A Comparative Analysis of Dell's and HP's products and services from the Perspective of the Firm and Customer - Essay Example

? A Comparative Analysis of Dell's and HP's products and services from the Perspective of the Firm and Executive Summary The development ofa firm’s performance in quality is sometimes difficult to be achieved. The use of quite known quality models and techniques, such as the Kaizen Gemba model, the quality awards given, or the Garvin criteria on quality, would help to identify the potentials of an organization to perform high in terms of the quality of its products and services. These models have been employed in this paper for checking the status of two popular firms, HP and Dell, in terms of the quality of their products and services. HP is more focused on quality while Dell seems to emphasize on the market performance of their products. However, both firms have made important initiatives to ensure the high quality of their products and services. The effectiveness of their efforts are presented and analysed below using appropriate literature. Table of contents Executive Summary 2 Table of contents 3 1. Introduction 4 2. HP and Dell 7 2a. Analysis of HP’s products and services from the perspective of the firm and customer 7 2b. Analysis of Dell’s products and services from the perspective of the firm and customer 10 2c. Comparative analysis of HP and Dell in regard to their products and services 12 3. Conclusions 15 4. Recommendations 17 References 18 Appendix 19 1. Introduction The development of organizations in the international market is usually promoted through specific strategies. Competition seems to be of key importance for strategy makers in most firms. Moreover, it has been proved that competing rivals can be a challenging effort, especially during periods of economic instability. On the other hand, firms that are already well established in the global market are more efficient in developing competitive advantage. The potential role of a specific framework, of Total Quality Management (TQM), in the growth of business activities is reviewed in this paper. The products and services of two, well-known, organizations, Hewlett-Packard and Dell, have been reviewed in order to check whether TQM can help modern firms to improve their market position and increase their customer base. The above firms have been chosen on the basis of the following criteria: a) their activation in the same industry, b) their presence in the global market and c) their efforts in regard to the promotion of TQM, as analytically explained in section 2 of this study. It should be noted that the involvement of TQM in the design of these firm’s products/ services is reviewed from two different perspectives: the perspective of the firm and the perspective of the customer. Quality is an element of organizational success. Indeed, firms with products/ services of high quality are expected to compete effectively their rivals even in adverse market conditions. Quality, as an element of organizational environment, has appeared after the end of WWII and has been related to ‘the ideas of Edwards Deming’ (Daft and Marcic 2010, p.33). In practice, quality became part of organizational activities due to the initiatives of Japanese firms that first emphasized on the need for ‘the involvement of employees in identifying quality problems across the organization’ (Daft and Marcic 2010, p.33). Different approaches have been used for the promotion of quality in organizations of different structure and culture. One of the most known systems for ensuring quality is the just-in-time system (see Figure 1, Appendix), which was first developed by Toyota. The specific system focuses on the elimination, as possible, of waste, emphasizing on the production only of those products that are necessary and of the amount and quality set by the customer (Ho 1999). It should be noted that the promotion of quality in the organizational environment had appeared quite early, many decades before the introduction of the just-in-time system in Toyota. In fact, it was about 1924 that the first statistical tool for quality control appeared (Jain 2001, p.2). Through the decades, the criteria used in quality control have been alternated; 1987 can be characterized as a critical year for quality control; it was then that the international quality standards ISO 9000 were first established (Jain 2001, p.2). These standards, as improved and increased, are still used today for securing the high quality of products and services. At this point, reference should be also made to scientific management, as developed by Frederick Taylor in late 1800s and the beginning of 1900s (Berk and Berk 2000). In fact, it was about 1910 when Frederick Taylor first described a series of rules which should be applied in industrial production; these rules are known, collectively, as Taylorism and focus on the following two concepts: a) ‘the division of labour’ (Berk and Berk 2000, p.91), meaning that employees are not responsible for the quality of products they produce (Berk and Berk 2000, p.91); this responsibility, according to Taylor, belongs to the