies. Despite any attempt to regulate inflation rates by various governments and stakeholders, inflation continues to wreck havoc in these companies. The world bureau of statistics continues to record an increase in inflation, and this means there is a bleak future for this company.
The European Union together with other unions has endorsed a policy to curb the manufacture of non biodegradable goods like electronics. This is due to the high number of electronic wastes that contribute a chief percentage of environmental pollutants.
This is going to be a serious challenge bearing in mind the volume of electronic wastes in many homes. The shift from analogue to digital communication will contribute to an increase in the number of electronic wastes. This puts computer manufacturers at risk of facing sanctions.
TQM Approaches
This refers to aspects that enable a company to manage its production by ensuring employees enjoy their work while clients get value for their money. This means customer satisfaction is given high priority compared to other aspects.
This is done through providing quality goods and service to customers (Wunker 2011). Therefore, a company must produce quality goods in terms of price, value, satisfaction and regular improvements like upgrading products.
The rationale behind this aspect is the changing trends in fashion and technology. A product that satisfies consumer needs today may not necessarily do the same purpose five years from now. This means if Dell produces a certain product and launches it within one year, there will be the need to upgrade the product to fit market demands.
Change in technology necessitates the need to have state of the art products that are not only affordable but durable and able to multi task. The application of TQM approaches ensures a company participates in international trade without fearing competition from other companies.
These approaches include effective leadership and management of companies that participate in multinational activities. In addition, the quality of service offered by a company determines its global ratings (Wunker 2011).
Product quality and employee satisfactions determine a company’s ability to command vast markets for its products. Unfortunately, Dell seems to have difficulties addressing customer queries due to poor products and customer care relations. In addition, the deliberate blackmails and economic sabotage expose Dell to dark future in the computer manufacturing industry.
This is in total contravention of the ISO 9000 requirements that stipulate product requirements. Even though, Dell is aware of these requirements it seems to make intentional mistakes that compromise the quality of their services and products. This is evident in their poor customer care department, pricing wrangles and product recalls.
The Six Sigma approach is an essential approach that will help Dell deal with its problems. This approach is based on identifying an error and correcting it immediately. This is a quality improvement strategy that ensures customers get quality products and goods (Wunker 2011).
Similarly, this approach involves activities that will reduce costs and maximise profit generation. An example of this approach is the use of statistical methods to identify money used in production. Additionally, this method identifies profits generated against their costs.
Recommendations
Even though, Dell is a multinational company there are various challenges facing its operations. The management seems to be asleep by failing to address key scandals associated with its operations. The customer care department needs to address customers’ grievances as soon as possible. The company has to work hard to reconstruct its already tainted public image.
Conclusions
Dell is without doubt an influential company in the computer manufacturing industry. It has grown from scratch to grace through hard work, commitment and timely innovations. However, these efforts may go down the drainage within seconds if the company fails to address intentional mistakes associated with its management.
Reference
Wunker, S. (2011). Capturing New Markets: How Smart Companies Create Opportunities Others Don’t. New York: McGraw-Hill.
Mergers and acquisitions have increased due to the technological dynamics affecting business operations. Dell consolidated with EMC in a merger that closed in 2016 after purchasing EMC’s assets at $67 billion. The company decided to fuse because it needed to control part of the software industry and expand its business to occupy a significant position in the data storage market. Dell needed to offer competitive generation technologies by harnessing EMC’s innovativeness in computer systems. Merging would enable Dell to remain the dominant supplier for retail customers, attaining the second position for manufacturing digital storage devices. The need for flexibility in innovations and investment in research and development sparked an amalgamation between Dell and EMC. The company’s industry analysis reveals that it faces challenges from stiff competition. Small enterprises that specialize in cloud computing present massive disruptions as they faster drive solutions and technologies that affect profitability.
It also has a higher supplier and buyer bargaining power. Threats from new entrants are low, while threats from substitute products are moderate. Increasing economies of scale and innovations would create new products to increase the customer base and reduce purchasing power. Diversifying in supplier selection provides alternatives from cheaper raw materials. Dell/EMC Corporation portrays financial situations that reveal success and failure. The company has benefited from the client solutions group, which earned more than 11 billion dollars in the fourth quarter of 2020. Income from infrastructure solutions reveals that the company is failing in some units. These solutions earned close to nine billion in the fourth quarter, implying an 11% fall. Dell and EMC would have thrived without consolidation if they invested in personnel development to meet their specific job requirements and sit more departmental demands to respond to the changing market conditions. Knowledge management, streamlining operations, and supply chain optimization would help them survive alone.
Technological disruptions have necessitated the development of mergers and acquisitions. They hasten skill seizing and fill operational gaps that existed when organizations had no affiliations. Merging means combining firms’ operations and efforts, while acquisition refers to purchasing a substantial amount of another company’s assets or takes over its control (Kumar, 2019). The disruptions in the information technology industries associated with changes in cloud computing have full implications for organizations. The personal computer maker, Dell, acquired EMC at close to $70 billion to pool their strengths in manufacturing digital storage devices and making PCs (Dell Technologies, 2020; Meddaugh, 2017). The Dell/EMC has remained agile and responsive to market demands, maintaining a higher competitive advantage.
