Strategic Management for Dell - Case Study Example

STRATEGIC MANAGEMENT ASSIGNMENT-DELL CASE STUDY Best strategy for Dell Face with such a decline in sales and the market share, Dell must come up with new strategy in order to reestablish its authority in the market. The performance of the company in the recent past compared to how it performed earlier is a clear indication that there is need to come up with new strategies in order to recapture the market that it has lost. Therefore the company cannot continue with its business as it has been doing. It needs to come up with a new strategy in the market. In order to come up with a new strategy in the market, Dell has to take a close look at how it has been performing in all its operation from the production part to the market part of the process. This will help to come up with new production and operation mode that will take the company back to the top. In its earlier operation, the success of the company has been based on the two aspects that helped it to gain competitive advantage in the market. The first aspect was in its product model. While most of its competitors remain with the earlier production model where they would manufacture computers ready for sale, Dell utilized the post-fordism model of production in which products were tailored to the needs of the consumers. The end of the production process for other competitors acted as the starting point of production for Dell. This was an important process that helped it to keep track of the manufacturing process and ensured that the company had the control of the process right from the start to the time the product was delivered to the consumer. It was a production process that is lead by the descriptions of the consumers. However this had an effect on lowering the innovative part of the company. While other companies worked to develop computers that assumed new features, Dell remained to wait to the customer description in order to tailor made the products. (Darlin, 2006) The other aspect of growth for the company was the price advantage that it had over the other competitors. In this case the production model which ensured that the company had less expenses when it came to inventory control and therefore was able to market its product less. The marketing strategy for the company also helped to eliminate middle men in the process and delivered the product right from the company to the customer. This also reduced the price of its product. These are two of the strategies that the company should be working on in the new strategy. They are strategies which helped it to grow and which can also help it to acquire a large segment of the market again. Which are the specific areas that the companies need to address in its new strategy There are number of areas that the company will need to emphasize on in order to reclaim its market and to prosper in growth. These areas include the production process, marketing and meant penetration and diversification. Production process There are minor changes that need to be made in the production process. While the production process has helped the company to cut a competitive edge in the market, it has not been effective in helping it to address the various changes that arise in the operation environment. The production strategy was useful in the beginning when the level of completion was low but it has been losing its effectiveness with time owing to changes taking place in the environment. The production process was sensitive to the market the production cost and it helped to deliver production on time to the consumers. This shows that it helped to meet the demands of the consumer in having products made to their demand and to suit their tastes. But the competitors have been working on new strategies to beat this model while not copying the Dell production model. They have been banking on production of styled computers with many enhancement with are new to the consumers. Rather than going to ask from the consumer what they want so that they can tailor made computer for them, they have been suggestion to their customer what else they can have part from what they know. Therefore the only change that needs to be made on the production process is on the factor of innovations. While the production model should remain, the company has to come up with new producers in which they will show the customer the models that they have and acquired from them the model that they want. This will help the company to inform the customer of the new models that are the market which have enhanced capabilities like other models. What is needed is just to depart from the old production process where the customer dictated the entire requirement needed for the computers and the marketing department should also have an input and inform the customer of the new development in technology that can be incorporated in the new design. (Gross, 2005) In order to respond to the issue of computer models the have modern enhancements, the company sought the service of Allienware which has the experience in the manufacture of high-end PCs. This is aimed at helping the company to enter into this market segment where it will manufacture and sell high-end expensive PCs to gain advantage of the new emerging market segment. But it is good to integrate this strategy not only the manufacture of the high-end PCs but also in its standards product. The market research has shown that consumer is not turning away from cheap products that do not meet the standards of other expensive products in the market. Therefore the company should uphold its price competitive strategy that is acquired through the production process and direct market and integrate improved technology in the standardize computers that it has been manufacturing. Another import step that the company needs to take in the improved of its technology is the use of AMD. AMD microprocessor have