supervisor, b) the quality of products was considered as having secondary importance, compared to the number of units produced (Berk and Berk 2000, p.91). Today, quality helps organization to improve their performance mostly through the Total Quality Management, a framework that incorporates a series of principles promoting quality. Total Quality Management, which was ‘highly developed during 1980s and 1990s’ (Daft and Marcic 2010, p.33), is a quite valuable framework for promoting organizational growth. In fact, due to its critical role in organizational development, the specific framework has been extensively reviewed and tested, as of its potentials and implications within organizations of different characteristics. In order to understand the role of TQM in business growth, it would be necessary to refer to its characteristics. According to Armstrong (2006) TQM is used in order ‘to improve the quality of an organization’s products until these products become perfect’ (Armstrong 2006, p.149). On the other hand, Morfaw (2009) notes that when TQM is established in a particular organization then a series of changes is expected to follow. These changes will be both ‘behavioural and cultural’ (Morfaw 2009, p.23). In fact, organizations that have chosen to employ TQM for improving the quality of their products need to be willing to support a long-term plan of change, meaning that TQM affects all organizational sectors and its full implementation in a specific firm usually requires a significant period of time. TQM is based on the following four elements: ‘employee participation, focus on customer, benchmarking and continuous improvement’ (Daft and Marcic 2010, p.33). There are various TQM models (for example Figure 2, Appendix) and approaches available to leaders who are interested in promoting TQM within their organization. In the context of modern organizations, the choice of the appropriate TQM methodology is depended on the skills of the leader, the resources available and the willingness of employees to support the relevant initiative. Different TQM models have been used in order to check the quality standards of HP and Dell, in regard to these firms’ products and services. 2. HP and Dell 2a. Analysis of HP’s products and services from the perspective of the firm and customer HP has traditionally focused on customer satisfaction, a fact that it is verified by the firm’s efforts to continuously update its products/ services so that they are of the best possible quality, especially compared to the similar products/ services of competitors. It should be also noted that the organization has introduced a series of practices in order to secure the high performance of the organization in terms of TQM. For example, in HP, employees at all organizational levels have to participate on a regular basis in training programs related to TQM (Hakes 1991, p.158). In general, the firm seems to highly value the following processes, as being able to affect its performance in TQM: ‘employee participation, customer focus and process improvement’ (Hakes 1991, p.158). Moreover, specific scientific tools, such as customer surveys, have been developed by the organization for checking the quality of its products/ services (Hakes 1991, p.158). At the same time, the organization has developed ‘a series of ‘Process – for – Management’ workshops ‘(Peratek 1994, p.162), in order to ensure that its managers are able to develop effective plans, setting clear goals and suggesting feasible courses of action for achieving them (Peratek 1994, p.162). The efforts of HP for developing unique products in terms of quality are also highlighted in the study of Pham-Gia (2009). Moreover, Ackroyd et al. (2006) noted that in HP the efforts for the promotion of quality in all the firm’s products/ services have been started quite early, since the initial forms of Quality Management techniques appeared, as developed by Japanese firms. HP has tried to compete its Japanese rivals by following similar practices for promoting quality, even if such effort has been initially difficult especially because of the differences in organizational culture. In Japan, team working, which is crucial for TQM is a core characteristic of workplace, while in Western organizations individualism is rather preferred. In order to evaluate the quality of the firm’s products and services, it would be necessary to refer not only to the characteristics of these products and services but also to the TQM techniques, as applied in HP. The products/ services of HP will be reviewed as of their quality using similar models as for Dell (in section 2b below). In this way, it will be easier to compare the effectiveness of these organizations in promoting quality in regard to their products and services. The quality of HP’s products/ services will be primarily checked using the criteria of quality as developed by Garvin. In the context of these criteria, the products/ services of HP would be checked whether they are: ‘a) exceptional, b) perfect, in terms of their consistency, c) fit for purpose, d) value for money, e) able to be transformed’ (Garvin 1984/1988, cited by Dahlgaard et