Dells Current Offerings and the Identification of New Opportunities - Research Paper Example

Dell is a leading technological company offering a wide range of computer products. According to its case study, it is the number one supplier of computer products in the US and the number two supplier worldwide. However, Dell lost its leading position to HP recently due to different factors. Against this background, this critical analysis of Dell’s case study seeks to evaluate the organisation’s previous and current strategies in its operations in order to ensure that it maintains its competitiveness. The assignment is divided into four parts. The first part is concerned with analysing the organisation’s environment and its business model and IS/IT strategic initiatives. The second part is concerned with evaluating the products currently offered and the identification of new opportunities in its target markets. The third part will look at the organisation’s core competencies and the last part is concerned with recommendations. a) Dells’ business model is based on the virtual organisation. A virtual organisation is a network of independent organisations linked together by information technology (IT) (Haag, Cummings & Dawkins 2000). The ability of the organisations to respond to customer needs by coming together quickly and in effect forming a full functioning firm generates a great deal for the organisation. Thus, according to its official website (www.dell.com ), the organisation caters for different needs of both small and large institutions. IT is an integral part of business at Dell such that it is almost impossible for the organisation to survive without it. Basically, IT is concerned with the field that deals with using computers to convert, process as well as protect information (About.com). On the other hand, information systems (IS) can be described as the way through which people collect, process as well as store information through the use of different computer technologies (Haag, Cummings & Dawkins 2000). Thus, Dells’ business/IT as well as IS strategic initiatives are based on the power of the internet to connect with the customers. New technology has also impacted on the way businesses operate and the internet in particular has revolutionised the way people conduct business. Essentially, the role of business is to serve its customers profitably and such kind of scenario can be achieved if the organisation has right information at a particular given time which is possible through the use of appropriate information technology (Haag, Cummings & Dawkins 2000). This strategy has allowed Dell to base its current competitive efforts on its strengths while using IT to innovate. In as far as the viability of the organisation is concerned, it is imperative for that particular organisation to scan the competitive environment so as to be better positioned to gain a competitive advantage. There are different techniques that can be used to analyse an organisations competitive position from an IS perspective. One method of exploring your organisation’s competitive environment is Porter’s competitive model (Robins 1997). In this case, the five forces in this model will be used to analyse Dell’s competitive environment. These include: customer force, substitute force, supplier force, new competition force as well as the current competitive force. During the 2010 period, the competition force of Dell shows that it has lost its market leadership to Hewlett-Packard Co. (HP). The delays in its supplies and the recent recall of the Sony Battery cells in its laptops affected its reputation as the leading computer company, the position it used to hold. This has led to increased discontent in customers which has contributed to its current state of competitive environment. A strong customer force is generated by a well informed buyer. Despite the mishaps over delays in supplies as well as customer discontent, it can be noted that the competitive environment of Dell in terms of customer force is still strong given that over the years it has managed to create loyal customers and it knows their needs and interests which is the essence of being in business. Dell has been following its direct customer model over the years where the customers can plan their purchases directly through the phone or the company website. This has given the organisation a competitive advantage which has helped to create loyalty among the customers. To date, it can be noted that its competitive environment is still strong though there is need to further strengthen it which is a healthy situation in any business set up. To date, customers trust Dell for their enterprise IT needs which is a strong competitive advantage for the organisation. Dells’ competitive environment is characterised by new and old competitors. The major competitors of Dell are HP, Acer and Lenovo among others. Competition in the market is always seen as a threat to the viability of the organisation hence the need to put measures that are meant to counter the negative impacts of competition. It can be seen in this case that Dell does not operate in a vacuum or in isolation but in an environment where there are also competitors seeking to gain a market share from the same customers. In the same vein, there are substitutes that exist in the market. The major product lines for the organisation include desktop PCs, laptop computers, servers and storage, software and peripherals as well as services. In the competitive market in which Dell is operating, it can be noted that there are substitutes whereby the customers can switch to the other brand if they are not satisfied with the products offered. It can be noted that Dell lost its number one position to HP which confirms that there are substitutes in the market whereby customers can just change the choice of product if they wish so. Porter’s competitive forces model can also be used in this case where it can be noted that some businesses in the market are viable to the extent that other competitors cannot be copied by the other competitors in the industry. In order to survive in the long term there is need for the organisation to have what is called competitive advantage according to Porter. Thus, in order to survive in the long term, Porter (1985) has argued that a firm needs to have sustainable competitive advantages. There are two sources of competitive advantage; cost advantage and differentiation. Cost Leadership’ is where a firm seeks to be low-cost producer in its industry whereas ‘Differentiation’ is when a firm seeks to be unique in its industry through features of its products that are highly valued. In this case, the internet has greatly helped Dell to lower costs on money spent on marketing activities while at the same time maximizing the returns. Antion (2005) states that the internet is relatively cheaper to use but the returns are tremendous. b) Many authors over the years have attempted to conceptualise the notion of a ‘customer journey’ Fraterman (2003) suggests that in making a purchase, the individuals are motivated by eight factors. Other types of purchase would have more or less stages of different types. These stages include: need, enquire, approach, recommendation, purchase, experience, problem and reconsideration. Each of the stages has a bearing on the customer