Dell has shifted to corporate technology, supplying storage devices and servers, earning much of its income from PCs. However, cloud computing and the increase in smartphone consumption pose significant challenges to the PC industry. Merging is instrumental in boosting a company to sell computing infrastructure and better converged hardware. For instance, it has enabled the companies to combine efforts and provide networking equipment, software, servers, storage devices, and routers as required in the market. Dell/EMC deal has enabled them to develop their product quality and surpass rivals.
Industry Environment in Which Dell/EMC Operates
The environment in which they operate is discussed through industry analysis using porter’s five forces. It will guide how the two companies can build a sustainable competitive advantage in diversified computer systems development by exploring profitable positions and establishing strategic positions in the technology sector. Figure 1 below shows the M&A porter’s five forces analysis, which includes threats from new entrants, rivalry from competitors, threats from substitutes, buyers’ bargaining power, and suppliers’ bargaining power.
Figure 1: Porter’s Five Forces Analysis.
Threats from new entrants (low): new investors pressurize M&A because they might bring innovations in diversified computer systems. Such threats include lower product prices and offering different value propositions to customers. However, Dell and EMC had established a broader customer base and won the consumers’ loyalty. Additionally, entering the electronics industry requires substantial capital investments and meeting business procedures from federal state laws. These make threats insignificant, but the M&A should create practical barriers to protect its competitive advantage (Kumar, 2019). It should create economies of scale and invest in research and development to maintain a fixed cost per unit and encourage innovations, which bring new customers.
Rivalry from competitors (high): competition is stiff, for example, from Microsoft, IBM, HP, Lenovo, and Fujitsu. According to Statistica (2021), this rivalry reduces prices as the company tries to maintain customers and earn profit. Dell’s acquisition of EMC made it diversify from the PC market. It attained the third position in the global market after Hewlett-Packard and Lenovo (Statistica, 2021), as shown in Figure 2. The company also leads in IT services, hardware development, according to Statistica (2021) and Meddaugh (2017). The consolidation reduced competition from EMC and created a larger market share for the new company. The company also has improved standardization and business intelligence to sustain competition.
Figure 2: Dell’s Market Share by 2020 (Statistica, 2021).
Bargaining power of suppliers (high): suppliers in the diversified computer system industry are numerous. Prominent suppliers can use their negotiating power to charge higher prices from the M&A as the latter keeps changing its standards to out-compete rivals (Mburu, 2018; Meddaugh, 2017). The mergers Dell/EMC can establish efficient supply chains with many suppliers to tackle this power. They should also try other product designs using diverse materials to be flexible, changing raw materials when prices rise for others.
Buyers’ bargaining power (high): consumers demand the best products and services at the lowest prices possible. This need pressure is the M&A by compromising its profitability and sustainability since competitions can set lower prices to attract customers. However, the mergers’ customer base is broad, although they are more likely to seek discounts and offers, affecting the M&A’s profitability. The firm should maintain a more comprehensive base to reduce its bargaining power and streamline production processes and sales. It should also understand the customers’ needs and improve their switching costs to tackle their bargaining power.
Threats from substitute products (moderate): some of the products that can substitute storage devices include smartphones. The phones can also hold video conferencing and web surfing as personal computers do. Additionally, Google and Dropbox are alternative storage hardware drives, threatening Dell/EMC. However, the majority of Dell/EMC products, for example, PC software, are not substitutable (Mburu, 2018). Moreover, personal computers such as laptops and notebooks, especially in the 21st century, where eLearning has gained significant recognition in many countries, have high demands because they are powerful and portable (Kumar, 2019). Dell/EMC’s major threat from substitutes is when they offer a higher value proposition that is spectacular compared with the industry’s offerings.
Merger Rationale
Acquiring EMC would be expensive, but Dell saw other substantial reasons to accept the deal. First, it would control part of the software industry and expand its business to occupy a significant position in the data storage market. Dell needed to offer competitive generation technologies through the infrastructure solutions group, client solutions group, and VMware Inc., SecureWorks Corp, Pivotal Software Inc., Information security, and Boomi (Kumar, 2019). The M&A combined the top providers of the significant storage devices and the leading server and personal computer developers. Moreover, Dell’s hardware development was slow in the information technology industry, while the production rates in the software sector were high with significant profit margins. The M&A would be feasible because Dell would benefit from EMC’s centralized portfolios and gain relevance in the cloud-computing era. This can be seen from the M&A’s new contracts, such as signing a business agreement with General Electric to be its primary IT infrastructure developer. Therefore, the acquisition provided substantial product lines from hybrid computer systems.
Merging with EMC was tailored at facilitating Dell to remain the dominant supplier for retail customers. As a result, the new combination, Dell Technologies, became the world’s top seller of storage devices, the 2nd in participant to develop servers, and the third company to provide personal computers (Kumar, 2019). Furthermore, Dell Technologies was meant to expand Dell’s technology portfolio to include hybrid cloud, converged infrastructure, cybersecurity, software-defined data center, data analytics, and mobility, among other advancements (Kumar, 2019). The same author notes that Dell/EMC has developed a portfolio of more than 20000 applications and patents. Therefore, the M&A has created a vast and privately controlled technology company.