al. 2005, p.11). According to the company’s website, the company has developed an extended framework of policies and activities in order to ensure that its products and services are of exceptions quality; this effort is reflected in the Research criteria used by HR Labs, the firm’s department working on the development of new products and the update of existing ones (HP, Research 2012); b) each of the firm’s products is continuously reviewed as of its ability to respond to the customers’ needs; for example, the Enterprise Cloud Software platform which incorporates automated security features and the Cog ex machina, which promotes intelligent computing in regard to a variety of IT systems; from this point of view, the firm’s products/ services can be characterized as perfect; c) in the same context, the products and services of the firm are fit for purpose, meaning that they respond to the demands of each customer, according to their features; the firm’s customers know that the firm’s products/ services respond effectively to all aspects of their role, being based on advanced technology, d) following the above, the firm’s products/ services justify fully the money paid for them by the customers; at this point it should be noted that the price of the firm’s products/ services is not particularly high, compared to other firms, as for example, the IBM; still, the quality of these products and services is high, as also revealed through the issues discussed above; e) another important characteristic of the products and services of HP is that they can be effectively transformed; however, at this point, limitations seem to exist since this process is not available to all the firm’s products/ services but only when their features are offered for such plans; for example, a firm’s desktop can be transformed into a sustainable datacenter, through appropriate customization of its platform/ hardware. On the contrary, a desktop could not be transformed into a copying machine, and vice versa. The potential use of Kaizen Gemba model for identifying the quality of the firm’s products and services could be also reviewed. In the context of Kaizen Gemba model, the members of each organization have ‘to assemble periodically in order to discuss quality issues’ (Mukherjee 2006, p.87). This model can be characterized as similar to the quality circle model, which also refers to the identification by employees of critical issues related to quality of products/ services. In HP such approach is used, although the terms of the relevant initiatives are not clear. It is just noted that teamworking is promoted in the workplace (HP Shared Values in Corporate Objectives 2012), without making clear whether the cooperation of employees involves in the promotion of quality or not. It is assumed that quality issues are discussed between employees, so that the Kaizen model can be considered as applied in the particular organization. An alternative approach for identifying the status of the firm’s products/ services in terms of quality would be the review of the quality awards given to the organization for applying quality standards that are established by international organizations. The firm’s employees in the technical/ research department have been awarded a series of important awards, such as ‘the Turing Award, the Julius Springer Prize for Applied Physics and the Feynman Prize for Nanotechnology’ (HP, Awards and Honors 2012). In addition, an ‘Emmy Award and a technical Oscar’ (HP, Awards and Honors 2012) have been awarded to the firm’s technical staff, indicating the high level of their expertise and skills. The firm’s intelligence infrastructure framework, known as CeNSE has been characterized as one of the most successful applications of such type, as proved through a series of important awards, such as ‘the EE Times’ ACE Award for Most Promising New Technology of 2010, the EDN Innovation Award’ (HP Labs Annual Report 2010, p.9). It should be noted that in 1982 the firm was awarded with the Deming Prize, a top award in regard to quality of products/ services. According to the issues discussed above, the products and services of HP can be characterized as of high quality, contributing in the increase of the firm’s competitiveness towards its rivals, such as Dell. 2b. Analysis of Dell’s products and services from the perspective of the firm and customer One of the key characteristics of Dell’s strategic management is the emphasis given on the existence of fit between the firm’s strategic choices and its environment, meaning employees, customers and competitors (Ingols et al. 2011, p.74). As a result, the TQM plans of the organization have been aligned with the organizational culture and environment, a fact that has highly contributed in these plans’ success. According to Ingols et al. (2011) the TQM plans of modern organizations cannot be successful ‘if they are combined with strategic initiatives based on conventional management theories’ (Ingols et al 2011, p.74). In this case, as Ingols et al.