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The organization being chosen to carry out such change management process analysis is the computer industry and the organization company in focus is amicably regarding DELL Computers. Thus, change processes in business organizations involves the reality behind every process and is considered as a daily cycle in dealing to various issues and concerns of the organization as it depends on the managements actions and its respected change of nature in dealing with effective change management as directed at overcoming anger and resentment evolving into a program that supports acceptance and internalization. As a consultant commenting on the organizational change process choosing DELL organization as the focal point for discussion and analysis for this presentation, my role to the organization is to have a clear emphasis dealing to the external and internal change drivers and other essential points needed for the realization of purpose for this report presentation for the senior management of the DELL in providing factual information that will be able to give a better substantive spontaneity of understanding of such organizational state needed for selection and the application of the appropriate management models as well as concepts per se.
In this assignment, I will be using Dell Corporation to complete task 1 and 2. Task 1 is about determining and analyzing Dell's internal and external influences. The external factors are the elements come from outside the organization that beyond the control of organization and internal factors are the influences within the organization. In task 2, political change, effectiveness and improvements of the Dell will be discussed.
1.1 Background Information of Dell
Michael Dell, the founder of Dell in 1984. Michael Dell started selling personal computers out of his dorm room at the University of Texas in Austin. Dell has a simple concept that is by selling computer systems directly to their target customers by cutting out retailers and suppliers. Dell listens and understands customers' needs and delivers the most effective computing solutions to meet those needs. Dell is the number 1 PC provider in the United States and number 2 worldwide. Dell was also listed in Forbes magazine as the 25th largest company on the Fortune 500 list. Dell headquarter is located at Texas, United States. In 2009, Dell has employed more than 76,500 people worldwide. Dell sells its products directly to customers such as government agencies, public institutes, healthcare and educational institutions, small to large businesses through sales representatives, telephone-based sales, and online through the company web site.
2.0 Internal Factors
Internal factors or influences include statement of mission, vision and goals, product and services, leadership and SWOT analysis.
2.1 Statement of Mission, Vision and Goals
Dell's success is based on a simple premise that is to listen to customers, delivers technology and services they value. Dell's mission is "to be the most successful computer company in the world at delivering the best customer experience in markets we serve", by means of meeting customer expectations of highest quality, leading technology, company accountability and support as well as flexible customization capability, and financial stability. The company vision was to produce computers that could easily be fitted with individual components to build a computer system to accommodate individual requirements. Dell's primary goal is to customize, design and built products to satisfy they customer's requirements so that customers can get exactly what they desire. Dell has achieved their main goal by doing business directly with customers one at a time. They believed that they could better than anyone in the world. This is their primary goal because they want to be the best at what they do and make a profit. Dell feels that their great customer service will keeps customer loyal.
Dell's another goal is to become the greenest technology company in the world. Dell has launched a long-term, global effort to become the greenest technology company in the planet. It has set an ambitious Zero Carbon Initiative whereby it aims to maximize the energy efficiency of Dell products, and over time offset their carbon impact. Furthermore, Dell is going to extend its "Plant a Tree for Me" programme into Europe and Dell will also continue offering its consumers worldwide free recycling for used Dell equipment and other branded equipment when new Dell hardware is purchased.
2.2 Products and Services
Dell is globally recognized for award winning products and outstanding services. Dell's dedication to customer satisfaction means that consumer can count on them for a responsive, reliable, quality service. Dell pay attention and listen to their customers needs and wants. Thereby, Dell delivers innovative technology and services they trust and value. Dell offers a wide range of product such as desktop computers, notebook computers, network servers, workstations, handheld computers, monitors, printers, high-end storage products, and a variety of computer peripherals and software. Dell's systems are built to order and so that customers have the freedom to choose what requirements they require. Other than that, the company is now offering wide range of electronics and PC accessories networking accessories, digital cameras and camcorders, gaming consoles and software, LCD televisions, projectors and surround sound speakers. Moreover, Dell has designed smart, simple services to fit the current customer's lifestyle and it has brought customers a lot of convenience. Dell also provides 24/7 customers service and support tool that secure customers' personal data and keep their system running in good condition. Dell technology experts can remotely access a customer's computer to solve issues instantly.
