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The vision "Dell is a smarter way to buy a computer", provides the innovative notation to the curious buyers. Introducing the new concept of confirming a PC purchase via phone or Internet has triggered the consumers' interest in finding more about the capabilities of the company. Dell has eliminated the traditional way of purchasing a computer via a reseller, it allows its consumers to directly purchase them via their website or call in to their customer service centre. With this strategy, customers are able to purchase computers at the lowest price due to the elimination of the middleman.
Apart from the manufacturing of personal computers, Dell has also gone into partnership with various reputable companies to produce monitors, printers and other peripherals. Dell has increased its emphasis in the production of servers and storage devices as the demand for servers are increasing by corporate customers.
Dell Business Strategy
Dell's proactive approach has helped the company to lay future traits which it would be going. Dell's strategies were determined with the focus on their core components identified by Michael namely as build-to-order manufacture, partnership with suppliers, Just-In-Time (JIT) Components Inventory, direct sales to customers with their award-winning customer and technical support team and the use of the Internet and E-commerce technology.
There are various factors which Dell needs to evaluate to determine what need to be improved with. The recent price strategy Dell announced on the price cutting of all computers up to %, with confidence that its competitors are unable to slash prices to compete, especially a day after Hewlett Packard announcement on its business loss.
Dell partnership with suppliers has been closely collaborated to meet its customer's requirement. They picked the name brand for its computer components to entrance its PCs' performance and quality. It committed to purchase a specified percentage of its requirement from the chosen suppliers and thus assured Dell a timely basis of supplies. It also invited its suppliers' engineers to join in its early stage of planning and design. This will transfer the knowledge of these engineers to Dell's own workforce and helps in troubleshooting the customers' problems in the early stage of promoting new products. With its commitment, Dell able to roll out Just-In-Time (JIT) delivery plan on its requirement of suppliers products with shared information and sales statistics. The best strategic alliance is not always apparent. That is why time is needed to explore the operational fits, as well as the relative present and future competitive position (Robert, 1)
At Dell, they outsource all the core R&D and component production facilities. Dell concentrates on its own resources on developing a deep understanding of the customer and their requirements, maintaining intimate trading relationship with its customers and partners. Suppliers provide the largest part of the investment and expertise needed to support the broad array of customer requirements. To create a seamless product and service mix for their wide array of customers, Dell has needed to integrate its processes with those of its suppliers.
Because Dell has sell direct, it gains significant cost advantages over its competitors who sells through resellers and stores. This arrangement would provide direct communications with its customers trough self-helps in Internet, telephone representative assistance and for larger clients, Dell has provided with more sophisticated and personalized sales personnel. With their web-based initiative, customers could check the status of their order online, saving $8 million from Dell's administrative costs annually. Moreover, when customers are able to check the status of their orders or packages, they are less likely to get irate leading to increases in overall customer satisfaction.
Competition Ground
Dell's promise to deliver PC in a time frame of ½ days, has always been the attracting factor. Minimising the waiting time of the customer has built up the trust and loyalty towards the company. Many corporate customers which used to purchase PCs from Compaq and IBM, have redirected their focus on Dell due to their short lead time. However, HP have came out with delivery commitment of within 1-4 hours from time of orders. HP, the leader in printing solutions, have merged with Compaq in September 001. With the new formation, the Company would have a combination of enhanced IT products ranging from PCs, servers to digital photography and digital media entertainment solutions. In other areas, HP has been slow to develop its own Web services softwares, which lose out to Dell.
IBM, the leader in mainframe, offers high quality technical support but at a high cost. IBM is offering its on-demand computing strategy to create an IT infrastructure that is simplified and flexible to counter Dell's e-commerce strategy and HP's Adaptive Enterprise Initiative. IBM name-brand has been known for mainframes and proves as hindrance to their penetration on desktop PCs. However, its huge technical team is desirable by many customers to resolve any complexity in network solutions over Dell's. This has created mudroads for the latter in attempts to conquer the markets in workstation and servers.
In 00, Gateway's CEO, Mr. Ted Waitt, have announced that they will stock up 10 PCs per store in its 58 stores by end of March 00 in addition to build-to-orders PCs. The move is encouraging, as there is market demand for off-the-shelves PCs and statistical figures showed significant improvement in such sales. Dell has counter attack with ready-made PCs with popular configuration including pre-installed software. They have further enhanced their presence in the IT industry by teaming up with IBM, in August 00, to tap on their professional technical support while IBM taps on their market knowledge in custom-made PCs manufacture.
Future Challenges of Dell
As the company grows, Dell continuously learns to manage millions of internet exchanges daily, from product orders to e-mail correspondence to information detailing the manufacturing of Dell products and the delivery of complex services. Dell's distribution facilities demand nonstop availability, instant access to data to ensure on-time customers deliveries and bulletproof disaster recovery capabilities. While you can't bottle lightning, you can build lightning rods (Gary, 000).
In the nd quarter of this fiscal year, Dell has managed to achieve nearly 18 percent of the global market share and 7 percent of US market. With such improvement, you could see the contribution arrive its team members. Michael Dell has encouraging recruitment of only capable personnel with the same vision takers. He provide room for self-thinking and empower his employees to create room for innovation ideas and opportunity for further business growth. Dell would need to expand it resources development and captures on those lagging market. The lack of technical support personnel must be reinforced to meet the global market requirement while paving out more sophisticated business products and solutions. A company must learn from both successful and unsuccessful experiences and develop a core competency which then give it a competitive edge (Robert, 1).
Conclusion
Michael Dell has adopted several attractive business philosophies for his computer business that spread over his management strategies. His believe that recruitment must be done having future challenges in mind, meaning hiring ahead of business curve. He even segmenting the roles and responsibilities of CEO between himself, Mort Topfer and Kevin Rollins to promote a wider spanning in management responsibilities. Michael has engendering a sense of personal investment in each employee through responsibilities, accountability and shared success and discounted on rigid business levels that hinder on communication and innovative ideas. It is not enough to have an ideology; you have to be able to pass it on, to infect others with your ideas in order to succeed (Gary, 000).
His management believes that by focusing employees with a single goal and targeting customers as one will help to add value "within and beyond the box" and also developing products from customers' viewpoint. The strong alliances with the suppliers provide higher efficiency that aligns to its success. The mission of efficiency, innovation and lower prices backed the strategy to capture better market share but using current ‘live' information and calculation.
Thompson, A.A. & Stricken, A.J. (001), Strategic Management Concepts and Cases, 1th edn., Mcgraw-Hill/Irvin, Boston
Gary Hamel (000), Leading the Revolution, Harvard Business Press, USA
Robert J.Mockler (1), Multinational Strategic Alliances, John Wiley & Sons Inc., USA
http//www.dell.com
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