(2011) note, all organizational plans, those related to TQM and those related to other organizational sectors, will fail. In Dell, particular emphasis has been given on the time required for the completion of orders. In fact, according to Al-Dabal (2001) the organization uses a feature called ‘Electronic Data Interchange (EDI)’ (Al-Dabal 2001, p.55); this feature that allows the product ordered to be sent to the customer quite rapidly, in about 3 days. It is explained that when the order is set a message is sent to the company – through EDI – and to the suppliers (Al-Dabal 2001, p.55). At the same time, a notification is made to the courier to come to the company’s unit in 3 days in order to take the product for delivery (Al-Dabal 2001, p.55). Through the years, the above process has been further improved. The status of the firm’s products/ services in terms of quality would be reviewed using models and approaches similar to those used in the case of HP, i.e. the Garvin model of quality, the Deming model on TQM and the Kaizen Gemba model. The quality awards given to Dell up today would be also reviewed in order to check the success of the organization in promoting quality in its products and services. A first approach for checking the quality of the firm’s products and services is that of Garvin who set the following criteria for characterizing a product/ service as of high quality: ‘a) exceptional, b) perfect, in terms of their consistency, c) fit for purpose, d) value for money, e) able to be transformed’ (Garvin 1984/1988, cited by Dahlgaard et al. 2005, p.11). The firm’s products have all the above characteristics, as derived in the description of the firm’s plans for ensuring the quality of its products; particular emphasis is given on the promotion of innovation across the organization (Dell, Innovation 2012); the firm’s critical initiatives in regard to the development of new technology, such as the introduction of ‘the unified fabric based on Ethernet technology’ (Dell Technology Initiatives 2012) and the DisplayPort (Dell Technology Initiatives 2012), are indicative examples of the achievements of the firm in terms of technology innovation, as related to the quality of the firm’s products/ services. In terms of Kaizen Gemba model, again, as in the case of HP, the firm’s ability to promote the particular scheme is not clear. It is just noted that employees are encouraged to take initiatives and cooperate for promoting innovation, but it is not made clear whether employees are involved in the control of quality across the organization. Taking into consideration the firm’s efforts in R&D and innovation, it is assumed that such initiatives are encouraged in Dell, like in HP; c) the performance of Dell in regard to quality awards seems to be low; in fact, the firm has not been given any quality award up to now; it has been just extensively recognized as an exceptional provider of IT systems and services. At this point, HP seems to have the advantage, having been given numerous awards in terms of its staff skills and the quality of its products/ services, as described in section 2a above. 2c. Comparative analysis of HP and Dell in regard to their products and services In order to compare the quality status of the two firms’ products and services it would be necessary to describe primarily the common methodology for implementing a TQM methodology. Then the most known TQM techniques should be mentioned. In this way, it will be made clear whether the practices of the two firms in regard to the implementation and promotion of TQM across their departments have been appropriate or not. It will be also made clear whether alterations or improvements in the firms’ existing TQM methodologies should be made for improving quality of the two firms’ products and services. The implementation of TQM within organizations is usually developed in five phases, as these phases are described in the study of Zell (2008, p.20): a) at the first level the organization is informed on its customers’ preferences in terms of quality; in this way, it is possible for the firm’s managers to identify those elements/ characteristics of products or services that need to be improved in order to meet customers’ expectations in terms of quality, b) quality should be set as the primary criterion for choosing supplier; the prices of suppliers’ products should be of secondary importance for choosing suppliers, c) team-working should be promoted across the organization; indeed, by encouraging the creation of teams for controlling quality managers ensure that quality problems are identified at an early stage, a fact that increases the chances for the successful resolution of these problems, d) TQM should be appropriately supported by relevant scientific methods, a fact that would allow to employees to monitor more effectively their performance in terms of quality control, e) the effectiveness of teams in regard to quality control could be promoted using ‘process – management tools’ (Zell 2008, p.20). In order to identify the position of the two firms in the global market in terms of quality of their products/ services it would be necessary to refer to the following issues: a) the two firms’ historical development, as related to the promotion of quality, b) the