2.4 SWOT analysis
One of the best renowned computer brands
Dell is the largest PC maker in the world and also well-known for online selling of computers. Dell offers a wide range of PC, Laptops, Monitors and LCDs, hardware and software. The company's web site received at least 25 million visits at more than 50 country-specific sites.
Direct to customer business model
Dell sells directly to their customers by cutting out the retailers and suppliers. Dell's efficient procurement, manufacturing and distribution process allowing it to offer customers powerful systems at competitive prices. Dell' provides top-notch customer service before and after the sale and also 24 hours customer service and support.
Every Dell system is built to order. Dell built computer based on customer provided specifications. So customers get exactly what they desire.
No Proprietary Technology
Dell does not have proprietary technology, the current technology used by Dell are shared by the other major competitors.
There is the occasional product recall that can cause Dell some embarrassment. In 2004, 4.4 million laptop adapters are recalled back because of a fear that they might overheat.
Dell is introducing many new products to its range through diversification. This initially has meant good such as printers, desktop and laptops, but now also includes LCD televisions and other non-computing goods.
Strong market potential
Dell has the opportunity for expansion in all parts of the world, especially in markets outside of the U.S.; in all customer segments; and in all product categories. The number of PC users is expected to hit or exceed 1 billion by 2010.
Dell attracts customers through cost saving. Since competitors are offering computers at low costs, this could threaten Dell's price-conscious growing customer base. With almost similar prices, price difference is no longer an issue for customers.
Rapid change in technology obsoletes the product in small span of time. Dell has to keep up with technological advancements to be able to compete.
Changes in world currencies can affect production costs. As the costs of supplies increase, the price of the computers will also increase.
3.0 External Factors
The external environments consist of Porter's 5 and PESTLE analysis. PEST is very effective for the understanding of business situation and global issues and Porter's 5 analyses the company's external environment in an existing market or a new one.
3.1 PEST analysis of Dell Corporation
Political factors include government regulations and legal issues determining the conditions under which companies have to operate. Dell Corporation encounters problems in certain countries where political stability is not guaranteed, no matter whether companies operate production facilities or if they do business with that country through exports or imports. Many countries still have restrictive policies such as the trade quotas and certain government regulations that implies on MNC (Multinational corporations) which are maintained to protect domestic manufacturers and production. These policies are more likely to obstruct foreign companies from investing or entering into these markets. The only possibility to do business in those countries is to establish partnerships with local companies such as joint ventures or strategic alliances, where they are additionally forced to accept minority shares and to provide resources concerning money, local culture and technological knowledge. However, the computer industry sees great potential in those countries with looser and less restricted government regulations for countries like China which has opened for many industries since its accession to the WTO in 2001. This causes the globalisation trade barriers to be less restricted and the opportunities for new market to emerge thus allowing free trade to expand.
Economic conditions influences both demand/supply, capital and cost and is greatly influences by political and government policies. The computer industry expects a growth of approximately ten percent over the next years. This growth is influenced by the economic situation in a specific country, having an impact on the purchasing power of potential customers. Hence, changing inflation rates and currency fluctuation also determine the profitability of a company. I the cost of capital is low it will be an interesting market for firms to invest and expand in the market thoroughly. Certain countries in Asia represent a great opportunity for firms to invest and expand in. For example, in Malaysia GDP for 2007 was estimated at 357.9 billion with a growth rate of 6.3%, while in 2008 it comes with a growth rate of 5.0%. Apparently in 2009 the growth rate has increased from 2008 of 5.0% to 2009 of 5.2%.
The social cultural factor represents the demand and taste. Promotional and pricing strategies will have to change according to the market saturation to adapt to the consumer demand. The national demand for computers is dependent on the educational level prevailing in a specific country. The higher the educational standard, the higher is the demand. Furthermore, computers get more and more involved in daily life. Today, children are more exposed to computers compared to the 1990s. Firms should be aware of demographics changes as the structure of the population by ages, affluence, regions, the employment rates can strongly influences the demand and supply for a particular products and services. Therefore, threats to existing products might be increasing and this indirectly causes the opportunities for differentiation and market segmentation to increase.