Dell also merged with EMC because it sought flexibility in innovations and investment in research and development. Consolidation has united Dell and EMC’s operations to ensure adaptability in the market. The step combined their strengths to achieve 98% of fortune 500 companies (Kumar, 2019). For EMC, merging with Dell was a strategy that the company had been seeking for years. Some influential agents, such as Elliot Management, to sell part of its assets and change its management to open shareholder values initially pressurized it. The company also wanted to maintain its storage position and extend Dell’s servers, apart from building customer support for consolidated offerings.
Dell also saw the future generation largely depend on technology in the health sector, business, legal systems, and education sector. Thus, merging with EMC would encourage innovation and gain larger market power in the tech-needy generation (Kumar, 2019; Meddaugh, 2017). The company also noted the rising number of connected devices and sensors transmitting large quantities of data. Therefore, it acquired EMC, an innovative storage business, to meet the demand for enterprises to analyze the information in real-time, securing a competitive edge.
When the 21st century turned digital, Michael Dell wanted to utilize a new landscape for growth and productivity. Merging with EMC would unlock independent ecosystems, encouraging partnerships with other players such as Microsoft to reduce competition (Dell Technologies, 2020). The strategy would enable Dell Technologies to develop a cheaper product that would enable the company to survive amidst the rapid adoption of Microsoft’s products, such as windows 10 (Kumar, 2019). Merging would foster research and development because EMC was already innovative, helping the companies devise ways to survive in a technologically dynamic market.
Dell and EMC seemed to have struggled to transit from the customer-driven PC businesses’ information technology solutions. They also faced stiff competition from small enterprises which specialized in cloud computing. EMC primarily faced a risk of massive disruption as rivals offered faster drive solutions and technologies that affected profitability (Mburu, 2018). The competitors were making their technologies accessible through the cloud, reducing the market share of EMC’s high-end storage systems (Kumar, 2019). Harnessing EMC’s robustness in the cloud and Dell’s PC development superiority would help them out-compete the rivals.
Lastly, Dell was able to acquire EMC due to its numerous sources of financing. It first sold its IT services to NTT Data Corp in Japan at three million dollars (Meddaugh, 2017). Moreover, the deal arose from selling eight million shares of Secure Works and junk bonds at approximately nine billion dollars, raising more capital (Meddaugh, 2017). Dell also paid EMC shareholders in cash and developed a specular plan for tackling VMWare, whose 81% of shares were held by EMC (Meddaugh, 2017). Thus, Dell would have most VMWare shares if it acquired EMC. EMC also had volatile stock prices, as shown in Figure 3. The robustness of the stock price changes was seen in October 2015, when Dell announced the deal. EMC opted to affiliate its operations with Dell because the stock prices were declining.
Figure 3: Stock Price Changes for EMC in the S&P 500 chart (Meddaugh, 2017).
Reasons behind Dell/EMC Success or Failure
The newly created Dell Technologies is both successful and limited. On the positive side, the companies have achieved dominance in the IT sector because Dell needed essential IP elements, such as virtualization and cloud software, to sustain its products. Software partnership increased Dell’s strength in the PC market, setting up the merger to create a robust solutions portfolio for clients. Product integration from the consolidation of companies leads to risks associated with economies of scale and synergies (Meddaugh, 2017). This problem underscores Dell Technologies’ position after Lenovo and Hewlett-Packard mentioned earlier.
Dell Technologies also portrays success through the risen profits and stock prices. Product competitiveness has also been positive over the years after merging with EMC (Dell Technologies, 2020). The rationale behind this allegation is that the companies have seen a downward trend in their commodities and services prices. On this note, Meddaugh (2017) notes that mergers take two to three years to converge products and reduce prices. This happened a while after the formation of Dell Technologies. The formation of a merger aimed to increase their market share by a quarter. It led to near-monopoly power in the development of storage devices. Companies purchase products from a single supplier. Thus, the M&A succeeds because customers appreciate the convenience of meeting different needs under one roof.
Further, fusion has led to the development of product brands with relative reliability and similar characteristics, increasing their competitive advantage. Dell and EMC had technological similarities, which have facilitated research and development. Therefore, Dell Technologies is likely to achieve long-term synergies and cost savings through research and development. Its future competitiveness depends on the competence the company develops in new technological fields and its ability to modify its resources. As mentioned earlier, consolidation has enabled Dell to gain a larger market share by buying the competitor’s business, including customers. Combining its PC development with EMC’s leading edge in storage system solutions has strengthened Dell’s server, storage, networking, and computer system development. The success is seen from Dell Technologies’ ability to provide IT infrastructure to General Electric, as mentioned earlier.
EMC initially supplied sophisticated technologies for storage, virtualization, document management, and security. Similarly, Dell manufactured low lost PCs with significant operational efficiency. Merging the two companies is critical in positioning them in the list of end-to-end providers in technology and other tailored services that come with consolidation. They regularly combine strategies with conventional M&A innovations to maintain a competitive advantage. The consolidated company has demonstrated a colossal impact in the computing industry. The scale is significant, acting in almost every enterprise and data center aspect. Their combined operations make the new company flexible to adapt to changes in the market, having a concrete record of acquisitions and integrations.
The merger forced the two companies to indulge in debts exposing Dell to interest rates that reduce profitability. Most consolidating organizations face difficulties incorporating different cultures and creative incentives to maintain critical stakeholders. It offsets organizational income as seen in EMC’s initial indebted situation for long-term and short-term bases. Moreover, Dell has not successfully leveraged EMC’s sales force, although the latter’s world has provided insights on how Dell can create value from its high-end servers and mid-market (Meddaugh, 2017). Dell’s leadership in the internet of things brings insights to client computing models is a crucial driver for current and future data center requirements.
