International Dell Company Case Study
Overview of the Case Study
The case under consideration involves the story of the creation and further development of the international company named Dell. It specializes in the manufacturing, assembling, and seeing of the computers both at domestic and foreign markets. At certain point in its, history, the company was an absolute leader in its domain; yet, over the course of the years, it lost its dominance in the market share, and it is looking nowadays for the further ways of development and expansion.
Dell Inc. was established in 1984 by Michael Dell who was only 19 years old then. At first, Dell dealt only with purchasing the computers from local retailers and amending them adding few key features (Hunger, 2010). Then, the founder invested all his personal savings, took a bank loan, hired the personnel, and started a new venture, which later evolved into multinational company named Dell Inc. Michael Dell was ranked as the entrepreneur of the year within his company in 1989 mainly due to his ability to recognize the growing trend and investing in it at the right moment of time (Hunger, 2010).
Before carrying out the analysis of the Dell Inc., it is necessary to outline the strengths and weaknesses of the company as its internal characteristics, the awareness of which will be helpful in crafting the future strategy and recommending the set of actions. Reflecting the story of companys success, it should be stressed that there are few features that are attributive to Dell and which seem to be the cornerstone of its business model. First of all, the company is innovative in regard to the business model as it is not afraid of various organizational and operational experiments. In particular, it mixed the distribution strategy ranging from direct sales to the sales through the retail stores and other channels. Moreover, the companys management team makes obvious attempts to respond to the market change quite effectively and quickly recognizing possible problems and challenges without bitter and hesitation. Such a sober understanding and awareness of the need for being flexible in the market environment is definitely a competitive advantage of the Dell Company.
Moreover, the company sells the computers that are standardized and suitable for the lower- and middle-class customers. In other words, the company offers high-quality products for reasonable price, which is quite convenient for any kind of the markets. The case study facts demonstrate that the company has had certain difficulties in promoting and selling its products in the developing countries; yet, it is supposed that this market share should be developed with more enthusiasm as it offers indeed a lot of the opportunities for the future growth (Hunger, 2010). In launching its affiliates, the company might employ the pyramid strategy too, which will consist of three layers. The first one will provide the launching of the primary business and legal processes needed for the operation of the company. The second one will refer to the softer areas and include hiring personnel, trainings, promotions, etc. Finally, the third one will aim at raising the customers awareness about the brand and launching of the promoting and advertising campaigns.
Apart from the innovative business model and high-quality products, the company has certain standards that also help it to reduce the operational costs and other expenses. One of the strategies used for that is high level of ignorance towards the innovations department within the Dell company. As it is stressed in the case study, the organization minimizes its expenses by waiting until certain innovation becomes a standard (Hunger, 2010). This approach might have its disadvantages; yet, it should be stressed that the company indeed saves money by not developing and promoting the innovation that might not be needed by the customer. In other words, it adopts the already developed and needed feature, improves it, installs in its products, and sells the final version of the computer. Perhaps, such a strategy leaves the company a little bit behind its competitors; yet, it is definitely a reliable and cost-saving method that might be appropriate and justified under the conditions of the decreased market demand for personal computers due to financial crisis.
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At the same time, there is a number of the weaknesses that put the company at risk. First of all, it still disregards the innovations at the moment and relies heavily on selling personal computers. Nevertheless, the focus is nowadays drawn to the mobile phones, which are used more frequently than the personal computers and are the main center of attention of the technology companies. Another problem is associated with the underdeveloped representation and selling methods in the developing countries. In this regard, Dell should definitely reconsider its entry strategies as these markets represent the issue of strategic interest for the company. The rapid and frequent changes in the distribution schemes might also have detrimental effects on the business since managers and employees have to adapt to these changes, and it usually requires additional time and resources that might be spent on the performance of more important job tasks. Furthermore, the company is not innovative in terms of design, and it might be perceived as disadvantage in the era of individualism. Based on that, Dell should look for the opportunities of diversifying its target audience and bringing in new clients.
The Entrepreneurial Spirit of Michael Dell
In accordance with the facts laid down in the case study, the Dell Company has been founded by teen-age Michael Dell (Hunger, 2010). Of course, he started with the most basic and primitive things; yet, he managed to grow year by year the multinational corporation selling its products and service all over the world. The personality of Michael Dell definitely is reflected in the Dell Company. Thus, it is necessary to assess the entrepreneurial character of Mr. Dell.
