Business Analysis and Strategies of Dell
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Published: Wed, 07 Feb 2018
The significance of information technology has in recent times arriving a great deal of growing concentration crossways the industry worldwide. Strategies for continuous development means that in many areas in the industry has been expanding with major companies, such as Michael Dell, Microsoft and HP and Acer, to become the main support for the IT industry,
The relationship between business and IS strategy of critical importance, gives a sense of direction, and provide support to the organization by as long as options that be able to followed.
The close relationship between business strategy and IS important because the ability IS to help achieve the objectives of the company by helping to reduce the problems that might be encountered in executing its plans, which means that the company is able to develop the right plans in the process in a timely manner. This report will be the focus of the leading information technology company Michael Dell (DELL).
The company Michael Dell, commonly known as the Dell, and started work 25 years ago at the University of Texas at Austin, United States. It now has a presence in all parts of the world and is one of the leading companies in the world dealing through information technology. DELL adapt its work to a new area in IS / IT infrastructure and developed a solid reputation and strong identity.
At the outset of this report will give an analysis of the company’s activities and business strategies to help to assess the results of its operations through the use of internal analysis (SWOT), assessment of the value-added chain and other factors critical to success. This will enable recommendations to be made in order to support and improve Dell’s business success.
It is useful to give information on the background of Dell, its vision and mission, as well as the organization’s structure and culture in order to give a comprehensive Image of the company and that is the way of progress.
Dell was founded in 1984 by Michael dell who studied at the university of Texas at Austen, Michael dell founded the company in the name PC limited with a capital $1000, the first company’s selling computers compatible with IBM .
Michael dell started to belief that trade regulations when selling personal computers directly to users, the company will achieve greater understanding of the requirements of customers and provide them with more efficient computer products to meet those requirements. during this time Michael dell to leave the study in university to his new job, especially after winning the expansion of capital value of $300.000 from his family (DELL 2009).
In 1985 the company produced the first computers of its own design, dubbed “Turbo PC”, which sold at $ 795 million. The design contains a processor compatible with Intel 8088 running at 8 MHz’s
The company has to announce this product in the national computer magazines for sale directly to customers, The compilation of each computer specifically by the customer options, Giving buyers prices lower than those of commercial companies, but with greater efficiency of an assembly of those components themselves. Although Of the fact that a company â€œPC’s limitedâ€? is not the first company to adopt the method of this work, but it has become one of the first companies that have succeeded in this manner. Dell Company collected more than U.S. $ 73 million total dividend during its first year.
Dell revenue totalled $61.133 billion for the fiscal year ended February 2008, having previously been $7.420 billion during the fiscal year ended February 2007, an rise of 6.5% on 2007 during the fiscal year 2008 the company had profit $3.440 million, an rise 12.1% on 2007, with the net profit of $2.947 million in 2008, an rise of 14.1% on 2007.
Michael dell company (DELL) provides technologies and services, aboard range offering of product, including desktop PC, storage, networking products and servers, mobility products, software and peripherals .the Company mainly based in the USA and about 2008 it was employing 82.700 people (DELL 2009).
DELL vision statement
Dell vision is quite focused about what customer needs to be somewhat homogenous throughout the world. Have been used management to translate the vision into a successful enterprise innovative and sustainable. Dell provides quality products and latest technology to cater the needs of the customers and suppliers and to build best relationship with them (DELL 2009).
DELL mission statement
Mission of Dell known as â€œTHE SOUL OF DELLâ€? for the good value and obligation as well as, Direct Relationships, Customers improve loyal by great value, The Dell Team with teamwork and the opportunity anyone need to learn and develop and the Global Citizenship sharing responsibly into global marketplace.
Dell’s mission is to meet the expectations of its customers and how to dealing business with them by phone and internet one on one for:
- The highest class of quality.
- A pioneer in the field of technology.
- Competitive pricing.
- Accountability of individuals and companies.
- The best in level service and supporting.