The technology today has indeed become an asset rather than a liability to human beings today. Firms must evolve accordingly in order to stay competitive among existing rivals in the market. Plus technology external can also be captures and used, and this again can be influenced by government support and encouragement. New technology can be useful in both manufacturing and services for a better and more efficient and effective output. For example, in Malaysia Dell corporation is famous for producing affordable and good quality laptops such as the Dell Inspiron and Dell Studio laptops to suit all range of income earners and taste.
3.2 Porter's five Forces
Five forces analysis help the marketer to compare and contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyze the market for Business Computers (one of Dell's SBU units)
3.2.1 Threat of New Entrants (moderate)
Barriers to entry, however can restrict the firms from entering the market, more number of entry barriers will make it difficult for the new entrants to exploit the opportunity of new market. Existing firms which produces at economies of scale makes it difficult for new firms to enter the market. Certain distribution channels are control by either the government or existing firms and makes it difficult for new entrants. Furthermore, not all programs can work all computers therefore switching costs is quite high. This causes customers to stay with the same product because it can be expensive to buy new software for a new system.
3.2.2 Bargaining Power of Buyers (high)
The bargaining power of buyer increases when there is a huge amount of players in the market. Rival firms offer discounts, warranty and services to switch the consumer from one brand to another in the same industry. Consumers are highly price-sensitive and might switch to other PC company if Dell increases their price. Thus, Dell can lower this threat by differentiating their products. Customers select mainly based on price although Dell differentiate their products because customers might not see much differences between products. Firms should maintain good relationships with customers by practicing CRM processes in the company. For example, P & G has an online portal to ask the customer about their views, opinions and new ideas about the products of their desire.
3.2.3 Rivalry among existing firms (Strong)
It refers to the war between the firms competing in the same industry for gaining customer share in order to increase their revenues and profits. Dell is offering affordability computers and excellent customer service which could stay competitive in the industry.
3.2.4 Threat of Substitutes (moderate)
Other gadgets such as mobile phones can be a threat to computers due to enhancement of phone features that have similarities with PDAs. A firm faces intense competition from substitute product producing firms, when the customer cost of switching is lower, substitute products are better in quality and functionality. The competitive strength can be determined by market share, sales pattern, producers adding capacity for more production, and rise in profits.
3.2.5 Bargaining power of supplier (moderate)
Bargaining power of suppliers affect the intensity of competition especially if there are huge numbers of suppliers in the market plus less availability of raw material and the cost of switching between suppliers or raw material is high in the market. The influences of certain huge suppliers such as Microsoft enforce computer manufacturers to load Windows in their computers and place their logo on laptops, desktops and server machines.
4.0 Influence on policies and decision making
The influence on policies and decision making is partly based on the revolution of globalization and world economy is usually recognized as being driven by the combination of political, economies, socio cultural, technological and biological factors. A firm would be able to analyze the situation through PEST analysis, SWOT and Porter's 5 forces. During the world's worst hit global economy crisis 3 years back, the whole world suffered in a lot of aspects. The United States economy tumbles like never before and because America is the world's biggest exporter and importer in terms of trade, it gradually affects other countries.
4.1 Global economy crisis in the world
During the global economy crisis in 2008, the United States experienced a serious financial crisis which turned into a major economic recession. Both events also spilled over to the rest of the world resulting in a global economic crisis. (Financial Crisis and Global Recession, 2008)
Inflation rises and consumers are more sensitive about their spending, hence this causes the government will have to come out with stimulus plans to restructure the economy and to decrease unemployment rate which is rising rapidly. Dell corporation second quarter profits falls 17% from a profit of $746 million, or 33 cents per share, the company reported a year ago and announces the firm's restructuring plan of 10% cuts in global jobs that equate to job losses of around 9,000. Dell also closes its plant in Austin, Texas as part of its restructuring plan to save $3billion over the next 3 years. Shares of Dell rose 31 cents to close at $19.92. They dropped and then regained 25 cents in after-hours trading.