First of all, it should be stressed that he has definitely an innovative mind-set that is necessary to be successful in terms of technology. Mr. Dell had assembled his first product personally, and, therefore, he knew the nuances of the manufacturing, the details of the technology, etc. In other words, he was on good terms with the science and everything that accompanied the creation of the personal computers and related accessories.
On the contrary, reflecting the case study of the Dell Company and its success in 2005, it should be stressed that Dell was able to recognize the growing trend for the personal computer and make right investment of time, money, and energy into this particular stream at that time (Hunger, 2010). From the entrepreneurial point of view, Dell possessed the feeling of the controlled risk that is critical for starting any kind of venture.
The case study refers to Mr. Dell as to the heart and soul of the company, who switched to the position of the head of the board and then back to the CEO of the company (Hunger, 2010). Obviously, both of these positions have different, yet quite similar responsibilities. Anyway, such a switch demonstrates that Michael Dell is an extremely dedicated founder as well as manager who cannot stay aside from the companys affairs. Such an approach is both advantageous and disadvantageous. On the one hand, the founder is the person who is indeed interested in the ongoing growth and development of the company. Moreover, just like Steve Jobs in case of Apple Company, Michael Dell is directly associated with Dell; he is quite recognizable ad influential face of the company. On the other hand, the involvement of Michael as CEO might have certain detrimental effect on the business too as founders frequently treat their business more as the creation of themselves than as just entrepreneurial venture. In other words, while passing certain decisions they might also be driven by emotions instead of reasons. Thus, it is also necessary to determine the level of Dells passion about his creature in this case.
In overall, describing the companys past and future, it should be stressed that the entrepreneurial spirit of Michael Dell could be perceived as one of the competitive advantages of the company as he fuels it from the inside and establishes the vision of the companys growth.
The Assessment of the Dells Ever-Changing Business Model
As it has been already stressed, one of the operational advantages and strategic disadvantages of the Dell Company is its inattention to the innovations. In other words, the Company prefers to use the technologies that have already become a standard and which do not need resources for developing, testing, promoting, and selling. Such an approach is indeed beneficial in financial terms. Yet, the company is considering its future strategy at the moment and should address the issue of innovations and the overall trend to the mobile technologies and software.
Furthermore, it should be stressed that innovative approaches are used within the company and concern mainly the business model. In this regard, Dell is quite customer-oriented as it passes the decisions regarding the business model considering the preferences of the customers as well as profit considerations. Following this, it switched from direct selling to retail and vice versa. Of course, there have been few reasons for such a step. Yet, two of them at least are positive. On the one hand, the company has switched to the direct selling which provided the decreased prices for the products as no intermediaries were involved. On the other hand, it kept the managers, employees, and the business model tuned.
One should recognize that the company under consideration is not afraid of changes in the business model, positions, organizational restructuring, etc. In other words, it is extremely flexible, and such a feature should definitely be preserved by the company as it means that Dell will also apply all those elements to the products and other aspects of the business. In terms of the high level of uncertainty reigning in the modern world as well as overall globalization processes and ongoing changes, such a characteristic is a strong competitive advantage of the Dell Company. Therefore, the company is recommended to keep on changing its business model in the future, taking into consideration certain factors that might cause the need for revising certain processes. In other words, it should remain open to new proposals and challenges.
At the same time, the case study demonstrates that certain markets are more responsive to the direct selling, whereas the others prefer the use of the intermediaries (Hunger, 2010). Based on that, the Dell Company is recommended to implement one of the proposed options. On the one hand, it might carry out a survey to determine the preferences of the customers and install the needed kind of the distribution. It is already suggested that the customers in the developing countries prefer the retail distribution as they need the recommendations and considerations from the tech specialists operating in the stores and providing the information in terms of the product options. On the other hand, the company might implement the decentralized decision making processes enabling its local affiliates to pass on certain decisions on their own. As a result, it will help to develop the local markets and be more responsive to the needs of the local customers.
Considerations regarding Dells Extrapolations into the Future
Generally, assessing the Dells state of affairs, it should be stressed that it is rather hard to judge the future in general due to the trends that are dominating within the industry and overall changes occurring on the ongoing basis. Yet, it is presumed that the company should definitely prevent itself from crafting the strategy based on past experiences, insights, and considerations. Dell has to seek for new market opportunities and find the niches that are still underdeveloped for certain reasons. Perhaps, the personality of Michael Dell who once recognized the growing trend would be the most contributing factor to this process.