Dell Technologies seems to be failing at an alarming rate due to the Covid-19 pandemic and other reasons. Haranas (2020) states that the company is dismissing employees for the second time. It sought to reduce costs associated with the coronavirus pandemic, but Haranas (2020) also notes that laying off 165000 employees in July 2020 was not due to the pandemic. The action affected all teams following a three percent decrease in sales in the second fiscal quarter. The author confirms that regular evaluations of Dell Technologies’ structures led to the retrenchment, meaning some flaws exist in the M&A. A company that is laying off staff is likely to be earning losses, and reducing the workforce would help it to save on production costs. Thus, Dell Technologies seems to have failed in its economies of scale because it could not sustain all employees.
An analysis of Dell Technologies’ operating segments shows that consolidation has been successful despite the few challenges discussed. Dell’s client solutions group earned more than 11 billion dollars in the fourth quarter of 2020 due to increased consumer and commercial revenue. The company’s operating income was close to $600 million, while the whole year earned $45.8 billion in client solutions. Further, Dell Technologies (2020) records that the merger has acquired a better PC unit share for the last seven years and received substantial revenue growth in commercial workstations and desktops. Dell technologies are successful because it shipped close to 50 million units during 2019 compared with other years (Dell Technologies, 2020). Therefore, the company’s acquisition of EMC is more profitable than working alone.
Further, Dell’s income from infrastructure solutions reveals that the company fails in some units. These solutions earned close to nine billion in the fourth quarter, meaning an 11% decrease, while they yielded storage revenue of $4.5 billion, receiving $4.3 billion from networking and servers (Dell Technologies, 2020). A decrease in sales or revenue foreshadows a downsizing company instead of expanding. However, the author reports that Dell/EMC has introduced a subscription-based model, which eases customers’ acceleration to hybrid cloud computing, apart from simplifying IT operations.
Another factor showing that Dell Technologies has failed is its absence in the stock market today. The company was publicly traded before it went private in 2013. Although it would help focus on the long-term strategies through privatization, the company ignored the needs of shareholders (Meddaugh, 2017). Amalgamation with EMC has improved its performance, but personal computers’ sales are still low as tablets and smartphones have had higher demand. Retaining the current position and improving further needs substantial changes in the firm’s model and diversification of products and services.
What the Companies Could Have Done Without Merging
A company can remain competitive in a changing market without consolidation. Dell and EMC would have sustained their products by utilizing other business models. Merging means explicit structural changes, and the companies could have managed and integrated their inherent mindsets instead of changing their structures. Moreover, a successful business focuses on appropriate economic models based on its situational factors. Meddaugh (2017) proposes that a contingency model is appropriate for particular situations in a changing market. Essentially, Dell and EMC would have remained successful by creating individual frameworks for sustainability and working to achieve their business goals.
The companies would have thrived through vertical integration of design and manufacturing and strategic sales and marketing frameworks. While research and development are vital in maintaining a competitive advantage, innovation out-competes rivals and attracts new customers. Vertical integration can benefit the company with subsidies, reducing manufacturing costs. Moreover, focusing on consumers’ unmet needs is fundamental in maintaining success. The companies, aiming to provide customer-focused design processes, would win buyers’ loyalty. This could include holding focus groups with new and long-term customers in various regions to help Dell and EMC track their product road map.
The companies could also sustain their competitive advantage by developing cross-functional individuals. It is not enough to hire staff and train them to meet particular job requirements. They should learn many functional areas within the organization to remain flexible to various departmental changes and encourage effective information sharing (Mburu, 2018). Further, knowledge management in an organization is vital in achieving a competitive advantage. It specifically enables an organization to offer same-quality services, reduce production costs, and increase the chances of expanding the business. It also enhances employee coordination and productivity, improving organizational performance.
The companies would have also survived through complete optimization of their supply chain using the operations research approach and strategic modeling and planning. Applying expert knowledge in decision-making is also vital in manufacturing and logistics, and procurement approaches (Mburu, 2018). In the latter, the strategy would help Dell and EMC to deliver services and products on time and optimize operations. Another strategy is to streamline business processes and delegate non-core activities to contractors (Muru, 2018). Streamline means analyzing current processes, dividing them to prioritize primary operations, adjusting to the results, continuously innovating and improving workflow. It would enable Dell and EMC to quantify processes and identify potential areas of improvement as they aim to remain sustainable without merging.
Conclusion
This report aimed to discuss Dell & EMC Corporation Merger and Acquisition. Formerly referred to as Dell-EMC, Dell Technologies is the most significant M&A in the technology industry. The acquirer purchased all the smaller firms that fell under EMC at $67 billion, setting a higher price tag in history. It sold various assets to obtain the funds to meet its acquisition requirements. The M&A corporation’s industry environment was analyzed using porter’s five forces framework. It showed that competition from competitors is intense, threats from new entrants are low, threats from substitutes are moderate, and suppliers’ bargaining power is high. At the same time, buyers’ bargaining power is also high.