4.2 Global Corporate Responsibility of Dell Corporation
Dell Corporation, a truly globalized information technology infrastructure and those who build, run and use it are creating a new era, the Connected Era. Dell wants to develop a generation of young people across the globe that is prepared to connect to the whole new world. (Dell Global Giving, 2010)
Dell has always been practicing this principle and culture since the firm's incorporation. For example, Dell has launched a new signature program called Dell Youth Connect to prepare while help unleashing the talent of young people through technology and designed to provide support for education and digital inclusion initiatives that the company considers essential to ensuring the next generation's success in the Connected Era. India, Mexico and Brazil are the recipients where Askhara Foundation is founded in Bangalore and American Indian Foundation in Hyderabad.
4.3 The increasing effects of global warming
Global warming has risen to become an issue and has turned into a catalyst. It is believed to be cause by human activity such as fossil fuel burning, deforestation, greenhouse emissions and pollution. The effect is devastating and is causing the earth's global temperature to increase and this leads to the rise of sea levels and will change the amount and pattern of precipitation. Apparently, Dell Corporation is committed to becoming the "greenest" technology company on the planet. The company has built environmental considerations into every stage of the product life cycle ranging from development and design, to manufacturing and operations, to customer use and end of life product disposition for more than a decade. Dell Corporation, not known as a cleantech company, but long known for being a supply chain expert and direct marketing leader in PCs and electronic devices, is turning its attention to global warming and at least working to provide consumers some greener product options and more consumer information. For example, Dell created the Plant A Tree program to make it easy for customers to offset the greenhouse gas emissions from the computer equipment and to help build a healthier planet while practicing the slogan "one tree and forest at a time". Customers can easily participate by purchasing new Dell products and simply add the Plant a Tree option to the shopping cart while shopping online. Non customers can easily donate by logging in to the carbonfund.org/Dell website to contribute to the program.
4.4 The Emergence of Asia on the economy factors
There are currently 28 emerging markets in the world and by far China and India are the two largest markets in the world currently. Since China's emergence in WTO in 2001, China has been growing rapidly in terms of growth and industrialization along with India. These two countries are the world's fastest growing country in terms of GDP growth and trade. Dell Corporation waste no further time by announcing its partnership with China's largest consumer electronics retailers Gome. The company also plans to pursue partnership like this in other Asian countries.
Dell opens its 1st outlet in Malaysia called Dell Direct Store at Mid Valle Mega Mall, one of the busiest shopping mall in Kuala Lumpur (KL) in 2007. Dell has since begun operating a plant producing for Latin Americas and the US markets in Malaysia in 1995. This shows that Dell already saw the opportunities to expand in the Asia markets long before it started to blossom. (Blogjer, 2009)
The income statement shown above is the reported earnings of Dell Corporation. Dell's revenue has been increasing steadily from 2006 until it decreases starting from 2009, which is where the period of time the global recessions affect the world. Due to the Global recession, Dell has to restructure the company and this leads to closure of plants and sacking of employees. Even though the US market is a slump, apparently, Asia continues to be one of the few bright spots for the computer industry. For example, the company is cutting workers and idling some facilities in Texas because of slow computer demand in the United States , despite that international sales still remain strong. The Round Rock, Texas-based company reported a 5 per cent dip in its global profit and an 11 per cent increase in global revenue during the fourth quarter, but reported a strong double-digit growth in markets such as India and China. The company's revenue rose 52 per cent year on year in India during the fourth quarter (ending January 29) , and 81 per cent in China in 2010. This shows the sign of economy recovery, but still international sales are by far larger than sales in the US years ago.