Yet, outlining the strategy for the future, the companys management should bear in mind the following factors. First of all, it has to consider the preferences of the target audience and to understand that it actually differs a lot and depends on the set of the characteristics that are attributed to the culture, age, gender, and other human characteristics. In other words, the Dell Company has to establish strong customer-oriented approach towards business operations.
Secondly, it should not extrapolate the competitors while looking into the future as it is the most dangerous option that will always leave the company behind its rivals. It might consider the success stories of other brands as well as their failures; yet, the strategy for the future development should be crafted out of the internal characteristics of the company and its capabilities. The failure of the company managers and marketers to consider the culture issues might result in wrong investment decisions, decreased sales rates, or complete ignorance to the advertised product. Moreover, the weak research on cultural matters might also be reflected in the inability of the company to handle the cultural issues with the locals employed by the company. Finally, it might shutter the positions of the organization on the international arena and harm the organizational brand.
The prediction of the future needs and preferences of the customers might also be quite tricky for such a multinational corporation since the latter depends nowadays on the development of the technologies and whatever the market can offer. Therefore, the present-day preferences might be irrelevant. In such a case, the Dell Company should focus on the problem solving as its key strategy of services development since it is both customers-oriented and the one enabling the company to stay tuned.
Generally, the most crucial factor that should not be extrapolated from the future refers to the current disregard of the innovations that is inherent for the company. The business model and operations should remain the only area that will be innovated and changed by the company. Even in case of the creation of the most effective strategy and corresponding business model, the effective and non-relevant product will not raise the demand and will eventually lead to financial complications within the company. Therefore, Dell should address current problems that relate to the product development instead of restructuring the business model. The latter is relevant for the profits which, however, depend more on the quality of the products than on the organizational structure. In this process, the company might focus on current problems that are experienced by the customers and attempt to resolve them by offering improved and renovated products and services.
Evaluation and Perspectives of the Dells Future Strategy
The current strategy of the company reflected in the case study is appropriate and totally acceptable. Yet, the question is whether the company should focus on the decreasing of the overall prices or on the development of the services, or both (just as its competitors). The probable answer is that the Dell Company should elaborate on the strategy that will let it focus on both directions due to the following reasons.
First of all, as it has been already stressed, the Dell Company manufactures high-quality personal computers the prices for which are reduced due to a number of factors and manipulations with the suppliers. Following this, the company should focus on its strategy providing for the overall decrease in pricing. Such a strategy is also appropriate in the view of the popularity of the mobile phones and other platforms different from personal computers. In such a way, the company would be able to decrease the prices and spur the demand in the industry presenting the price as one of its competitive advantages.
Moreover, it should be stressed that the first statement in Dells strategy provides for the education of the population in terms of the online-related technologies. It is a brilliant vector for the development of the market and customer base in the developing countries, where the company currently experiences certain difficulties with the customers and with realization of its production. The Dell Company might introduce the courses on computer literacy in the developing countries aiming at drawing attention of the seniors and older customers who are not on good terms with the computer and technology on the whole. Moreover, such a strategy coincides with the Dells view of its products that are not especially designed and promoted compared with the Apple Company and HP, both of which aim at the younger customers. As a result, it will help the company both to promote its products and to increase the target audience for its future product. Next, it has been mentioned that the computers offered by the Dell Company are standardized and, as a result, easy in use, which is a contributing factor to adopting the strategy of luring older customers. Therefore, by enhancing the computer literacy of the customers in the developing countries, the company will be able to advertise its brand, products, services and create a really strong potential for growth.
On the contrary, the company should also focus on the development of its service portfolio since the manufacturing is not a trend in the technology industry. In other words, Dell should try to move from the made by to designed by strategy. Such an approach is also important for the development of the markets in the already developed countries being interested in the customized products and services. Moreover, the Dell Company should also design the way in which it will sell its original products including the manufacturing rests, the knowledge, experiences, services, etc.
Overall, assessing the future strategy of the Dells Company, one might recommend the diversification of the portfolio of the services and products offered by the company and the market segmentation. The first one refers to the offers of the company, and the second one deals with the understanding of the needs of the particular audience, which is critical for the financial health of the company. These two processes are interconnected and might also result in the change of the business model and decentralization of the decision-making processes and global restructuring of the business.