- The ability of flexible customization (DELL 2009).
DELL organisational structure
The structure of Dell’s organization on the basis of on the number of divisions, from the factory to High Command is very slight hierarchy to slow down a decision making process.
The important points arise from organization
- Structure of the organization be relatively permanent and is designed to facilitate the achievement of something, This means that sometimes changes, what can be achieved change, or changes in the structure has come for senior management to change its views on the mainly agreeable structure to achieve specific results.
- The formal structure of the organization, which select to organization, and senior management, by inference, and this is to consider the question of choice.
- Structure of the division organization of component part to determine what these roles will play in achieving the goals and specific results for the whole organization.
- The structure of organization also provides for monitor and coordination of all parts to realization these goals (Derek Rollinson 2002).
Employees are encouraged to pursue the most successful ways to complete their jobs and are permitted to implement these new efficiencies without prior approval by upper management. This open-communication has made junior employees realize their ideas are welcome and respected. Once proven to be successful, it is not unusual for these notions to be implemented in all part of organization.
According a business Magazine published online in 2001 Michael Dell has been awarded CEO (Chiefexecutive 2009).
Dell’s organizational structure is an essential part of the company’s success. Small hierarchy exists inside the company. From the industrial unit to the management office, communication is emphasized and all staff is empowered to make decisions to get better job and big business performance. Top management support is not required for the completion of new ideas. Dell’s business flat structure is probable to enable the company to stay at the top of industry.
Worker empowerment facilitates development innovation one of the most important spirited characteristics of growing industries. Likewise, Dell’s fast, reliable and receptive business replica enables it to execute its direct sales model more effectively than any other company in the industry. As well as Dell expands interested in rising markets, however, the corporation will have to adapt its organizational structure to increasing global environments. Dell will need to keep focus on its place in the manufacturing goods differentiator, bringing superior value to clients.
DELL organisational culture
organizational culture espoused by individuals in organizations have a strong influence and direct their behaviours and performance of their activities and their supervisors and their subordinates, colleagues and dealers with them, and reflect these values and beliefs, the degree of coherence and integration among the members of the organization as an internal control system when the bells ring out behaviours limits drawn to the human eye, therefore, these values reflect the organization’s ability to create core values can move around all the efforts at all levels of the organization.
Component values between several different of culture definition , which represents a common denominator and that these values refer to the attitudes, beliefs and ideas in a particular organization and reach these values to the individuals are obliged by social relations and continuous interaction among them, management will contribute greatly to instil the values espoused by the members when the organization adopts certain values such as to obey the laws and regulations and attention customers and improve efficiency, the organization expects of its members to adopt these values and reflect on their behaviour.
Values and organizational culture play an important role in maintaining the identity of the organization and support its presence and influence in the activities of their employees, so managers are keen to develop and adopt organizational values to achieve the objectives of the organizations.
However Cultural change is neither easy nor assured .It can take a long time and it takes effort and vigilance. (Philip E. Atkinson 1997)
Dell maintained its culture through honesty and open communication. “Tell Dell” surveys into encourage rank and file employees anonymous evaluation of managers and senior leaders. The company believes that this kind of honesty help to bring change and accountability. Previous assessments have brought improvements in work-life balance, and common goals, classifications and job satisfaction.
Dell, the winner of culture and diversity initiatives to create a comprehensive environment for companies on the basis of merit and personal competence and the achievement of equal access to all available opportunities, leading to employee satisfaction with the choice of employees to stay with Dell because of the significant benefits offered by the company, and the company aims to enable workers to maximize its contribution to the company while also maintaining effectiveness between their work and personal lives, as well as sponsors in the community of networks formed by groups of staff that help promote a more inclusive work environment, and improve communication between employees and enhance understanding by all staff about the value of diversity.