5.1 Awards for environmental core
Dell Corporation values honesty, integrity and the highest level of ethical conduct. Hence, starting in 2000, Dell began the "Soul of Dell" initiative to redefine our values and elucidate what Dell aspires to be as a company. (Ethics and Compliance, 2010)
5.1.1 Business Ethics Magazine's Top 10 Best Corporate Citizens
"Dell ranked No. 9 in Business Ethics' list of "100 Best Corporate Citizens" among major U.S. companies. The annual "100 Best Corporate Citizens" list evaluates the top 1,000 largest publicly-traded companies in the U.S. and is based on a statistical analysis of performance in the following eight stakeholder categories: shareholders, community, governance, diversity, employees, environment, human rights and product. Dell scored highest this year in the categories of employee relations, community engagement and environmental responsibility. Dell has been ranked for six of the list's seven years of publication. In recent years, Dell has won acclaim for the company's commitment to corporate citizenship, notably as the 2005 winner of the Business Ethics Environmental Progress Award." (Ethics and Compliance, 2010)
5.1.2 The Tim McClure Award (Outstanding Environmental and Community Leadership)
"The National Recycling Coalition awarded Balcones Recycling partnership with Dell Computer Corp. The award salutes organizations that show initiative and commitment to recycling, the environment and the community. Since Dell's partnership with Balcones Recycling began in 1997, the computer giant has achieved a remarkable 80 percent recycling rate and has diverted more than 40,000 tons (1,700 tons per month) of material from local landfills and saved more than $16 million ($1.3 million per month) every year. Dell's R3 reduce, reuse, recycle implementation in recycling and waste reduction that includes focusing on recycling within Dell's offices and manufacturing facilities in the United States, and in schools near the company's headquarters in central Texas. Balcones's recycling partnership with Dell represents one of the largest and most successful waste minimization, diversion and recycling efforts in the United States. Balcone's anything that tears office recycling program at Dell is the largest in US, this allows Dell employees to mix all types of recyclable papers such as cardboard, office paper, plastics, foams in the container making it the most user friendly recycling system in the country. Innovative reuse programs developed by Balcones Recycling have had the single greatest economic and environmental impact on the results of R3. In Dell's manufacturing facilities, innovative reuse programs put into action by Balcones save packaging materials and parts, and then returns them to suppliers." (CHARLOTTE, 2009)
Refer to appendix 1
6.0 Area for improvements
Although Dell is an extremely successful company, there are areas of improvements and enhancements that should be considered. The computer industry focuses mainly on technology, therefore for Dell to stay competitive among firms in the industry, Dell should innovate and constantly adapt to the new technology for technology will have a significant impact on Dell's success and future. Dell Corporation is famous for its affordable and good quality computers. Dell can invest more in the research and development to develop new products and services, even though Dell is a leader in e commerce computer hardware market and sets the highest sales in online sales in US, still the company can initiate a program called "Customer Survey" to gain more market share. For example, like what the company did in Twitter and Facebook , Dell Corporation managed to get a $3 million revenue through Twitter and the company placed 200 employees on the social networking site to interact with customers about technical support and customer demands. The company can also implement a program to reduce errors in their direct Internet ordering system and create a "Clearance" area on its website for systems produced in error because most of Dell's sales come from online sales. Therefore, customer should not have bad experience when purchasing online on Dell's official website because leaving a good impression and experience in the customer is always good for business no matter if the customers are just consulting or purchasing. Dell's customer support service can also be enhanced, apparently the company spends $150 million to improve on customer service but recorded a 5 % drop in the American Customer Satisfaction Index. Dell's global brand identity is also undeniably strong but in new and blooming market such as India, China, Vietnam, Indonesia and so on, Dell can increase their company recognition through a national advertising campaign. Mutual agreement within a company and government to achieve a certain goals and objectives can be obtained and are very beneficial towards both sides.
Dell is a very successful company in the world due to the company's high level in understanding of customer needs and satisfaction. The company listens to what customer wants and needs and then implements it into the company's system, products and services. Dell implements the direct business model since it was 1st founded by the current chairman Michael Dell, even till today, Dell's environmental programs for product asset recovery and product design for environment have spanned more than a decade. The company designs and customizes products and services to the requirements of the organizations and individuals, and sells an extensive selection of peripheral hardware and computing software. One of Dell's missions is to engage stakeholders to improve products and processes for the beneficial of everybody in the process. Dell is expanding from selling desktop computer market to enterprise computing, a move that involves building high-powered server computers. The company's expertise in selling over the Internet and efficient supplier network are critical if Dell is to drive better value for its customers, plus the internet has become a booming business in all kinds of industry and are increasing the demand for network computers for many years to come. If Dell wants to optimize their return on investment, they must continue to form strong customer relationship as well as vendor relationships and participation.