The company’s factors underscoring success and failure were also discussed. Its competitive advantage relies mainly on the larger market share gained from consolidation, while competition from major players such as Hewlett-Packard and Microsoft is attributed to its failure. The companies would have survived by investing in employee development to diversify in the organizational functions, apart from fostering research and development to ensure that products are tailored to meet customer needs on time. Lastly, optimizing the supply chain operations, knowledge management, and utilizing expert knowledge in decision-making help to maintain a competitive edge without amalgamation.
Kumar, B. R. (2019). Wealth creation in the world’s largest mergers and acquisitions.. Springer.
Mburu, D. G. (2018). Mergers and acquisition effects to competitive advantage within information technology companies: A case study of Dell EMC Central, East Africa [Unpublished doctoral dissertation]. United States International University-Africa.
Meddaugh, C. (2017). An Event Study Analysis of the Dell-EMC Merger (Publication No. 2749) [Master’s Thesis, Clemson University]. Tiger Prints Publishing Company.
The relationship between the managers and workers was not good at all, this led to mass layoffs which affected the company’s performance. The other problem was in the process of recruiting new employees in a bid to achieve sustainable growth and development for the Company.
The company did not have enough creative employees who could contribute new ideas on how to venture into new fields of investment. The chief Executive officer was very impatient with new products in the market; he expected quick returns which was not possible within short span of time (Lynch 433-437).
List of Alternatives
The relationship between top managers and the subordinates in any company must always be healthy for productivity purposes. From the case in Dell Company, the relationship between the top managers (the Chief Executive Officer Michael Dell and the President Kevin B. Rollins) with the subordinates was poor resulting to mass lay-off hence poor company performance (Lynch 433-437).
Any established company should always have training programs for new employees on issues related to company management; this includes marketing segmentation and sales strategies. This ensures that high level of productivity is realized.
The success of Dell relies on their improvement in the quality of goods they offer. This has to take place by incorporating new technology in the manufacturing process. This will require structuring of business plan that will incorporate new marketing and promotional strategies. There is need for patience whenever a new product is introduced into the market; this allows it time to catch up before any profit is realized (Bonoma 69-76).
Analysis of the Alternatives
Good interpersonal skills and relationship between workers is vital for effective management and running of any company. Communication is a very important factor that ensures smooth running of activities within the company. This must be encouraged amongst all employees regardless of the positions they hold.
This may as well act as a very important tool for designing communication marketing mix outside the Company. The scenario at Dell Inc clearly demonstrates the results of poor communication that ends up creating poor working environment (Ahmed 1177-1186).
It is very important for the firm to offer training to its own workforce than recruiting them from outside the company. This ensures that the new recruits are those who are very much familiar with the company’s production processes. This also encourages smooth transition when it comes to succession within various departments. Dell had a problem with workers from outside because they were unable to adapt with the required speed to the company’s codes and principles.
For a company to keep up with the ever changing demand and supply curve, they must be ready to invest on better ways of improving the quality of their products, this also includes stepping up their technology by initiating necessary modifications with regards to quality and quantity (Kohli 53-81).
Dell’s conservative ways could not enable the company to invest hence failing to compete favorably within the market. In the business world, it’s not easy for one to get quick returns from newly introduced products. It calls for patience and proper strategizing. Dells impatience and quest for quick profit slowed their productivity and consequently affected the end results (Cravens and Piercy 2009).
Recommendations
The management should work out modalities of creating good relationships amongst the workers at all levels (Johlke and Duhan 265-267). There must be harmony within the working environment. It’s inevitably necessary for the Company to have new recruits if it expects to expand its production and improves on the level of its skilled manpower.
This can be done through training and internship programs. The company should come up with good business plan that enables it to arrest the lucrative investment opportunities. By all standards, when a new product is launched in the market, it will take a while for it to command public confidence. As such the producers must be patient and use good sales and marketing strategies.
Works Cited
Ahmed, Pervaiz. “Internal Marketing Issues and Challenges”. European Journal of Marketing; London 37(9), (2003):1177-1186.
Bonoma, Thomas. “Making Your Marketing Strategies Work”. Harvard Business Review. Harvard Business school USA (1984): 69-76.
Cravens, David and Piercy, Nigel. “Strategic Marketing”. McGraw Hill. 9th edition. 2009.
Johlke, Mark and Dale, Duhan. “Testing Competing Models of Sales Force Communication,” Journal of Personal Selling & Sales Management, United States Vol. 21 (2000): 265-277.
Kohli, Jaworski. “Market orientation: Antecedents and consequences”. Journal of Marketing, New York 57, (3) (1993): 53-81.
Lynch, Merril. “Dell Inc”. Business week, New York Feb 6, (2006):433-437
This research paper will delve into a scrupulous analysis and discussion of the modern drift in strategic marketing probing deeper into how it interlocks with the overall organizational goals and objectives.
For the purposes of this study, Dell Inc, a colossal company offering a wide assortment of computer products and services will be reviewed bringing forth its kind of products and services, suggestions will be offered on how its marketing programs should be generally manned and executed. The study will however veer towards the researcher’s attained views and concepts, thus the information used will not necessarily second copy the actual data from Dell Inc.
A keen attention will be given on how the suggested marketing plan will garner a complete overhaul of the business processes and profitability. The paper will further analyze the risks involved in the marketing plan and how to counter those risks by implementing control measures in the wholesome business plan.