Dale is described as a culture of meritocracy, which rewards those employees who are working hard to achieve organizational goals. Dell is also promoting a culture of learning within the organization, where each employee is expected to be committed to the promotion of consciousness of the company and work to achieve those objectives, and be on the other hand, Dell is committed to staff development, and help employees achieve personal and professional through the professional management (DELL 2009).
Focus on internal efforts in Dell on cultivating and promoting best practices among those working in the areas of policy development, training and employment, direction and development and advancement and culture change, Dell strives to develop and participate fully, and retain talent on a high performance and flexibility in the invitation, in the workplace to enable staff and managers to hold discussions on the needs of every business and every employee in the individual work / life effectiveness of objectives, and then to build an implementation plan for each priority. Council and management of Dell are expected to bring integrity to the management and operation of the company and each and every one of the managers and senior management should be an example where trust, integrity, respect and responsibility of Management.
Business and IS/IT strategies
IS strategy is the long-term orientation, business-led and demand orientated .At the same time, IS strategy concerned either to support current strategy of business or develop a new strategy for IT choices, the responsibility of IS strategy fall within the range of senior management.
IT strategy is described as the basis of the activity. Supply which focuses on technology and demand. It is also for the delivery of IT a practical solution to business problems. IT strategy is not only for the vision that senior managers adopt on IS planning long-term, but instead from the practical application of IT for business.
The effective information management strategic can make in enable the institutions to work more competitive and flexible in the global environment and current developments in IS/IT impacting organizations to change the basics elements for prosperity strategic change management.
On the other hand the introduction of IS / IT of manufacturing into the business sector, has led to significant improvement, for example in the automotive industry, where most of its processes controlled by the machines, and have the IT / IS computer operating system.
IS/IT plays an important and very useful element in the growth of products at various stages, during all the product stages, with manufacturing industries by using computer-aided design to develop the design of product. (Currie.W 1995)
You can also use the IT/IS to support the activities of value chain in order to gain a competitive benefit. Making it easier for suppliers to be close the system, improve services, cost savings and accelerate the delivery time while Value added by IT/IS for value chain makes the operations activities faster a result a rapid response to customer requirements and demands. It can also using the added value for the improvement and achieved about the sales activity to provide the competitiveness of the company with its competitors.
Dell’s devised operating framework to guide them the strategic decisions making and manage, dependent for the elements below targeted growth, operational efficiency and capital strategy.
The company has concentrated on the analysis of the growth opportunities in the future, to consider the customer segments, geography and business groups, but in order to obtain these opportunities, they continue to produce developments to become to the market effectively.
Dell believes that if it builds an excellent technology with direct sell, then clients will want to buy this technology, except it must be effective in selling their technologies as it is an image in the first place. So far, it had conducted a long-term analysis of its sales strength; Making sure that they have a sufficient number of appropriate skills and experience with account managers, and the correct management of the accounts in the correct places, and in its target with the opportunities available for development. In this method, this aims to get better results of sales, while declining costs in the sale off. In order to make the service provided to their clients and clear and accountable, Dell has made several new programs; therefore the development of new incentive schemes in the process to achieve greater growth and profits for both Dell and its partners.
The company will be the potential for growth can be achieved only by gaining customer loyalty and customer respect the outcome of positive experiences. There must be better coordination of sales and marketing with targeted investment if the company is to increase growth and achieve an improved return on investment in those regions where it is seeking to create more demand, it also a need to interact with customers in those regions where the clients spend a lot of time on the website.
Side by side with their search of growth, the company has purposed to get better efficiency and raise the speed and effectiveness in the field of marketing. To this conclusion the structure of company’s dell rationalized and managerial matrices have been decreased and nearly three layers of top management have been disconnected, therefore the integration of its global processes with business groups to achieve greater accountability, competence and speed. The completion of the restructuring of large and led to a reduction in costs and benefits in terms of the full cost of this will be seen through the fiscal year.
The company dell has made significant growth in reducing the total costs that are given the opportunity to invest further capital in the growth and even add to market share.