two firms’ performance as evaluated through a series of quality models (in the sections 2a and 2b), c) the two firms’ financial performance, which indicates their potential to keep their quality standards high without reducing their profits; d) finally the two firms’ corporate objectives should be presented in order to discuss whether these objectives have been achieved or not. a) The firms’ historical development could be described as follows: since its establishment in 1939, HP has achieved an important growth; the firm’s involvement in microwave took place in 1943; the years that followed, the firm entered new technology fields, such as the incorporation of fast frequency in 1951; since then the development of the organization has been so rapid that in 1957 the firm entered the Stock Exchange; in 1961 the firm entered the NYS, an important point in its history (HP Timeline 2012). In 1966 the first HP Labs appears; In 1982 the firm was awarded the Deming Prize, a top award for quality; In 2009 the firm was given the IEEE award, another top award referring to the quality of products/ services (HP Timeline 2012). The firm has been related to a series of critical technological developments, such as ‘the introduction of the first DRAM microcomputer (in 1974), the introduction of the touchscreen PC (in 1983), and the development of the colour printing (in 1992)’ (HP Timeline 2012); Dell also has an important historical development; in accordance with the organization’s website, the key events in the firm’s history have been the following ones: its establishment in 1984; the ‘design of its first computer system’ (Dell, The Birth of a Company 2012); the entrance in the international market, in UK, in 1987; ‘the completion of the firm’s first public offering in 1988’ (Dell, The Birth of a Company 2012); the launch of the firm’s website in 1996; in 2005 the company ranks first in the list of Fortune for the ‘most admired companies’ (Dell ,The Birth of a Company 2012); in 2010 the firm ‘ranked first as a global healthcare IT services provider’ (Dell ,The Birth of a Company 2012). b) In terms of their performance in quality through the models described above, in sections 2a and 2b, both firms can be characterized as of excellent performers in quality, with HP to have an advantage, as reflected in the quality prizes awarded to the organization, c) In terms of their financial performance, both firms seem to have a lot of prospects in regard to their growth in the long term; indeed, as revealed through the Figures 3a and 3b, Appendix section, both organizations have been able to keep their performance standardized, despite the periodical downturns; Dell, at this point, seem to have an advantage, since its financial performance seems to be continuously increased, while HP seems to face delay in achieving a continuous growth. d) Using the information provided above, the ability of the firms’ to meet their objectives can be analysed as follows: d1) HP has managed to achieve its objectives, which can are as follows: ‘customer loyalty, profit, growth, market leadership and commitment to employees’ (HP Corporate Objectives 2012); indeed, the organization has managed to achieve a stable growth as revealed in Figure 3a, Appendix; d2) Dell, which is a firm established quite later than HP, just in 1984, compared to HP which was first established in 1939, has achieved a significant growth which seems to be developed more rapidly compared to that of HP (Figure 3b, Figure 4), Appendix, which seems to be developed more slowly compared to Dell (Figure 3a and 3b, Appendix). 3. Conclusions The effectiveness of strategic decisions in modern organizations is usually judged taking into consideration certain criteria: the resources required, the costs involved and the benefits achieved; in other words, a balance should normally exist between the costs of a strategic plan and its benefits, at least at the level that losses are avoided. When the development of certain strategic initiatives is unavoidable, such as in the case of the involvement of organizations in TQM schemes, effort should be made in order for the best practices to be identified, ensuring that the risks for the organization are kept at low levels. The review of the initiatives of HP and Dell in regard to the promotion of TQM has revealed the following facts: both organizations have understood quite early, in fact HP earlier than Dell, the need for investing on TQM plans for securing their competitiveness in the global market. Moreover, both organizations have tried to prepare their employees as possible in regard to the requirements of TQM plans. The performance of the two firms in TQM, as revealed through the review of the quality of their products/ services, proves that the efforts of the organizations to prepare their employees in regard to TQM have been successful. At this point, the following issue appears: has the high performance of these firms in TQM helped their market position? In other words, can the efforts of these organizations to promote TQM be characterized as worthy? The review of the firms’ performance, as based on the figures included