Finally, a reflective section elaborating on the significance of undertaking this assignment will be highlighted followed by a brief conclusive section to summarily capture the key points established in the research paper after which the research will be wrapped up.
Introduction
In order for a marketing plan to succeed it must be based on the key goals established in the business plan. This call for the strategy formulating staff to sit down have a thorough review and understanding of the business plans in order to have a formula on how to blend the marketing plans with the business plan.
Many first-time business industrialists hold the fallacy that by appending an ad on a local dairy or on a commercial television channel would have the potential buyers flocking into their premises to purchase goods and services offered. This trend is true, but only to certain degree.
A cluster of people may well learn of the business enterprise, purchase products for some period but a huge latent clientele base may never learn about a business if it fails to develop and implement a passable marketing program. Any potential business owner who intends to stay germane in the business arena must design a thorough marketing program, maintain it, understand it and maximize on it to extract myriad advantages form the market place.
The key to acquisition and holding on to numerous and loyal client lies in the strategic marketing plan. The business owner must gyrate over diverse strategies and techniques until he fully understands them. After understanding the strategies it is important for the business owner to customize them and fit them in his business situation.
Once the strategies a re implemented and maintained they help a business enterprise to attract and retain a stable group of loyal customers. Moreover, the business garners innumerable advantages such as reduction of risks accrued to market shifts and augmentation of profit margins.
How Marketing Plan Supports Strategic Objectives
Organizational Strategy And Marketing Plan
Practitioners in the marketing field are mired by innumerable tasks. Often marketers find themselves entangled with the responsibility of running and maintaining marketing programs, staff supervision and sales this may sometimes obliterate their thinking from the real picture; however marketers are advised to gain little perspective via engaging in serious strategy formulation.
The broad spectrum of business plan considers details like the products and the services being offered by the particular company, the numerous markets being served by the products, environmental factors, the production process, the company finance, research together with the other elements necessary in order for a business to succeed.
The American Marketing Association defines marketing as a planning process comprising of execution of the conceived ideas, appending the right prices to the products, promoting and distributing goods and ideas for the purposes of satisfying the organizational objectives (Fill 2005.p.23)
In essence it can be stated that the marketing plan endeavors achieve the overall organizational goals by ensuring that products are offered at the right price to the accurate potential customers. Once implemented, a marketing plan plays a crucial role in ensuring that the business attains success since it ensures business continuation and sustenance of business competitive edge in the market place.
A business plan sets a pace for the business, determining the direction in which the business will be steered. In order for the overall plan of a business to succeed it must work in harmony with the marketing strategies and tactics implemented in the business. A marketing plan works in consensus with the strategic objectives of the overall business.
Its is the marketing plan which determines the degree of business promotion (Davies 1998.p.82) According to Kotler a marketing plan designs structures and devices tactics on how the business will be advanced and propped up (2006, P.67) This element helps the marketing plan to supplement the overall goals and objectives of the business.
Fill established the fact that marketing plan is the driving force behind client base build up (2005.p.56). Marketing plan goes into the details on how the percentage of the clients will be increased and how the degree of loyalty will be augmented.
Moreover, a marketing plan comes up with the right tactics on how the business will garner more profits to enhance growth. Thus the business growth intent is further bolstered through the marketing plan. The strategy on how to capture new market opportunities is intrinsically interwoven in the marketing plan and this aids the business in growth and advancement.
Components Of A Marketing Plan.
Each business designs it’s a marketing plan depending on its size, and the stage of growth it’s going through. The process of preparing a marketing plan is acutely important as it determines the effectiveness of the plan laid down. Preparation of a marketing plan plays are major role in establishing what the business goals would be and how those goals can be attained.
As a business organizer I would design a marketing plan in the following systematic steps.
Executive Summary: This will form a preamble into the whole marketing plan and will highlight the major points of the over all plan. In nutshell, the summary brings into light the major services offered and the products of the company. Finally, the summary states the overall mission and the objectives of company (Kapferer 1997.p.45)
Current situation:
Current Situation: This section offers information concerning the business locality, the customers targeted to purchase the product together with the competitive environment. Further, this section offers information on the business viability in the locality and the encompassing threats which are likely to daunt its operations.
Competitor Analysis: This facet includes the information on the other businesses operating on the same wavelength as the business under review and the competitive advantage or disadvantage they have over the business being analyzed. In this section, the business highlights other similar businesses offering similar products as your business. Other potential challenges to the business such as government regulations could also be high lightened on this section.
Marketing Objectives And Strategy: In this section the aims of the business are written and the formula to attain them is explained. Further, the game plan on how to achieve profitability through marketing is noted. The marketing strategy explains how the stipulated objectives will be attained (Kotler 2006.p.17)
Product: This offers detailed information on the product or service offered for sale and its features and the benefits garnered by using it.
Price: This section offers detailed information on how much the customer will offer in order to get the product, payment policies are also indicated here.
Promotion: This is detailed information endorsing the product to the potential buyers bringing out the salient features which give the product an edge in the market place.
Place: This is the locality of the business in relation to the competitive environment.
Action Programs: These ere rigorously structured and planned agendas stating what the company plans to do concerning the promotion of a product, and how and when they will be put into use.
Budget: this offers the total cost that is going to be incurred in order for the marketing plan to be implemented.