Dell has required to achieve four key benefits of its business, firstly to lower costs, plus increase its capacity at the same time, to manage their business and meet the needs of its customers extra efficiently through access to improved information, it will also seek to improve control over the infrastructure for decrease business risk finally, In order to achieve all of this using Dell technology. Dell will be a wide publicity advertisement to its customers all over the world this way with its own IT.
Dell is composed of people who have committed to work well in every day and, therefore, in order to achieve progress, the company invests heavily in developing the skills of its staff. To enable staff to develop performance and competencies with the development of their innovation by giving them this authority, the company also provides comprehensive programs to give opportunities to employees to improve and develop their performance, and in this line ensures the company to increase its competitive advantage, the company’s success derives from the success of its managers and employees.
The Strategic IS/IT of DELL
There are a number of processes are available, each one provides a different framework to a development IT/IS strategic plan. Various analyse such as Porter five forces, the internal analysis (SWOT) and the value chain required to achieve this goal.
Plus a number of tools obtainable through the organizations where they can find help to identify ways in which a company can obtain a strategic advantage, while improving the strategy IS/IT. Tools that are explained in the following part has proved to themselves to demonstrate the importance of the role that can be played by information technology in order to obtain certain goals, and business to find areas where IT applications can benefit from them.
Conducting Internal Analysis
Could be considered internal factors in the IS unit and of the element played by the users managers of IT in the whole process to be implemented, as well as an analysis of Foreign Affairs. And can be used the following tools for this process.
This is the way that can be used to appraise the strengths and weaknesses, plus opportunities and threats that the organization may contain to agreement with it. Opportunities can be distinct as the range to create new sources or systems that will feature the company’s long-term, while the threats can be considered as areas of performance to the changes to be carried out or counter where there is need for introduced (Robson 1997).
DELL SWOT analysis
Strong market position
Despite the drop in market share to Hewlett-Packard recently, and Dell is still a strong player in the PC hardware segment. In the computer component and equipment manufacturing in the United States, Dell Company was in second ranked with a market share at 18% in 2007 after HP Company 20%. Dell was followed by rivals while the competitors for dell such as IBM, for 11.1% a market share, and Sun Microsystems company on 5% at a market share (Datamonitor 2008).
In the computer hardware, software and equipment wholesalers industry in the US, Dell was in first position at 6.5% market share in 2007, followed for Ingram Micro 3.7% and IBM 2.8%. According to the annual ranking Inter brand’s by 2007, Dell brand was in 31st position among the top 100 brands in 2007 at the world; its brand was valued at $11,554 million (Datamonitor 2008).
Dell is also one of the world’s leading companies in the servers segment. The company Dell is a strong market place because its partnership with EMC in the storage sector, Based in the United States information technology infrastructure and solutions company. Dell company is strong market place in the computer component sector will has a strong brand image (DELL Annual Report, 2008).
Strong performance in Asia Pacific
The Company’s over the last three years in Asia Pacific, revenue growth in all product categories through fiscal 2006 and 2007 with strong performance. The revenue at this part rose from $5,465 million to $7,358 million between fiscal 2005 until 2007, a raise at 34.6% and CAGR at 16%. During fiscal 2007 the part in China was led by 26% revenue growth and in Japan by 13% during fiscal 2006. Higher rate revenue growth at the overall region by Malaysia, Singapore, South Korea and India In fiscal 2007.
Dell Established in Bangalore, India to development centre and new global research in May 2007 to software products, data-storage systems and develop the new generation by network servers.
Plus Dell Company focused in China market because Dell’s is the third biggest competitor after Lenovo. Furthermore, dell established a design centre in Shanghai, china which played this segment primary key in the start on a low cost price PC Also launched a corporate blog to connect with customers, powerful performance in quick growing markets will be help the dell company to increase revenue growth (Datamonitor 2008).
