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Based in the Texas in USA, Dell Incorporation is world's one of the biggest seller of computer and laptops. It is a multinational information and technology corporation which employed around 76500 people across the world as of 2009.
Michael Dell started his company with a purpose of direct sell concept to the end consumer. He was mainly focused to avoid the intermediaries and cut the cost of product and sell it directly to the end user in comparatively cheap rate. Dell's company PC Ltd. Was able to sell IBM clones for 40percent less than the competition.(1) This strategy gave a way to run the company in instant growth. Once Dell tried to sell its products indirectly through warehouse clubs and computer superstores in 1990 but met with little success and the company refocused on its more successful direct to consumer sales model. Dell started to sell computer by Internet website from 1996.
To talk about of origin of the Dell Incorporation, the concept of the company was developed and founded by Michael Dell in 1984 as in the name of PC's limited. While he was studying in university of Texas he was 20 yrs old and he founded the company with the capital of $1000. At the period of 2009 the company had the asset valued of worth £26.500 billion.
Dell started to grow up as in the period between1980 to 1990 to become the largest sellers of computers and servers. In 2009 Dell took the 3rd position in computer sales industry as the 1st position took by Hewett Packard and 2nd position took by Acer incorporation. Since the history of computer sales to current position Dell incorporation is not limited with single product. It sells verities of products like servers Data storage Devices i.e., USB storage devices, Televisions, Notebooks, Scanners etc. It also sells varieties of electronic products manufactured by others.
In the mean time of 2006 it was listed in the 25th largest company ranked by Fortune Magazine in the Fortune 500 list, 8th on its annual "Top 20" list of the most-admired companies in the United States. In 2007 Dell ranked 34th and 8th respectively on the equivalent lists for the year. A 2006 publication identified Dell as one of 38 high-performance companies in the S&P 500.
Â Literature Review
In the computer market, the models that are integrated in the operations of the business are not only technological but rather strategic. Components of the computers are largely produced by other firms other than the firms selling the complete system. Thus, it can be assumed that the technology embodied in making the storage devices and microprocessors can be available to any firm at any time. Each firm has its own choice of what strategy to impose for the business operation given the constraints imposed by the existing technology. These firms face two choices. The first choice is whether the company place their strategy in a single segment of the market by pacing their new models close to their existing ones. With this strategy, the firm can take advantage of the economies of scope in the locality however at the same time create substitutes for their previous models. This strategy results to market segmentation where each can produce only one close substituteÂ
According to several literatures, in the computer market, being an existing firm is more favourable as the customers are more likely to buy familiar brands. In addition, the existing firms have already established long-term contracts with distributors and can relatively lower their costs compared to the new firms. Forcing the new entrants to seek for empty markets segments to avoid price competition with the established firms.
2.4 Vision and Mission
Â Â Â Â Â Â Â Â Â Â Â Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in the markets they served. In
Michael Dell's vision was based on the rationale that assembling a computer and directly selling it to customers lessens the costs and risks involved in storing computers and waiting for resellers to order computers
Role of operation management and operations manager
In today's highly competitive, Internet-based, and global marketplace, it is important for companies to have a clear plan for achieving their goals. In this case study we discuss the role of operations management, its relationship with the business strategy, and ways in which the operations function can best support the business strategy. We conclude with a discussion of productivity, one measure of a company's competitiveness.
Some people (especially those professionally involved in operations management!) argue that operations management involves everything an organization does. In this sense, every manager is an operations manager, since all managers are responsible for contributing to the activities required to create and deliver an organization's goods or services. However, others argue that this definition is too wide, and that the operations function is about producing the right amount of a good or service, at the right time, of the right quality and at the right cost to meet customer requirements
Operations managers are responsible for managing activities that are part of the production of goods and services. Their direct responsibilities include managing both the: operations process, embracing design, planning, control, performance improvement, and operations strategy. Their indirect responsibilities include interacting with those managers in other functional areas within the organization whose roles have an impact on operations. Such areas include marketing, finance, accounting, personnel and engineering
Decision making is a central role of all operations managers. Decisions need to be made in:
designing the operations system
managing the operations system
improving the operations system.
. Dell Computer Corporation has become a leader in the industry because of its speed of delivery and low price. Other computer giants, such as Compaq, have had to redesign their business and operations strategies to compete with Dell. Otherwise, they would be left behind. It is through environmental scanning that companies like Compaq can see trends in the market, analyse the competition, and recognize what they need to do to remain competitive.
