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Michael Dell inventor of Dell computer and founder of Dell Inc. founded Dell Corporation in 1984. Firstly Michael Dell built and sold personal computers from his dorm room at University of Texas at the age of 19 and at that time the original name of the company was PC's Limited.
Company's Gross profit for the first year was 73 million dollars. It went public offering shares for $8.50 in 1988 and the IPO raised $30 million. First laptop was introduced in 1991. By 1993 Dell was one of the top five companies in the world and its share were worth $100 by 1995.
Dell started selling their products over internet through their website in 1996 and they took over Compaq three years later. Dell sold $1 million per day through its website just seven months after its launch. Dell's website became the fourth largest U.S. e-commerce site with $4.2 billion in sales in 2007.
Dell was ranked no.33 in Business Weeks Top 100 Brands and no.34 on the 2008 Fortune 500 list and also received 400 product awards in 2007.
Dell Innovative strategy was to cut down the supply chain by eliminating the middleman and by doing this Dell gained Brand value and huge part of profit. Dell used more customer oriented strategy and had a fast and excellent customer service.
Dell Mission Statement:
"To be the most successful computer company in the world at delivering the best customer experience in markets we serve."
To achieve this goal Dell will meet customer expectations of:
Best-in-class service and support
Flexible Customization Capability
SWOT ANALYSIS OF DELL:
Dell is the world's largest PC maker
Dell is the one of the best known and renowned computer brand in the world.
Dell has well controlled supply chain by signing long term contracts with supplier.
Dell has direct relationship with the customers by cutting out retailers and supplies directly to the customers which gives them loyal consumers.
Customers can make their own specification for their computer that give Dell high number of customer satisfaction.
Customers may want to see the computer before they purchase and there is no retail stores of Dell for Computer demonstration.
Dell buys a huge range of products and components from many suppliers from various countries.
Dell is unable to switch supply as its computer maker not computer manufacturer.
Dell is always known by pursuing a diversification strategy by introducing many new products to its range such as printers, toners and now it's including LCD televisions and other non-computing goods.
Dell makes and sells low-cost, unbranded low-price computers to PC retailers in the United States.
The biggest problem for Dell is the competitive rivalry that exists in the PC market globally today.
New entrants to the markets have made a potential threat to the Dell brand.
Fluctuations in the world currency markets i.e. changes in exchange rates.
DELL'S INNOVATION APPROACH:
Innovation is the introduction of something new; a new idea, method or device.
Dell uses Customer-Driven Innovation in which Industry has leading R&D driven by customer needs, Cutting-Edge solutions, and Strategic Partnerships.
Since 1986 when Dell introduced its first PC, Dell has continued to shape the industry, breaking new ground and pioneering critical development in home, small business and enterprise computing, driven by some of the industry's foremost product designers and engineers. At the core of Dell's innovation approach remains an unwavering commitment to delivering new and better solutions that directly address customer needs. Dell's innovation approach has three main components which are as follow:
Dell gather requirements directly through tens of thousands of customer interactions daily, organized events, customer panels and social media venues. Partnership with a wide range of key industry software, hardware and component suppliers gives Dell a uniquely broad perspective on the computing industry.
Many innovations in Dell begin in-house led by a global team of top engineers, product designers and technical experts. Others begin as a team effort with Dell's strategy partners. Dell's mission is to deliver innovation and cost-effective solutions that meet today's real-life customer challenges and work seamlessly in existing environments and with other products.
Dell is uniquely positioned to impact the industry trends. Dell maintains strong internal development capabilities. Dell makes partnerships rather than competing with top industry technology suppliers and original development manufacturers. Dell steer enabling industry standards and technologies through industry groups and strategic partners. In this way, Dell delivers value to customers.
Dell was no.22 in the world's most innovative companies in 2007 survey was done by Business Week. The world's most innovative companies in 2007 are as shown in figure 1 below:
Figure : world's most innovative companies
DELL'S ROLE OF STANDARDS:
To deliver effective solutions that meet customer challenges, Dell focuses on pivotal standards that accelerate innovation by driving future technology innovation. Dell's industry leadership helps to establish the core building blocks for the future innovation - in the home, the office and the enterprise. With wide network of strong industry alliances and a long track record of pioneering work, Dell can drive adoption of open standards that give customers more choices and lowers complexity and costs.