been long overdue in their use in the company despite the earlier approval that AMD makes processors that are faster, energy efficient and with an overall improved performance than Intel. Their prices were also lower than that of the Intel. However among all the computer manufacturers it is only Dell that declined to sell the microprocessor or use them in their production process. These are some often factors that have made Dell lose its market credibility and it is also one of the starting point that can be used by the company in order to reclaim its market. Therefore one of the strategic areas that can help the company back to it's initially place in the world is through the manufacturing process. The above strategies are important since it will help to turn it to be an innovator. Rather than waiting for other company to penetrate the market and then come later with modification of their technology, the company should be in the forefront to take advantage of its new technology and important it before other venture in the market. It should shift its focus from selling standard-based products to products which are more responsive the needs of he consumers and the changers taking place in the market. With the price of the computers falling further low, Dell has to come up with a strategy that will enable it to catch up with the new developments in the market. This will only be archived through the use of an effectible production produces in all its operations. It does not have to do away with its direction production and market model it just has to modify it to meet the demands of the market. Marketing strategy Dell was one of those companies with took the advantage of the evolving use of internet in market and immediately took to direct marketing. The company has been selling its products through the internet and through phone calls where the customer places their orders and their specifications. This has been an important growth strategy for Dell that has enabled it to eliminate most of the cost incurred by middle men and therefore offer its products at a lowered price. While this trend has been a source of growth in the US market and other market, it has not worked in other countries like China due to the difference in structures of operation in the market. the influence of middlemen and lack of a market structure that ensure direct marketing has made it difficult for the company to market its product successfully in the country. Direct marketing is the new marketing strategy that other companies are taking on in the market and therefore Dell should not opt for another marketing strategy in place of this one. It has been working and it is still working for the company. but owing to the increasing number of complains that have been launched by customer on the inefficiency of its customer service team, it means there is need to come up with strategies that will help to streamline the operation of the customer service team. For along time the company is known to have put in place a well organized customer service team that has helped it to operate efficiently in the market. But all over a sudden there have been millions of complains in the internet and in other articles who have been complaining of error in their Dell transaction. Therefore one of the most important steps the company has to come with in the customer service department is to have an overall vetting of the competitive of its customer service staff. There are already efforts that have been initiated to deal with the problem of underperformance of the customer service staff. In this new assessment customer service staff are not rated according to the number of transaction they handle but rather based on the way they competitively handle problems arising from the transaction or lack of complains from the transactions that they hand. The company must take more efforts aimed at addressing the issue to improve the service of its customer services section. Another marketing approach that the company has to take in regard to the other areas of operation like china and India where the strategy of direct marketing has not been successful based on the lack of market structures to support the strategy. In this case the company has to come up with new marketing strategies that will assist it to address the needs of the local market instead of imposing the foreign model on these markets. In this case it would be more helpful for the company to adopt marking strategy that is being used by the companies operating in these markets. The market in china has become more competitive and it doest not support the ideas of direct market. Most of the companies in china have been engaging in mass production so that they take advantage of economic of scale. Dell should not consider itself as an exception and therefore should also take this chance and modify its production process in china and other market. Although it still remains to be one of the most competitive seller in the Chinese market, Dell is faced by a dark future in the Chinese market and other market that have not developed the direct market structure. It will be more important for Dell to adapt to the demands of these markets rather than withdraw from the market altogether. Diversification Although the company has a large structure of operation, it is more helpful for the company to diversify in new products that it has the capability of producing. With the entrants of new manufacturers in the market, the price of computer h as been falling and companies will be forced either to come up with new methods of operation or face closure of their operations altogether. Dell has already being backing its competitive edge in the market by selling number of product. It is also thinking of starting its operation in the production of flat screen television. This is one of the most important strategies that the company should take in order to diversify