Wide product portfolio
The company has a wide range of product, including notebooks, desktops, servers, networking, printers, storage products, ink and toner, accessories, software and televisions. Dell has to perform partnerships with EMC to Promotion Vulnerable areas in storage market. It has powerful manufacturing abilities in the many regions.
A wide portfolio by products has aided the dell company to provide offerings to customers, which adds constancy to its revenues. the US Army on March 2007,chose Dell company provide hardware ,servers, networking and storage in addition integration services and installation for its enterprise solutions ,hardware and information technology . Dell is one of six honourees of the Prime Minister for the contract, which is a three-year accord with two one-year extensions and buy a ceiling value of $ 5 billion. Also Dell was selected under the Army’s desktop mobile computing contract to provide printers, displays, desktop, peripherals and laptops for three years (Datamonitor 2008).
Weak internal controls
In August 2005 The United State started an investigation into financial reporting and accounting matters with Dell by Securities Exchange Commission (SEC). As well as in August 2006, begin an investigation in the financial reporting and accounting issues in the company directed its Auditing accounting Committee.
In addition, the Attorney in United States for the Southern District on New York to subpoenaed all documentation relating for the dell company’s financial reports from 2002 until the present time.
Afterward, Released the company announcement of the existence of accounting errors, find evidence of misconduct and deficiency in the fiscal control environment and through Audit Committee’s investigation. The company is currently evaluating whether these problems require any restatements the previous financial period.
As a result, in October 2007, Dell presented its past via periodically reports by Securities Exchange Commission (SEC). Those reports include financial information for fiscal from 2003 until the first quarter of 2007. Accounting mistakes, proof of misconduct, and to fail control in the financial environment, reflecting to weaken internal controls and the reduction of investor confidence in the company’s management (Datamonitor 2008).
According to dell company data “it is possible for these batteries to overheat, which could pose a risk of fire. The company was forced to withdraw several products due to quality issues in the recent period. The company announced on August 2006 to withdraw 4.1 million for laptop batteries because to fire risk. These batteries made Dell-branded based with Sony cells. the company offered in December 2005 substitution batteries by some models such as Dell Precision, Dell Latitude and notebook computers by Dell Inspiron because quality issues. In addition, 2004 the company recalled several further products in previous years because problems in the quality, containing printers, AC adapters and Auto-Air power adapters also batteries between 2000 and 2001. In the past few years several product which reflects weak quality function on company Dell (Datamonitor 2008).
Testing and Quality operations processes are too applied tospare parts, componentsand subassemblies obtainedby third party suppliers. Dell recently forced to withdraw products because of quality issues, and this means that Dell may not be fully capable of achieving success in achievingat own ambition quality. Product recalls weaken the confidence of customers for products, and increase the advantage of competitors to Dell.
In 2007, Dell companies have gained many new companies, projects and alsolong-term plans to further acquisitions in the future. Dell made a deal for the private sector Silverback Technologies in July 2007, to provide services through the provision of a platform for the management of infrastructure forIT and remote monitoring devices such as notebook computers, desktop servers, networks and storage. The following month, made ZING systems an agreement with Dell.This agreement allows Dell to use the capacities ZING continue to improve entertainment experience that offers its customers (Datamonitor 2008).
performance and optimal solutions in default ISCSI Storage Area Network (SAN), and this would strengthen the Dell product and channel leadership in simplifying andIT solutions for clients at the global level, ISCSI SAN knowledge and technology the fastest growing part of the business volume. As well as at the same time, Dell completed a deal with the Express Company for the services of licensing, as soon as possible, software and software solutions and asset management.
In December 2007, Dell has signed an agreement to acquire the privately held with Everdream, a large provider in the field of software-as-a Service (SaaS) that is solutions and managed services from a distance and acquisitions Everdream are a key element in the strategy of Dell simplifies IT (Datamonitor 2008).