Dell has driven standards through working collaboratively with leading suppliers and standards organizations, which not only benefits customers but often result in industry changing developments such as:
Display Port digital display interface to support high-performance, high-resolution digital flat panel displays and application.
Standard formatting for sorting RAID configuration information to enable interoperability between different RAID suppliers.
Standard system management instrumentation on managed nodes, such as servers, storage, switches, client systems and printers.
SEEING WHAT'S NEXT PROCESS:
Seeing what's Next process, analyzes industry change and it suggests following a three-part process to use the theories of innovation to spot and interpret disruptive developments and predict industry change. Three parts are as follow:
Part one look for signals of change, for signs of companies emerging to meet the needs of three different groups:
Undershot customers: They are customers for whom existing solutions are not good enough. Signals of these customers include customers eagerly snatching up new products, steady or increasing prices and the struggles of specialists. They look for sustaining innovations that close the gap between what is available and the job they are looking to get done.
Overshot customers: They are customers for whom existing solution are too good. Signals of these customers include customer reluctance to purchase new products, declining prices and the emergence of specialists. Overshot customers welcome low-end disruptive innovations that offer well enough technological performance at low prices.
Non-consumers: They are customers that lack the skills, wealth or ability to "do it themselves." Signals of these customers include customers that have to turn to someone with more skills or training in order to consume, a market limited to those with great wealth and the need to go to centralized, inconvenient locations to consume. Non-consumers welcome new-market disruption innovations that make it easy for them to do it themselves.
Part two analyze competitive battles to see which firms are likely to emerge triumphant (to overcome something). These analysis content two components.
The first involves identifying each combatant's strengths, weaknesses and blindspots by looking at their resources (what they have), process (they way they do their business), and values (decision rules that determine how resources get allocated).
The second part requires identifying the company that is taking advantage of "asymmetries," doing what its opponent has neither the skills nor the motivation to do. Pay particular attention to asymmetric processes and value are inflexible, determining what a company can and cannot or will and will not do.
Part three look at important strategic choices that can help to determine ultimate winners and losers. For entrants, start by looking to see if the company is properly preparing for battle by hiring the right management team, instituting an appropriate strategy-making process and receiving funding from investors that will allow the company to follow a disruptive path.
Dell is good at this process as it provides best customer services and being always in top in the high competitive industry. It has also been winner of lots of award for best company, best customer services, etc.
OUTCOMES OF DELL'S INNOVATION:
Dell became the Top Company in the Computer Industry.
It started to be recognised by its reputed and high Brand image.
Sales increased rapidly.
Through cutting down the supply chain by eliminating middlemen and retailers, Dell became most popular for low cost and high performance products.
Dell honours the outstanding inventors among its employees each year which encourage and motivate employees to give their ideas and views for new process of innovation.
Dell is been known by the one of the best company with the best customer services. Dell gives customers what they need by giving them right to choose the specification of their product by their own.
Dell shifted from closed innovation to open innovation. Closed innovation is an innovation in which a company generates, develops and commercializes its own ideas. This philosophy of self-reliance dominated the R&D operations of many leading industrial corporations for most of the 20th century. "Open innovation is the use of purposive inflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. (This paradigm) assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology." By Henry Chesbrough, Open Innovation: researching a New Paradigm.
Closed innovation had no new technologies and ideas outside of firm, competitors could not take benefits and it's more beneficial to company
Open innovation combine internal and external ideas, it's a term promoted by Henry Chesbrough and it has permeable boundaries.
It's a cultural shift to move from closed innovation to open innovation. There are so many competences to be tapped around the world that developing new ones on your own is only worthwhile in a very few situations. More adaptive businesses have a greater chance of success; developers are not purely technical people. They have to be able to function in teams and negotiate with the outside world.
Dell should offer products which is more customer customised so it can get high customers satisfaction level.
Dell should improve relationship with the suppliers.
Unvalued features of the product which are not valued by customers should be eliminated.
Dell should focus more on its Brand name and its promotional techniques.
Dell should start selling products in retail shops as customers will prefer to watch the product properly before buying it.