Discussion Question #1 Answer
For many years, Dell Corporation has been exerting its efforts to sustain its competitiveness in the electronic industry. The company has also been using its effective strategies that makes it one of the major computer companies on a global basis. There were various techniques that company employed in order to sustain its reputation in the market as the most preferred computer brand on a global basis. The process, to which the company has taken in order to reach the top rank and became a leader in computer business was driven by different factors especially the company’s desire to provide the best possible customer experience (Dell Case Study, n.d.). There are two factors, to which Dell Corporation’s strategies are based on. One is the customer service experience and the other one is the company’s desire to sustain its good reputation.
Like the other companies, providing the best customer service is one of the keys to their success, thus it remains as part of their business strategy. As for the case of Dell Corporation, market leadership has become the outcome of the management’s constant focus on providing exceptional customer service to their consumers. This became possible through the application of one unique strategies that other computer companies did not think would work. According to the case, the key component of Dell’s strategy was their decision to implement direct selling. This is the enabling of selling computers from manufacturing directly to the company’s end-customers. This approach enabled the company to reduce the delivery time to the customers, as it no longer needs to go through retailers. Thus, this approach has reduced the price of computers due to the absence of retailers’ markup. On the other hand, the retailers who offer Dell computers to the customers ensured that their locations are accessible, and more importantly, the ability to test such products prior to the actual purchase. Dell also ensured that their retailers have enough knowledge to provide accurate information on the customers’ questions about product specifics. The totality of these approaches leveraged the customers’ satisfaction.
Furthermore, Dell Corporation was able to sustain its reputation as the world’s most preferred computer brand. It also retained its status as a major provider of computer services and products that most of the worldwide consumers need in order to build their own internet and IT infrastructure.
In relation to the company’s basis in building its competitive advantage, Dell was able to redesign the value chain of computer industry using different advantages. These include, cost advantage, consumer knowledge advantage, and their technology advantage. The cost advantage that the company holds include their inventory cost, component purchase cost, and administrative and selling cost. There was a great impact when the company started to reduce its computer prices. In fact, Dell Corporation had a better cost advantage compared to its major competitors, such as IBM and HP (Darlin 2006). This advantage also lead the company to the development of another competitive advantage, which is the consumer knowledge.
According to the case study, Dell Corporation understands what their consumers need and applied its strategies to address such needs by applying the direct purchase approach. This business model eliminated the retailers that added time and cost. Thus, shipping its products from the factory to its end customers makes it more convenient for the customers themselves. The company was taking product orders either through the internet or over the phone. This model was accomplished by developing better supply chain, which links computer suppliers close to Dell’s factories.
Knowing what the customers need is one of the most important knowledge that a company must understand. This will enable them to know what strategies need to employ and how they will be implemented. Although there are many businesses are aware about this problem, they are unable to address some of the customer needs that are essential for the business success. On the other hand, Dell Corporation did what it had to do in relation to this issue. The company primarily analyzed what the customers’ core problems are, then create appropriate solutions for them (Enderle, 2013). Additionally, these analytical ability of the company proves the need in understanding and focusing on the core problems. As a result, there were happier and more loyal customers.
Furthermore, Dell Corporation has a technological advantage that added to its competitiveness. Due to its application of direct sales, the company gave way to their machine’s customizability (Tough Nickel, 2015). Moreover, the company custom-built the computer right after receiving the customer’s order, which is different from building the machines based on the anticipation of the orders. Dell Corporation also introduced a technology faster than its competitors that have slower inventory process. This turned Dell into a top-ranking personal computer retailer on a global basis, which outsell Hewlett-Packard as well as IBM Corporation.
Discussion Question #2 Answer
Dell Corporation’s control system helped the company to execute their strategies. There are factors that enabled the company, especially when it comes to decision-making process in relation to strategy execution. These factors include the company’s performance measures, the system being used for decision making, its performance of the business unit, and the speed up process in assembling their machines.
In relation to the performance measures, the company’s score card includes both financial and non-financial measures. On the financial aspect, the measures include return of investment capital or ROIC, administration and selling cost, and component purchasing cost (Dell Case Study, n.d.). As for the non-financial aspects, the case study shows measures that include inventory of finished goods, stock out inventories, A/P days, and A/R days.
When it comes to the company’s localized system for decision-making, it uses a structure as a flat organization that needs no higher up’s assistance. These apply for the issues that are less delicate, which will be decided upon without making a consultation to the top management. This has become possible through utilization of efficient communication channels as well as the accessibility of the people to the management. This approach also enabled an open sharing of information that even the junior employees’ idea is being considered as it can be a beneficial strategy for the whole organization. Therefore, dampening effects of bureaucracy is not happening within the organizational structure.
The business unit performance also helped the company in executing its strategies through the development of metrics to measure the performance of the business unit. Therefore, this will identify the opportunities and the units that need to improve in prior to the execution of the current business strategy. Lastly, the company’s control system in expediting the process of assembling the machines and other products have been recognized earlier. This will speed up the process, which will generally accelerate every pace in the business. This is also in relation to the Dell Corporation’s aim to provide a faster delivery of the machines to their customers through direct selling as one of the paces of the overall business process.
References
Darlin, D. (2006). Dell's World Isn't What It Used to Be - The New York Times. Retrieved from http://www.nytimes.com/2006/05/13/technology/13computer.html?_r=0
Dell Case Study. (n.d.). Measuring and Controlling Assets Employed.
Enderle, R. (2013). Why Dell Has a Subtle, Secret Strategic Advantage | CIO. Retrieved from http://www.cio.com/article/2385373/customer-relationship-management/why-dell-has-a-subtle--secret-strategic-advantage.html
Tough Nickel. (2015). Dell's Competitive Advantage & Strategy | ToughNickel. Retrieved from https://toughnickel.com/industries/Dell-Competitive-Advantage