its operation in the competitive market as the landscape of competition changes, the company may lose one market and still maintain growth in the other market. For example Dell market for PCs has been decreasing while the market for notebooks and other devices has been on the increase. Therefore diversification is an important strategy the can help the company to survive in the long run (Goldman, 2008). How to put the strategy into action In order to put the strategy into action, the first step will be to implement the needed changes in the production process. This would involve one of the strategies that have been carried out by the company already of acquiring a company that is highly experienced in the manufacture of high end computers. This would help to bring expertise in the production process that is needed to integrate the new technology in the standardized computers that are produced by the company. Investment in research and development would be another area that the company would have to address in order to create a competitive technology edge. In some areas like China where the direct selling strategy has not been successful, the company needs to outsource from the computer manufacturing firms in the country in order to produce the same computers but using the model at home and the brand name Dell. This would help to create compatibility with the technology that the company has been using and the new technology used in these countries. It would also reduce the production cost for the company. Most of the companies operating in China and India have given contract to Chinese companies to produce for them. This would be an important procedure that would help Dell to adapt ot the local market. In marketing there are various ways that can be used to restructure the default customer service staff but the most effective way would be to bring in some new customer service staff. This would help to add variety in the new staff. The staff should also be hired on performance contract in order to increase their effectiveness. Training and development of the customer service staff is another important step that can be used to implement the mentioned changes. With the changes expected in the production process, the customer service staff has to be kept up to date with the new developments in the production department so that they can communicate with the customers on these new technologies in the production process. Being the link between the customers and the company's product, the customer service staff needs to be update on all the changes in the company. In diversification, the company needs to invest in technology in order to enhance its capacity to product more products aimed at enlarging its area of operation. It will therefore have to invest more in the production technology if it has to produce flat screen TV and other product. The first step in diversification of its product would be the assessment of the market demand of the product and then the capability of the company to produce these products. While the are of flat screen TV is crowded and very competitive, the company can still record the same success that is has recorded with the PCs if it applies the same principles that have not been used by the current producers of the products. Challenges and suggestion There are a number of challenges that are expected to arise from the implementation of the strategy. In the strategy to streamline the production process, the company may be needed to invest new machineries in order to produce as per the demand of the market. But with a turnover of more the $80 billon, this many not be a big challenge for the company. The company can easily raise the amount that is required to modify the production process. There may also be a challenge of investing heavily in research and technology which may even take time to catch up with the new technology in the market. However this can be resolved by the strategy that has been taken by the company of acquiring other companies that have experience in the production of such technologies. In the marketing strategy there will also be a number of challenges that will be encountered. In an effort to streamline the operation of the customer service staff, the company may be forced to lay off some of the workers and hire other in order to make it more competitive. This is likely to generate a negative image for the company in addition of the negative image attributed to its poor performance. But this can be resolved by hiring the customer service staff based on contract performance with will ensure that those who will be dismissed will have been dismissed on bases of underperformance. In place like China where the marketing strategy has not been working, the company may be forced to change the whole production process which will have an effect on the overall control of the company. This means that the company may be forced to change the production process and therefore compromise on the quality of the product (Anoldo and Mailful, 1996). There are few challenges that are expected in the diversification strategy except market competition and the technology. If the company finds that it has what it takes to produce the new products like TV then the market competition maybe the only limiting factor. Therefore the main challenge here will be to sell the new product under the legacy of Dell brand which may be dying in the market. Reference Anoldo, C. & Mailful, S. (1996): Strategic Management; Concepts and cases. Prentice-Hall Darlin, D. (2006): Dell's world isn't what it used to be. Retrieved from http://www.nytimes.com/2006/05/13/technology/13computer.html on 3rd June 2008 Goldman, J. (2008): Dell's Cuts - and problem - Go deep and deeper. Retrieved from http://www.cnbc.com/id/23939314 on 3rd June 2008 Gross, D. (2005): Is Dell Dying Retrieved from http://www.slate.com/id/2125297/ on 3rd June 2008 Read More