The Elements of Dells Strategy - Term Paper Example

Running Header: Dell Inc. in 2008 case study Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: Table of contents Introduction………………………………………………….…………………………….3 Competitive strategies employed by Dell ……………………….…………………………3 Dell’s expansion into other IT products and services………………………………………4 Actions and strategies recommended for Dell company…………...………………………5 Hewlett- Packard’s strategy compared to Dell’s Strategy…………..………………….….6 Issues and problems to be addressed by Dell………………………………………………8 Conclusion………………………………………………………………………………….8 References………………………………………………………………………………….9 Dell Inc. in 2008: Can It Overtake Hewlett-Packard as the World Leader in Personal Computers? Introduction In the category of enterprise IT, Dell Company has been seen to compete with the Hewlett- Packard (HP) Company for a very long time, though there has been a very stiff competition, Dell has always maintained the leadership in the market of personal computers (PCs) all over the world. This may be attributed to the Dell’s singular strategy of building and selling products cheaper and more efficiently than its competitors. Dell company Chief Executive Officer has been strategizing and venturing in other fields of IT; this has boosted its competition with rival companies. Companies’ management is very essential in delivering quality products to the consumers as well as driving the profits of the company high, as in the case of Dell compared to rival H.P. This case study is aimed at assessing the performance of the Dell’s C.E.O in executing the strategies of the company, the various strategies put in place in order to stay ahead of H.P., the major problems and challenges as well as the actions or strategies that has to be implemented to scale up the vision of Dell Company. What are the elements of Dell’s strategy? Which one of the five generic competitive strategies is Dell employing? How well do the different pieces of Dell’s strategy fit together? In what ways is Dell’s strategy evolving? The main strategy put in place by Dell Company is manufacturing and selling its products in low prices and more efficiently compared to its rivals especially the Hewlett- Packard (HP), thus increasing its market share as well as its revenues (Madden 2005, p.3) .Dell has been adapting this generic strategy of cost leadership as it targets a broad markets. Dell depends on this particular strategy as it has some strength especially in regard to Dells efficient distribution channels, high expertise in the entire engineering process and quality skills in the design of products for efficiency in manufacturing. The Dell’s simple plan to focus mainly to both the consumers and business customers has led to the growth of Dells overall enterprise strategy. As described by Aurthur, John and Strickland (2005, p. 568) Dell’s strategy model gives a room for selling products directly to the customers; this a very efficient in marketing the company as it is able to eliminate some retail dealers and wholesalers who act as a hindrance in Dell’s understanding of the needs as well as the expectations of the customers in relation to its products and services. Dell also gives an opportunity to the customers to buy products that are custom build and customer tailored services effectively while trying to meet the needs of the clients. The other and most important component in the strategy of Dell Company is the efficiency in the supply chain whereby the use of standardized technology and selling of its products directly acts as a cost saving strategy the overall enterprise strategy for Dell is maturing and growing stronger each year and has led to crystallization of the main vision of scalable enterprise. The Dell’s strategy is evolving as the management keeps on holding to the components of its strategy. Dell aims at making a build-order manufacturing and makes it more efficient in relation to the cost. The strategy also aims at using a direct sale to attract customers as well as expansion of the company into additional services and products and to provide good customer service and support. The company’s main aim of their evolving strategy is to reduce costs through out the supply chain and direct sales (Dell Company 2011). Does Dell’s expansion into other IT products and services make good strategic sense? Why or why not? Dell’s has ventured into various IT products and services, some of these include: desktops, servers, notebooks, net books, peripherals, printers, televisions, scanners, storage, and smartphones. This expansion is a well thought strategy and it makes a lot of sense. This is mainly because IT products are linked either in their functioning or one product has to go with another one for efficiency. A good example is the scanners and printers. A printer or a scanner works hand in hand with desktops; therefore it is a valuable strategy, because a client does not need to buy a Dell desktop and moves to IT Company such as H.P to get a computer or even a scanner. Since other Companies have varying IT products and services and that the market for IT products is rising as the world advances technologically. There is need to have customer satisfaction in all IT fields. This expansion calls for more research and development as well as improved marketing and production strategies. A good example is when one has a PC and servers, switches are a must as every PC attaches to a switch, every server attaches to a switch, and therefore this makes an easy sale as switches go along with computer systems. Business expansion is a major boost to exploring new markets that may n future yield more in terms of revenues. What actions and strategy changes would you recommend to Michael Dell to boost the company’s performance and its prospects for overtaking HP in global sales of PCs? Marketing is a key strategy; Dell need to undertake a well planed advertisement al over the world, this is a strategy to enable the customers to fully understand or become aware of the efforts put in place by Dell. The new products that Dell (2011) is bringing in the market have to be fully marketed. Technological advancement calls for research in new models and designs to fit in the demands of the customers. Dell Company should also shift its single strategy of doing business and focus on a multichannel strategy, to ensure that their products do not entirely depend on one channel to reach the customers. In doing so, Dell will be able to reach a wide market all over the world. E-commerce has been advancing and being adopted widely and the world is becoming a global village, Dell Company should adopt a strategy to ensure customer awareness and ability to make use of online business as it is more efficient in today’s world. It