in their financial reports, leads to the following assumption: investing in TQM has helped HP and Dell to secure their position in the global market. However, TQM has not helped these organizations to avoid failures and losses. Under the influence of strong market turbulences, the preferences of consumers may be differentiated; instead of preferring quality, customers can focus on the price of products/ services, even if such trends usually don’t last for a long period of time. On the other hand, the costs for developing a TQM scheme can be high. This means that TQM has benefited these firms but has also resulted to financial pressures for both the organizations. The balance between benefits and costs of these firms’ TQM plans should be rather evaluated taking into consideration their performance in the long term, i.e. through decades, and not in regard to short periods of time, in which the negative effects of global financial pressures can seem quite difficult to be reversed. 4. Recommendations As already explained, the success of TQM within organizations is depended on a series of factors. The support of TQM plans by managers and employees is a prerequisite for the effective development of these plans. According to Zell (2008) before implementing TQM techniques, organizations need ‘to explain to their top managers the elements of quality’ (Zell 2008, p.20). At the next level, managers at lower positions should be trained so that they are prepared to face these plans’ challenges (Zell 2008). In HP all possible efforts in regard to the promotion of quality have been made, as proved also through the firm’s Standards for business conduct and the firm’s Quality Improvement Cycle (Figure 5, Figure 5a, Appendix). In fact, the organization has kept its tradition to emphasize on quality ignoring the potential limitation of profits, as reflected in its financial report (Figure 2a); on the contrary, Dell seems to focus more on the continuous technology development, without controlling continuously the quality of its products, maybe because this is considered as secured (Figure 2b, Figure 3). From this point of view, the following suggestion could be made to the two firms in regard to their efforts in promoting quality: HP should try to promote a more flexible quality control framework, meaning that quality would be checked rapidly without causing delays in production. Also, Dell should also seek to secure the quality of its products/ services, setting relevant priorities; for example, the firm’s managers should try to improve the image of their firm in regard to its quality awards, ensuring that their products/ services are not only financially valuable but they are also exceptional in terms of quality. References Ackroyd, S., Batt, R., Thompson, P., Tolbert, P. (2006) The Oxford Handbook of Work and Organization. Oxford: Oxford University Press. Al-Dabal, J. (2001) Is Total Quality Management Enough for Competitive Advantage?: Realities in Organizations Implementing Change Initiatives with Examples from the United States and the Developing World. Boca-Raton: Universal-Publishers. Armstrong, M. (2006) A handbook of management techniques: a comprehensive guide to achieving managerial excellence and improved decision making. London: Kogan Page Publishers. Beecroft, D. (1999) The role of quality in strategic management. Institute for Improvement in Quality and Productivity. University of Waterloo, Canada. Retrieved in March 26, 2012 from http://www.bisrg.uwaterloo.ca/archive/RR-99-03.pdf Berk, J., Berk, S. (2000) Quality management for the technology sector. Oxford: Butterworth-Heinemann. Daft, R., Marcic, D. (2010) Understanding Management. Belmont: Cengage Learning. Dahlgaard, J., Kristensen, K., Kanji, G. (2005) Fundamentals of Total Quality Management: Process Analysis and Improvement. London: Routledge. Dell (2012) Corporate Website. Retrieved in March 26, 2012 from http://www.dell.com/ Hakes, C. (1991) Total quality management: the key to business improvement: a Pera International executive briefing. New York: Springer. 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(1993) Putting total quality management to work: what TQM means, how to use it, & how to sustain it over the long run. San Francisco: Berrett-Koehler Publishers. Zell, D. (2008) Changing by Design: Organizational Innovation at Hewlett-Packard. New York: Cornell University Press. Appendix Figure 1 – Just-in-time system in Toyota (Source: http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/just-in-time.html) Figure 2 – An indicative TQM model (Source: http://www.tqe.com/TQM.html) Figure 3a – HP revenues (in $billions) from 2009 to 2011, per quarter (Source: 2011 Annual Report p.6) Figure 3b – Dell Revenues, for 2010-2011 (Source: Dell, Financials 2011 Overview) Figure 4 - Dell – Achievement of Corporate goals (Source: Dell, Financials 2011, Overview) Figure 5 – Standards of Business Conduct in HP (Source: http://h30261.www3.hp.com/phoenix.zhtml?c=71087&p=irol-govConduct) Figure 5a – HP, Quality Improvement Cycle (Source: http://h17007.www1.hp.com/us/en/support/warranty/quality-statement.aspx?jumpid=reg_r1002_usen Read More