experience when he is buying a particular product. The strategy is adopted out of the belief that the market makes the best decisions and since the users are responsible for business results they are the most equipped to make these best decisions (Robins 1997). This strategy requires knowledgeable users who are able to assess the relative merit of wide ranging options. According to Fraterman (2003), there are broadly four stages that are drawn from the customer experience that create what an addictive customer experience. This type of experience encountered makes the customer wants to buy the product again and again. Thus, a critical analysis of this concept will be used to help evaluate Dell’s current offerings and the identification of new opportunities in its target markets. The table below is going to illustrate the strategy that can be adopted by Dell so as to appeal to many customers. Action plan Strategy Understanding the needs of the customers. Conduct market research to gather information and their views Matching customer needs Create customer service through engaging them. Impressing customers Turn satisfaction into delight. Appealing to emotions Feel for the customers. The first stage or foundation is concerned with understanding of the needs and expectations of the targeted consumers where the voices of the consumers, employees, suppliers as well as the organisation as are heard. It can be noted that the main goal for Dell has been achieved at this stage whereby it has to understand the needs of the customers. These are given prominence than the organisations competitors. Feedback from the customers is very important at this stage and in can be seen that Dell has been leveraging on this to ensure that they stay very close to the customers so as to keep on gathering relevant information that can be helpful in reinventing the current offering. This can be noted through their customised service to the customers through the customer model. This stage is concerned with what Dell has decided on what will be included into the promised brand to the customers. Dell has been continually utilising this stage so as to make products that are purely distinct from the other competitors which is a source of its competitive advantage to date. There is likely to be a lot of interest among the customers given that their needs will have been addressed in a nice fashion. Product designing has been based on the needs of the end users of that particular product who are the customers. Indeed, Dell has been guided by the notion of customer care but it has to keep on investigating the needs of the customers given that these constantly change especially during the contemporary period. The second stage in the customer journey is concerned with matching the customer needs. At this stage, the organisation delivers the brand promises made in such a way that will amaze the customers while at the same time ensuring consistency. It is at this stage that the organisation delivers on the customer needs where the goal is to deliver perfect service. This stage creates customer satisfaction. Whilst many people expect more than just satisfaction, research has shown that delivering what is expected by the customers or what you promised creates satisfaction. More is needed in terms of creating loyalty since research has shown that mere satisfaction does not lead to loyalty. By engaging the customers, Dell is better positioned to influence product development which helps it to establish the needs and interests of the customers. This information is then relayed to the manufacturers and suppliers of different computer accessories. By virtue of being responsive to the needs and wants of the customers, the organisation has managed to create satisfaction among the customers which is an advantage for the organisation in terms of competition. However, Dell must continually follow up on the customers and try to gain more information from them about their perceptions of the current offering. This will help it to take into consideration the needs of the customers in modifying the current offering so as to help create loyalty among them. Loyalty among the employees entails that they will make return purchases and there will also be referral purchases which is advantageous to the organisation in terms of future growth in the face of competition. The third stage is concerned with adding something extra to surprise as well as delight the customers. Through its direct customer model, dell is better positioned to customise its products to meet the customer needs. It must be its responsibility to ensure that that they conduct further research such that they know the extra incentives they can offer to their customers as part of their loyalty programme. This is the stage where satisfaction should be turned into delight which has a long term bearing on the way the organisation will manage to retain its customers. As a way of identifying new opportunities in its target market, Dell must go an extra mile and design features that will attract the customers even if they are not requested by them. The final stage is concerned with dealing with emotions. Dell must always be reminded that they should touch the emotions of their customers so that they will be better positioned to create a lifelong loyalty to the organisation and the products offered. This helps the people to bring out their natural human emotions which can lead to life-long emotions. By virtue of showing the customers that Dell really cares about them, they will develop a closeness that will last and this can translate into loyalty which can help in developing other products that will appeal to them as well and it can be noted that Dell has reached this stage. Similarly to the customer journey, the customer activity life cycle is a framework which includes methods for reaching, acquisition, conversion and retention of the customers. Basically, the customer activity cycle is comprised of the following stages: recognising the need, problem definition as well as purchasing framework. As it stands, Dell’s customers have reached the purchasing framework and they always anticipate improved products. The opportunity for Dell is that it can harness on the loyalty of its customer base and improve on the offering. Indeed, there have been some hiccups in its supply chain which have created a gap which should be bridged as a matter of urgency. To a larger extent, the customers are loyal to the brand offered and opportunity readily available is to appeal to their emotions through product development which may include differentiation. The diagram below shows the customer activity life cycle of Dell. Customer activity cycle c) Dell’s core competencies mainly emanate from its usage of the internet in is operations. As an internet company, it can be noted that the internet can play a cost effective role with regards to selling of the products where the organisation can directly interact with the customers through specially designed website. According to information obtained from its official website, the internet has given Dell a means of reaching all the customers with minimum costs. “It has done so in part by automating functions such as product configuration, order entry, and technical support which enables the company to grow revenues without a corresponding increase