Measurements: This is quantification of the numerical targets for measuring achievement of the targeted results such as sales increase by 5% in 3 months.
Supporting Documents: These are documents offered to back up the information provided in the marketing plan, such documents include research results, spreadsheets, budget sheet amongst others.
Risks Within A Marketing Plan.
In a time of finely tuned sensitivity to marketing competence a momentous effort should be made to ensure that the money pumped into the marketing plan achieves the best returns possible. Time and again, the best laid plans fail or are derailed by sudden or under-estimated forces that despoil the projected returns razing professional reputations. The negative forces which endeavor to thwart the marketing plan are termed as risks.
As Davies elaborates risks are likely events that will considerably decrease the quantity base, hoist the expenditures and affect margins of the market share in adverse ways (1998.p.59) Myriad factors raging bad weather to marketing channel interference and financial gaffs could sap the acuity of a well calculated marketing plan. Some factors which pose great threat to the success of the marketing plans include:
Competitive actions, once a product or service is launched in the market place for instance in the case of Dell Inc after launching a plasma screen monitor for the computers. Chances are very high that Hewlett Packard, and Compaq will do the same; they would try to duplicate the product and add on some extra accessories which could easily cause the Dell’s monitors to be discredited.
In order to avoid being choked up by competitors Dell has to endeavor to produce perfect products which will be hard to duplicate and which will stand out in the market place to give them edge over the competitive computer markets.
Financial Blunders, Poor budgeting could lead to paucity in the money allocated to implement the marketing plan and this could deter the performance of the whole project or cause compromise in the quality of the expected results. Poorly managed and unmitigated risks sap the credibility of a well planned marketing plan and this could disappoint the company and frustrate the efforts of the marketers as they try to steer the organization into a fruitful territory.
Operational risks are also known as the short term risks and they cover the pricing strategy and the quality of the product or service offered in the market place.
Poor pricing could stall the rate at which the product or service is consumed, it could also garner losses for the business if the returns obtained from the product or services are too low (Chisnall1997.p.54). Poor quality products give the competitors a chance to trample over the business since customer always seek to buy the best products which are offered at their convenient prices.
Strategic risks, these risks concern the business in relation to the immediate environment. They concern the producer as he relates to the longer term forces (Brassington 2006.p.98) some key risks entombed in this category include poor buyer power.
For instance if Dell Inc wants to launch a new and sophisticated power saving, fast and reliable computer machine in order to cater for the production cost incurred it will have to hike the price and this will be difficult for the buyers since they may not be acquainted with buying computers at high prices.
Evolution of consumer demand, is also another strategic risk, the market demands keep on changing due to increased technological changes in the market place hence a product might be phased out due to buyer’s disinterest or change of preference causing the business to incur massive losses.
Policy changes could be another bottleneck to the marketing plan. Some government policies implemented such as increased taxes on the production materials or regulatory measures on how the product is sold and transported could deter the rate at which a service or product is consumed.
In order for the ill effects of risks associated with marketing plan to abate marketing planners should device a contingency plan to buffer any ill effects accrued to the marketing process (Booms &Bitner 2001.p.74). Although the planners have very little to do to avoid the occurrence of the risks they are supposed to be prepared financially, and be psychologically prepared and have action plans on what should be done incase of uncertainties.
Construction Of Marketing Plan.
Executive Summary
Dell Inc is a complex IT multinational company which offers a wide assortment of computer products and services. Further it sells computer servers and other accessories used to aid in computer networking. The marketing plan endeavors to market Dell servers in Middle East where the competition has not yet taken root. The company will be working on a budget of approximately Three million dollars for a period of six months in order to break even in the virgin market
Business Overview.
Dell servers are powerful computer machines used to offer back up for other computers in a networked computer environment. Servers provide a link through which computers networked though a LAN (Local Area Network) or WAN (Wide Area Network) can communicate, share information and achieve data.
A typical server capable of supporting 50 computer work stations goes for $400. The companies which pose competition to this kind of product is the Microsoft inc and Hewlett Packard. In the Middle East the company projects to acquire a pool of over five hundred thousand users since computer usage is gaining prevalence in the region.
Target Market.
The market cluster targeted for this kind of product include the ISP’S (Internet Service Providers), colleges and learning institutions, producing companies, government institutions and the religious institutions. In the case of the ISP’S who need to offer a lot of services to the initial customers, the company will offer high specialized servers to ensure that they can hold innumerable Gigabytes of data.
Marketing Goals.
To increase computer usage in Middle East by introducing highly powerful servers this could aid in provision of internet bandwidth to the potential clients. To bolster clientele base by venturing into new markets. To offer more training programs on computer usage in Middle East in order to create a viable market for the company servers. To establish a permanent working legal relationship, with the Middle East Information regulatory department.
Marketing Strategies.
The strategies will be used to venture in Middle East with new products include, customer incentives whereby for every Dell server machine purchased customers will be given free training on how to use them and also get free programs for running the server. There will also be free laptop offer for the first hundred clients in order to increase the rate at which people will purchase the products.
Implementation Tactics.
Foremost the Dell Company will advertise on Television channels and News Papers the presence of its chiefly available products and the advantages accrued to usage of its products. Moreover, the clients will be compelled to know that it is the best offer in the market.