is also important to help customers streamline and expand on their intranet plus the extranet capabilities; this will only be possible through Dell’s improved functionality, enhancing the user experience as well as ensuring better integration. Dell should be able to conduct its online business assessment to determine whether it is effective as per their target, and make adjustment and improvement where necessary. According to Purkayastha and Kramas (2008, p.5), the IT sector advances very quickly and Dell company should ensure that it has a skilled human resource a as well as machines to strengthen its production and supply chain. In today’s world low-cost and low-style approach is not applicable in computer market; instead Dell should focus more on branding and designing their products, as this is the strength in the world today due to the rising need of modern and quality products. The other important strategy that Dell must put emphasis on is on corporate responsibilities. Many people all over the world are concerned on product effects on the environment; therefore, Dell Company must look for way to assure its customers that the product whether in use or faulty has little or no negative effect on the environment. Dells green campaign should also be used to market it. In what respects, if any, is Hewlett-Packard’s strategy in PCs more appealing or better than Dell’s strategy? Hewlett- Packard (HP) has a well developed strategy of business to business form of conducting its business. HP also has an extensive strategy used in integration of both direct customer as well as channel partners; HP does this through Web and via customer’s internal systems. HP’s strategy does not link with the customers directly as through as it is in the case of Dell Company. HP strategy is more appealing in that it involves various channels to market and distribute its products globally. The involvement of marketing and distribution channels enables HP to reach a wide market, hence improving its share in the competitive market of IT related products. HP strategy is somehow better than the Dell’s strategy of focusing directly to the customers while doing away with the retailers who are also very crucial in the delivery of products in the market. Dell has a strategy of selling its products at a cheaper price which over the years had been seen as a positive strength but later it almost turned to be its weakness as the market demanded more quality products rather than having cheap products (Rosenthal 2003, p.1). HP on the other hand put its focus more on improving the quality of its products as well as regulating its prices. This acted as a major boost to the HP as it was and is able to maintain a huge market share, regardless of their prices; mainly due to improved quality of products. This strategy has really made the HP strategy to be more appealing than the Dell’s. Dell’s failure to use retailers, independent sellers, marketing channels and the strategy of lowering costs affects it negatively. It becomes easy for HP to sell more; though it also relies on direct sales of PCs it also meets huge numbers through involvement of retailers and distribution channels. What issues and problems does Michael Dell need to address? As indicated by Dell (2011), the company relentlessly continues to focus on being the lowest – cost manufacturer and distributer of Personal Computers, Michael Dell should also focus more on the quality of the products and services; as customers in today’s IT market have a tendency of purchasing quality and not the price at which a particular product is retailing at, therefore, Dell must improve on the quality most importantly in the design and durability of its products. Dell has to focus more on its research and development, mostly on new innovations and client preferences before initiating new products. A good example is of its failed MP3 music players. Rival companies such as HP have overtaken Dell due to manufacturing of cool quality products. There is need for Dell to address the issue of marketing and have to involve retailers rather than over relying on direct selling; marketing demand for a diverse strategies. There is need for Michael Dell to address the issue of customer relation which has been deteriorating; proper mechanisms has to be put in place to ensure customer satisfaction especially when product delivered are faulty or have malfunctioned, the response should be quick and timely to avoid loosing customer’s faith which is very important in maintain customers loyalty to the company’s products and services. Customers rely mostly on phone calls, blog posts, email feedbacks and personal visits to the company. The issue of customer dissatisfaction should not arise at all as this is likely to harm the company. Michael Dell must be able to regain and protect the image of the company through rectifying mistakes identified and reported in time. A good example is the issue of the exploded notebooks where there were claims of faulty batteries or technical problem. There was an urgent need to respond to this issue. Conclusion It is quite clear that profitability as well as customer satisfaction is the sole idea behind establishment of a company. In addition competition in the Personal Computer and other Information Technology related products is rising each day; this can be attributed to the globalization and advancement in Technology. This calls for Dell Company to be innovative in both ideas and Technology to maintain its share in the IT market and to enable compete fairly with, rival companies such as Hewlett- Packard (HP), Toshiba among others. Dell has to improve on the marketing strategies as well as on the distribution strategy; it should be able to reach a wide market through market channels, independent sellers and retailers, otherwise competition form rival HP Company will become stiffer. In conclusion Dell must shift its focus from selling cheap products and rely more on quality as customers are turnin to rival HP due to its cool quality designed products regardless of their prices. Dell Company is not likely to overtake Hewlett- Packard (HP) in terms of product delivery as well as profitability. References Arthur, T, John, E & Strickland 2005, Global strategy and competitiveness, McGraw Hill, U.S.A. Dell Company 2011, viewed 4 May 2011, http://www.dell.com/ Madden, J 2005, ‘Can professional services drive Dell’s scalable enterprise vision?’, Market Strategy Report, p. 1-20. Pur Kayastha, D & Kramas 2008, Dell-inc: Moving beyond direct sale model, IBS Centre for Management research, India, pp.4-20. Rosenthal, R 2003, Hewlett - Packard ' s Strategy for Business to Business e- Commerce, viewed 4 May 2011, http://h10019.www1.hp.com/business- site/docs/29814.pdf Read More