Dells Business Environment - Case Study Example

Dell’s Business Environment Dell’s Business Environment Introduction Dell is a privately owned American company. It is a multinational company based in Round Rock, Texas that specialises in the developing, selling, repairing and supporting computers and the related products and services. Started by Michael Dell, the company has grown into becoming one of the largest technology corporations in the world by employing more than 100,000 people worldwide. The technological company deals in selling personal computers, servers, network switches, software, data storage devices, peripheral devices, cameras, printers, Mp3 players and it also sells electronic devices built by other companies. Though it leads in the shipment and selling of PC monitors in the world. Dell traces its origins to 1984 when its founder, Dell, created the Dell Computer Corporation. The company sold IBM Compatible computers solely built from stock components. The company dropped its PC Limited name in 1987 to Dell Computer Corporation while also expanding its business around the world. The company began growing as it became a publicly listed one with its market capitalisation growing from an initial 30 million to 80 million dollars. The following essay looks at the in-depth case of the Dell Company while analysing its various business environments. It looks at understanding the organisational purpose of the company. Understanding the nature of the environment in which it operates. Analysing its behaviour in the market environment and assessing the significance of global factors in shaping the national business activities of the company. Dell’s Purpose The intent and purposes of the Dell are stated in its mission and vision statements. The mission and vision statements are critical standard elements for any organisation and its strategic plan (Bryson, 2011). Most organisations and companies develop the mission and vision statements which act and serve as foundational guidelines in the establishment of company objectives and purpose. From the mission and vision statements, the company then develops its strategic and tactical plans for achieving the objectives (McDonald & Hugh, 2011). Dell’s mission statement communicates its reason for being and how it has the aim of serving its key stakeholders. Consumers or customers, employees and investors are the main stakeholders. The mission statements of Dell include the summarization of the company’s values, these values are the beliefs the company associates itself with, for example, integrity, and quality among others. The values are its guiding principles in the interaction with its stakeholders that the mission statement aims to communicate (Cornelissen, 2014). A vision statement is a long term prospective plan and objective. As opposed to the mission statements, they are relatively brief. However, differences exist between the two, they both play significant benefits and importance to Dell. They play three critically important roles for the company. Firstly, they communicate the company’s purpose to its stakeholders. Secondly, they inform strategy development. Thirdly, they develop goals that are measurable and objectives through which the success of the company can be gauged (Johansen & Nielsen, 2011). Dell’s purpose is becoming the most successful IT systems company in the world. It achieves this through delivering the best customer experience in all the markets it serves. In so doing, it meets customer expectations of high quality, competitive pricing, best in class service and support, and flexible customisation capability among others. Meeting the expectations of different stakeholders Stakeholders in Dell is anyone with an interest in the company’s business. Stakeholders are individuals, organisations or groups that are affected by the activities of Dell’s operations (Bourne, 2012). They include the owners who are interested in how much the profit the company makes. Other stakeholders include employees, customers among others. The extent to which Dell meets their expectations is shown below: Customers The company’s extent in meeting the expectations of the customer is clearly highlighted in its mission statement. The company promises to deliver high-quality products, offer competitive pricing, offer the best in service and support while also offering accountability to all the customers (Schiffman, et al., 2013). This indicates a willingness and extent the company is willing to meet the expectation of this key stakeholder. The company has consistently maintained a lead as the best PC related company in the United States. The feat is due to meeting the needs and expectations of customers in terms of fair pricing and high-quality products. Those two needs are the main expectations from customers and the Dell Company meeting them highlights a milestone that it strives to adhere to every day. The importance of customers is clearly highlighted in that the company’s mission statement aims to meet their needs more than those of others. Owners The owners are mostly concerned with the profitability of the company (Barry, et al., 2011). The company has consistently been named as one of the largest global companies in terms of both assets and operations. The company’s total assets have been on the increase, reaching more than 48 billion, with its operating income numbering more than 3 billion. The need for a company to achieve success and become a leading IT-related company is what its owners had in mind during the formation of the company. They are clearly on the way in achieving this feat with their company’s total assets being healthy and profitable. The company also aspires and grows into being a responsible corporate citizen. This is particularly important to its conscious consumers, the government and the surrounding communities. Company’s responsibility and the strategies employed to meet them The company’s responsibility includes ensuring quality products. In so doing, the company has employed a quality assurance strategy that focuses on meeting the needs of customers and enabling employees to do their jobs in ensuring quality. The company has invested in a quality management system (QMS) that ensures the quality requirements are met. It also ensures the varying customer needs, particular objectives, and the products and services provided, the processes used all meet the quality standard. The standard also employs quality control plans which define how the quality standards are to be met for specific projects and customer deliverables. Furthermore, the company