Why Dell Company is Great

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Table of Contents

Abstract
Introduction
Analyzing the Phenomenon
Dell Going Green
Conclusion
References

Abstract

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

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

Introduction

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

Analyzing the Phenomenon

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

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

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

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

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

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

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

Dell Going Green

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

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

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

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

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

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

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

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

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

Conclusion

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

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

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

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

References

Baue, W. (2004). Dell First US Computer Company to Commit to a Global Recycling Goal. Social Funds. Web.

Breen, B. (2007). Living in Dell Time. Fast Company. Web.

Company Facts. (2009). Dell. Web.

Dell and Goodwill Launch Free Computer Recycling Service for Consumers in New Jersey And Philadelphia. (2007). Dell. Web.

Dell Company Description. (2009). Web.

Dell Financial Statements. (2009). Hoover. Web.

Dell Takes Strong Stance Against Exporting E-Waste. (2009). Dell. Web.

Green, H. (2008). Dell’s HQ is Now 100% Renewably Powered. Eco Geek. Web.

Heimbuch, J. (2008). Dell Takes Lead in Green Technology. Eco Geek. Web.

Holzner, S. (2006). How Dell does it. New York: McGraw-Hill.

Inventors of the Year. (2009). Dell. Web.

James, M. (2007). Dell’s Environmental Head on Their Recent Green-Up. Eco Geek. Web.

Levinson, Y. (2009). Dell Shows Its Green Stripes At Greener Gadgets. Eco Geek. Web.

Michael S. Dell. (2009). Dell. Web.

The Role of Standards. (2009). Dell. Web.

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

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

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