Dell's mission is to "be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: highest quality, leading technology, competitive pricing, individual and company accountability, best-in-class service and support, flexible customization capability, superior corporate citizenship, and financial stability." The mission defined what business Dell is in: highest quality, leading technology, Computer Company. It also defined Dell's customers: focus on markets served. Finally, it defined how Dell would do this: through competitive pricing, best in- class service and support, and flexible customization capability. You can see how this mission defines Dell as a company. An environmental scan revealed that competing computer manufacturers, such as IBM and Compaq, used intermediate resellers to sell computers. This led to higher inventory, higher costs, and slower responsiveness to customer wants. Michael Dell's idea was to sell directly to the customer and be able to put together exactly the system. Dell defined its core competencies as flexible manufacturing and the latest technological offering. Together, the mission, environmental
scan, and core competencies were used to develop a competitive business
strategy that provides customized computer solutions to customers within 36 hours
at a highly competitive price.
Dell's operational business strategy was to take advantage of an opportunity in the market. However, to implement this strategy, the company needed to develop an operations strategy
that arranged all the resources in ways that would support the business strategy. Operations
Strategy designs a plan for resources in order to take the business strategy from concept to reality.
Dell's Supply Chain management
Customers can give order for PC as per their choices by website, phone or faxes. When Dell receives an order for a PC, it faxes or phones its requirements to suppliers who pick the proper parts and pack them in reusable bins with kanban cards attached. Trucks on a continuous loop between suppliers and Dell, known as a "milk run," deliver the sorted parts to the computer maker's plant for final assembly. Customers can also keep track of their order status. When the customer's order gets ready it reaches to the door of customer by courier.
Different choices of operational strategies of Dell Inc.
Selling direct to customers give dell first-hand intelligence about customer preferences and needs as well as immediate feedback on design problems and quality glitches.
Dell's management believed its ability to respond rapidly gave it a significant advantage over rivals, mainly over PC makers in Asia which made large production runs and sold standardized products through retail channels. Dell saw its direct sale approach as a totally customer driven system to new generations of components and PC models.
2. Partnership with suppliers
Dell believed it made much better sense for Dell computer to partner with reputable supplier of PC parts and components rather than to integrate backward and get into parts and component manufacturing on its own. Using name brand component enhanced the quality and performance of Dell PC's. It feasible to have some of supplier's engineers assigned to Dell product design team and for them to be treated as part of Dell.
3. Just -in -time inventories
Dell built its computers, workstations and servers to order, none were produced for inventory. Dell customers could order custom built server and workstation based on their needs of their applications. This sell direct strategy meant that Dell had no in-house stock of finished goods inventories and that unlike competitor using traditional value of chain model; it didn't have to wait for resellers to clear out their own inventories before it could push new models into market place.
4. Research and Development
The company talked to its customers frequently about "related technology", takes feedback from the customers and their needs and problems and trying to identify the most cost-effective solutions. Dell had about 1600 engineers working on product improvement and spent about $250 million yearly to develop user's experience with its products including incorporating the latest and best technologies, making its products easy to use, and devising ways to keep costs down. The company's research and development unit also studied and implemented ways to control quality and to make more efficient the assembly process.
5. Listen -solve and its impact
Dell collects requirements directly through thousands of customer interaction daily, organized events and customer panels. Partnerships with a wide variety of key industry software, hardware and component suppliers give us a uniquely broad perspective on the computing landscape. After gathering the requirements of customers it goes to solving process. The mission is to deliver innovative and cost effective solutions that meet today's real live customer challenges and work seamlessly in existing environments and with other product.
Recommendation and Conclusion
The focus of the study is to determine the available alternatives and find out the suitable for the overall competitiveness of the organization. This study is focus on identifying the operational strategies for Dell computers. After researching on this case study i find that strategies, which has been adopting by Dell is not less for the progress of the organization but there are some alternative strategies which can help the organization to reach the summit of success and to achieve success on their aim and mission. Dell is using some operational strategies which i find good by researching in this case study but if they improve a little bit on their strategies it could be better.
These are some operations strategies which are followed by Dell:
Cost- Dell is pursuing direct sell strategy to reduce the cost of product. They are trying to reduce the cost of product as much as possible. What i recommend them is try to reduce cost more by using alternatives. For example they are buying components of products from supplier. If they manufacture some components of the products from where they can save the cost, they should do that by researching on there. It can help them to become a winner in the competitive market.
Speed- for to the speediness' of the product, Dell has done good job by avoiding intermediaries and supplying the product by themselves. Speed of getting order and process of sending order to the manufacturing office is okay. But about the speed of the delivery i recommend them to establish some warehouse in the main area like from where they gets more order, and make some samples already get ready and supply them immediately when order comes.
Flexibility- Dell has been not limited with single product. They have got flexibility on their product. They are developing varieties of product as per customer's needs and choices.