employs methods of self-assessments to ensure its quality standards are of the required level. In ensuring that it is a responsible corporate citizen, the company has employed various strategies and means of corporate social responsibility that aims to give back to the society. It uses innovations in packaging, efficient energy and recycling that guarantees and protects the environment. The company also works with different communities to solve different pressing needs through the provision of technology, expertise and providing the necessary funding. Economic systems in allocating resources effectively The national environment in which the organisation operates is based on the free market economic system. The economic system has very few interventions from any external entity, and the price mechanism determines how much of goods and services are supplied according to the prevailing market demands (Wills & Lee, 2014). Most of the decisions for the dell company is based on the free market economic system. The supply demand and the ability play the important role in market decision making. The company produces the IT related products during the market and of course the cost of production decides the prices of that product and service. The government and other external stakeholders do not control anything or play any factor in the allocation of resources. The key role of the national environment is through providing an enabling environment for such companies as Dell to effectively operate without any difficulties or hindrances. Impact of fiscal and monetary policy on Dell activities. Following the world’s economic and financial meltdown, there have been calls for far greater regulatory controls on the money flows in the corporate sector (Harvey, 2011). The calls have mainly come in the fiscal and monetary aspects of corporations. It calls for the enactment of prudent measures to ensure the health and financial success of any company. The prudent measures ensure there are no unfair cash outflows. And companies do no borrow more money that they can service. These measures have not had a significant effect on the activities of Dell Company. That goes without saying that the Dell Company has enough measures that ensure fiscal and monetary prudence. Furthermore, the company has enough measures that guarantee compliance with external financial regulatory frameworks and financial accountability. The measures are important in ensuring the company plays and abides by the national environmental requirements. The need to abide by the national environments fiscal and monetary policies is important in making the company becoming a responsible corporate citizen that follows the laws set. Impact of competition policies and regulatory mechanisms on Dell Competition policy is meant to ensure Dell does not play a monopolistic role over the market. The competition policies are important in encouraging enterprise, innovation, efficiency and the widening of choice in products (Edquist & Zabala‐Iturriagagoitia, 2014). Furthermore, it is important in enabling the customers to acquire the products and services they desire at the best possible price. Finally, the competition policy is important in guaranteeing national competitiveness. The importance of were set up with the need to protect the market, guarantee consumer choice and ensure fairness in the marketplace. Dell as the one of the largest companies in the IT related industry has to abide by these regulations. The impact of the policies of the company is felt in the sense that the company can never acquire its direct competitor without having to undergo through various regulatory approvals. It ensures it does not breach the letter and the spirit of competition. Therefore, the competition policies ensure that the company has the same equal operating footing as many of its competitors and it does not enjoy any favours from any market. The only advantages the company can rely on to offer competitive advantage stems from its product differentiation from those of other competitors. Market structure determines the pricing and output decisions of the business There are different kinds and set up of markets in different economies. Accordingly, there are different types of output and pricing decisions that must occur. Normally, output and pricing decisions are interdependent except for in the case of perfectly competitive markets (Esteves & Reggiani, 2014). In the case of that perfectly competitive market, a single company is so small as compared to the market size that it cannot affect the pricing. In that case, that company must take the price the way it is and then decide the quantity of products to be supplied. Price in this market is equal to the marginal cost of production. This is relative to the same situation that the Dell Company finds itself in, this is because the of the competitive regulations place on the national environment. The competitive policies disregard monopolistic tendencies and the ability to set and determine market prices of products. Therefore, in such a competitive market, the prices of Dell’s company are determined by the market after the calculation of the marginal costs of production. However, in order to maximise profit or minimise loss, the company needs to produce the quantity was their marginal revenues equal their marginal costs. It must then charge a market clearing price which is the price that will clear exactly that quantity of their product. Therefore, the Dell Company must clearly determine the product that will clear in determining the product output. Product pricing is determined by the competitive nature of the environment, but the company determines the product output in order to increase profit and minimise chances of a loss. Market forces shaping organisational responses Market forces affect organisational responses in many different ways. Market forces include things like demand and supply, governments, speculation and expectation and international trade (Cairncross, 2013). These factors have all had an effect on the response of Dell as the company positions itself for the future and the demands of its customers. For example, Dell is currently positioning SecureWorks as a big data based solutions that aggregates security threat profiles from across Dell’s customer base. The initiative processes security issues from across the multiple products across the Dell platform. The SecureWorks based service ties clients’ end-point to networks, to software applications and data in the cloud to integrated monitoring. Dell’s venture into security provision has