in customer service costs,” (www.dell.com). Dell’s other core competence is that through the use of the internet, communication costs involving telephony are drastically reduced while at the same time it is able to communicate effectively with all its customers. Advertising is also promoted through interactive involvement of all the stakeholders. The website of the organisation is designed in such a way that it is easy to get any information about a product or about the organisation itself without any difficulty. Effectiveness of information processing especially in the information society we are currently living is ideal for any business and it can be seen that this is a major core competence for Dell as it can process all its informational requirements at great speed which may not be met by the other competitors. The other core competent is that the use of the internet at Dell has also greatly improved the marketing of PCs and other related accessories. In this particular case, marketing is essentially concerned with bridging the gap between the sellers of the PCs and consumers and the main aim is to satisfy the needs of the customers profitably. Dell is constantly in touch with its customers and communication with the customers is greatly enhanced by the use of the internet. According to its official website, Dell connects with more than 5.4 million customers every day on the phone, in person but mostly through the internet such as the use of social networking sites. Through the use of the internet, Dell is positioned to offer feedback through on site or offsite support. It is the second most respected brand for breadth and depth of social media activities. According to its official website, it has more than 3.5 million members who belong to the Dell social Web community, which includes Dell.com communities and Dell outlets on Twitter, LinkedIn, Facebook, SINA, Orkut (Brazil) and other sites. These social sites are very popular these days which make the company stay in touch with its customers. It has been noted that during the contemporary era, new information and communication technology has revolutionised the ways of communication and doing business. Through social networking, the organisation is better positioned to reach millions of people where interaction is possible. Another core competent for Dell is that the internet facilitates online shopping where the buyer does not need to go to the shop physically to obtain any product of choice. With online shopping, the customers can purchase various products using credit cards or other online transactions regardless of the geographical location they are. Deliveries in local areas are done within 24 hours of purchase and in other areas abroad, they will be done within seven working days. Online transactions are secure and convenient to use and this has benefited the above mentioned organisation a lot to satisfy the needs of the buyers. Where there is mutual trust between the buyer and the seller, there will be highly chances of creating loyalty among the existing customers which is the case with Dell. Another core competent that has been brought by the use of the internet to Dell is that the organisation is better positioned to keep pace with the other developments taking place in the environment in which it is operating. The purpose of business is to attract as many customers as possible but this is not an easy feat given that the industry is characterised by many competitors. The internet has made possible for the organisation to gather information about the other competitors. As noted above, almost any information can be found online hence Dell has successfully managed to harnesses the internet to gather information about rival competitors that it uses in the formulation of strategies meant to counter the challenges of competition. In order for business to survive in a competitive environment, it is imperative for the organisation to know the operations of the others which is an advantage. To a greater extent, it can also be noted that Dell has immensely benefited from using the internet where it can be seen that the company is better positioned to influence product development from different actors given that it deals directly with the customers. Dell knows exactly what the customers want which is a core competence for the organisation in that it offers products that will be readily accepted in the market. The internet allows the organisation to carry out market research which helps it to establish the needs and interests of the customers. This information is then relayed to the manufacturers and suppliers of different computer accessories. It can be seen that the organisation has strong ties with the customers which makes it to be able to customize its products to meet their needs. By virtue of being responsive to the needs and wants of the customers, the organisation has managed to create loyalty among the customers which is a big advantage for organisation’s survival in a competitive environment. Loyalty among the employees entails that they will make return purchases and there will also be referral purchases to the other potential customers which is advantageous to the organisation. All the above mentioned core competences are somehow unique and they can be maintained. d) It is recommended that Dell should not put more emphasis on the needs and wants of very big organisations only. Noble as it is, it must take due consideration of the needs of the other niche markets comprising of individual customers. These certainly go a long way in contributing to the revenue generated by the organisation which is the main purpose of being in business. Some market segments may be overlooked which means that the potential customers living in these areas will not be covered. It is therefore recommended Dell must restrategise and widen its net to include all the grassroots markets. There is great potential and long term benefit in venturing in these markets as they will help the organisation to sustain its market share in terms of revenue generated. It is also recommendable that Dell should find an alternative to the supply chain strategy it has been using all along. The fact that we are living in a dynamic environment means that some strategies even though they used to be good are bound to fade which means that there is need for revisiting these strategies and find alternatives where possible. It is recommendable that Dell should make use of many retail outlets other that Wal-Mart and other big and popular retail outlets like Tesco. Dell should try to encompass the use of many retail outlets given that the other competitors have closed the supply gap. Reaching the customers in their market segments is a virtue especially during the contemporary period where there is stiff competition among rival competitors. Dell should also take into consideration the aspect of design of its products. It is recommended that Dell must focus on continuous improvement of the products it offers so as to remain viable. Customers are attracted by new features of a product which is a step which should be taken into consideration by the CEO of the organisation. Bibliography Antion T (2005). The ultimate guide to electronic marketing for small business. New Jersey. John Wiley & Sons. 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