Budget
The whole practice which is supposed to last for three years is supposed to cost $six billion dollars. The budget is projected on the assumption that the potential customers will embrace and purchase the offered products (Blythe 2004.p.65). Further, it is assumed that the legal regulatory mechanisms will not inhibit the Dell Company from carrying out its business objectives in Middle East.
Result Evaluation.
The company will be able to realize the acquisition of its goals if there will be 10% reception of the product in the first three months. Further, if the company will be able to acquire five hundred clients inn two months it will be in a course of achieving its goals.
The Importance Of Each Marketing Plan Component
The executive summary of the marketing plan offers brief summary of all the activities which will be carried in order to make the whole plan a success. Business overview will be the second part of the plan explaining the general operations of the business and the objectives in relation to the outlined marketing plan (Baker 2000.p.43).
The targeted market curves a niche for the business to identify the needs of the people who need to purchase the product. Marketing goals and strategies will help the business to have a vision on what it aspires to achieve and how it will achieve it. The marketing tactics are the procedures which will be followed in order to realize the set goals. The budget will highlight the overall cost of the marketing plan. Result evaluation will help to gauge the credibility of the plan.
Mitigation Strategies For High Risk Components
High risk components include the budget and the targeted customers. The budget may be minimal in comparison to the needs established, the planners will have a contingency plan by budgeting for hidden costs and uncertainties. Further, the team will have a reserve of finances for miscellaneous costs like training costs and the verbal promotion costs.
Customers And Competitors
The targeted customers who are likely to buy the Dell server machine include ISP’S government institutions and learning institutions this is because they are likely to have numerous computers in their working environments which are networked. The companies which are likely to offer stiff competition include Microsoft Inc and Hewlett Packard.
Promoting Marketing Plan In Support Of Strategic Objectives
Supporting Dell’s Strategic Objectives
Dell has got a strategic objective of venturing into a new virgin market to promote its servers. The driving force behind the move is in endeavor to attain more customers and also to improve awareness of its products. Moreover, Dell will assert efforts towards improved sales and customer relations.
My marketing plan will help to create awareness of the product through Television promotions and the Daily newspapers hence increasing customers’ proclivity towards Dell’s commodities. On the other note the marketing plan will offer incentives like free training and free laptops a factor which will create customer loyalty and bolster improved sales.
Approach To Gain Agreement For The Marketing Plan
In order for my marketing plan to gain credibility to the business managers I will foremost project to them the anticipated benefits of the whole marketing program. I will convince them that the move to market products in Middle East will help the company to dominate the computer servers market before competitors creep in. I will keenly establish the significance of marketing as it will help to give the company an edge in the cutthroat competitive computer market.
Publicity And Promotion Strategy
The strategy to embrace in order to gain publicity for the product is by using mass media channels like the internet, the Television channels and the daily Newspapers this will ensure that the information will reach numerous potential clients within a short period.
Reflective Statement
This research paper has stretched my credulity helping me to develop a different perspective towards the marketing facet of the business. I have realized that in the contemporary business hurl, a business’s constancy in the market place is determined by its knack to formulate and implement strategies in order to remain at par with the demands exerted by both internal and external environments.
A business must devise a strategic plan which looks far beyond the instantaneous circumstances bringing to clarity the focal point of the business and its vision for the future. Strategic marketing considers the customer’s point of view when planning a marketing campaign. Moreover, it blends the customer’s situations, such as what they want and why they want a product or service, with the general company’s direction.
I have realized that marketing plan plays a massive role in aiding the entire businesses attain its core objectives. It offers positive solutions on how fast and effectively the business can achieve its projected project margins.
The success of any business endeavor is so depended on the marketing plan that it why it should be formulated so accurately giving a key consideration to both the external and internal parameters. The existing customers are well retained through marketing plan when loyalty schemes are established, again new customers are acquired and retained thorough the plan if it is properly formulated.
All the businesses which intent to remain afloat in the highly competitive arena must have on their fingertips all the information concerning their consumer needs and how to satisfy those needs.
Marketing veers towards the consumer needs and how to satisfy them this is the surest way of making sure that the brands produced have credibility in the market and address the urgent consumer needs. Marketing is all about devising products which intrinsically satisfy the needs of the potential market at the same time offering a challenge to the competitors.
Conclusion
Business success depends on formulation of attainable strategies and achieving the specific objectives of the strategies. In order to achieve the objectives in accordance to the stipulated timeline is important to have a marketing plan which blends with the business goals and objectives.
The plan will cultivate an ample environment through which goals will be achieved. A marketing plan must put into consideration the targeted market its needs and preferences (Hoyer 2001.p.34). The plan should bolster both loyalty and increase customer satisfaction which will draw in more customers and augment the business growth. The secret of success in business is devising a realistic marketing plan, executing it in relation to the business goals steering the business into fruitful terrains.
Reference List
Baker, M. (2000) Strategic Marketing And Management (2nd) edition. NY: Macmillan press.
Blythe, K. (2004) Essentials of Marketing (Ist Edition) 2nd edition. Chicago: Prentice Hall publishers.
Booms, C.H. and Bitner, D.J (2001) Strategies In Marketing Ventures and organizational structures for service. American Marketing Association. Vol 6
Brassington, F.G. (2006), Principles of Marketing Management. (1st) Edition. Chicago: Prentice Hall Publishers.