been as a result of its customers demanding for a holistic approach to security provision. Business and cultural environments, shaping the behaviour of Dell The behaviour of any organisation is influenced and shaped by the surrounding business while also the cultural environment has a great impact on it (Carroll & Buchholtz, 2014). The wider business environment which has a great impact on the behaviour of Dell may be divided into six segments according to the PESTEL framework. They include the political, economic, technological, socio-cultural, environmental and the legal environment. The business environment affects the business in different ways, for example, in the political, it focuses on the government that is necessary for providing a stable framework for economic activity. The economic environment affects firms both at the national and international level, both at the general level of economic activity and other particular variables. The variables include exchange rates, interest rates and inflation. The technological environment is crucial in determining the way in which markets are identified, services are provided, the manner in which the company is managed and the means of communication among others. No business exists in isolation. Therefore, we can state that cultural environments shape the people and the organisations that are near. The society in which an organisation exists influences it in many different ways. Importance of international trade to UK business organisations International trade is buying and selling of goods and services beyond national borders. International trade is essential in maintaining the flow of goods and services, therefore, ensuring the availability of products or raw materials across different regions. It is the backbone of an increasingly interconnected and interdependent world because different producers of goods try to profit from an expanded marketplace. International trade is essential in eliminating shortages of goods and services or raw materials in particular regions. The significance of international trade of UK business is not matched (Wagner, 2012). Some examples include. Firstly, the fact that some goods and services are highly specialised, and the local, domestic market may be small to allow the exploitation of economies of scale. Therefore, international trade is significant. Secondly, commercial buyers of some products that are operating in an overseas country may need their suppliers to be in a position to cater to their demands across national borders. Thirdly, the saturation of the domestic market may necessitate a company to seek an international market. Finally, international trade gives companies an opportunity to reach new market segments. Impact of global factors on UK business organisations There are different aspects and global factors that have impacted on the UK business organisations. These have been occasioned by the international trade and the increasing interconnectedness as a result of globalisation. The UK business organisations are heavily influenced by the developments in the global economy. The impact can be felt in terms of various aspects, for example, in economic terms, the socio-cultural issues, in technological terms, the environment and the legal aspects. Some examples of the impact concern the technological arena. Business are affected through the increasing access to the overseas patents, overseas intellectual property protection, the transfer of technology and the relative cost of the technology as compared to labour. These have had positive and negative impacts on the business, but it offers UK businesses a chance to exploit the opportunities offered through technology transfer among others. There has also been an increase in competitions because of the trade and increased economic activity among the businesses in the UK due to global factors. Impact of the policies of the EU on UK business organisations The European Union has had various impacts on the business organisations not only in the UK but across throughout the bloc. The EU places some regulatory legislation on the goods and services produced by UK organisations. Some of them include an end for the need to produce customs documents and also an end to the need for traders to submit tax declarations. The policies have also had the impact of making UK business organisations match other world organisations in terms of efficiency and effectiveness while also offering environmental protection to the firms. Other impacts include the opening up of markets upon which UK businesses can exploit for profit. The impact of the policies is many and beneficial to all the business organisations involved. Conclusion Different environments have different impacts on the performance of companies. The particular environment in which the organisation operates in has many different variables and factors that affect business differently, and it is through this interaction that a business becomes successful or not. Companies need to leverage the different variables in the environment in order to meet its purpose as is the case of Dell in the above essay. There are different stakeholders in an organisation with different expectations, and the organisation needs to plan carefully how it will meet those expectations. The above essay has some examples on the needs of these stakeholders and how to meet them together with the responsibility and the strategies to meet them. Furthermore, there are various factor that determines how an organisation behaves in the external environment in terms of the business operations. For example, various policies such as the fiscal and monetary policy and the impact of competition policies and the regulatory mechanisms on it organisation. The market is an important interactive environment for any company and how the forces shape the responses of the organisation together with the business, and cultural environment is also analysed and how it affects the behaviour of Dell. Finally, the essay also looks at the how the global factors on the business organisations and the further impact of the European Union policies on the UK business landscape. The importance and the various challenges. In analysing Dell company, we gain an invaluable insight into how it is important for business to analyse the various factors in the environment may have on its business and how to navigate that environment. Bibliography Barry, T. A., Lepetit, L. & Tarazi, A., 2011. Ownership structure and risk in publicly held and privately owned banks. 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