Expanding PC market
In 2006, total revenues to 163.8 billion U.S. dollars in world markets through the computer, and compound annual growth rate (CAGR), representing some 7.3% in the period 2002-2006. In comparison, the market grew at an annual growth rate to reach 9% and 5.1% in Europe, Asia and the Pacific, reaching the value of each to $ 62 billion and $ 41.1 billion between 2002 and 2006 and also, increase the size of a CAGR of 10.8% in the period from 2002 to 2006 the consumption of the market, in 2006, achieving a total of 184 million units. It is expected to grow to market size of 260.8 million units in the year-end 2011 and annual growth rate of 7.2% in the period between 2006till 2011 (Datamonitor 2008).
In 2006, the total revenues of 123.1 billion dollars, equivalent to 66.9% of its value in the public markets for sales of the desktop, although the sales of laptop computers of the total income of $ 60.9 billion, representing a 33.1% of market revenue share.
At the same time, it is expected to increase market performance in Europe and Asia-Pacific markets with compound annual growth rates would go up by 6.1% and 5.4% respectively, during the same period, up to the values for each of the 83.5 billion also $ 53.5 billion in 2011. It is expanding the market for the computer by allowing the company to enhance the overall revenue base (Datamonitor 2008).
New retail agreements
Dell company entries of new agreements for retail customers to enable greater access obtain Dell products. In September 2007, Dell is entering into partnership with GOME, the largest distributor of consumer electronics in China, which allows Dell to sell products to many buyers in the computer store. Also in September 2007, Dell opened its first store in Russia retail sale.
In October 2007, Dell signed a deal with Staples, which means giving consumers options for the purchase of a wide range of Dell desktops, laptops, printers, ink, toner and observers in 1,400 Staples stores. The company has signed an agreement in November 2007, with a group Carrefour, and became the first trader to sell a comprehensive desktop computers and mobile in Europe. This agreement allows consumers to purchase Dell products in 365 Carrefour Group. In January 2008, the company achieved in the retail trade agreements with theDSG as well as dell made agreement with Tesco, the retailer with international operations in Asia and Europe (Datamonitor 2008).
Serious threats to the Dell in the market segments of contraband goods, and the black market in 2006, a significant increase in counterfeit products on the black market and smuggling of goods made in China and Hong Kong, where the total value of goods via mainland China and Hong Kong, a significant increase 96.3% to $ 125.6 million in the mainland, and 61.9% to reach 9.4 million in Hong Kong, although the products on the black market of lower quality in most cases is much cheaper and which affect the income of the company’s long-term (Datamonitor 2008).
The WEEE and ROHS directive
At the beginning of August 2005, the EU market to be fiscally responsible for the implementation of its obligations under the WEEE legislation. Which makes producers of electrical goods, including computers, printers, and financially responsible for the disposal and treatment, and the collection and recycling of electrical product in the past and the future. In December 2006, the Parliament of the United Kingdom to introduce a bill to implement the Waste Electrical and Electronic Equipment (WEEE) Directive, however, the United Kingdom in January 2007, entered into force. In addition China in February 2006, issued a regulation to combat pollution (Datamonitor 2008).
And Dell and non-compliance with new environmental legislation can lead to great responsibility and fines. In July 2006, and the reduction of hazardous substances (ROHS) Directive in an effective manner in order to impose restrictions on the use of Dell six hazardous materials, this material is used to produce various kinds of electrical and electronic equipment, which means that the complexity of purchasing and product design(Datamonitor 2008).
Economic deceleration in the Euro zone and United States
According to the Organization for Economic Cooperation and Development (OECD) in the economic field in the euro area and the United States and are the most important market for Dell. Is expected to slow in 2008 due to the recent turmoil in financial markets, in 2008, is expected to International Monetary Fund (IMF) of the United States economic growth to reduce from 0.9% to 1.9% for the slow growth in the euro zone to 2.1%, as well as reduced growth in the United Kingdom, between 3.1% in 2007 to 2.3% in 2008 (Datamonitor 2008).
Economic slowdown in the euro area and the United States could lead to a reduction in spending on information te
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