Performance, Governance, and Top Management of Dell Company - Case Study Example

Street Address ST ZIP e-mail phone fax Dell Case Study The following is an analysis of Dell, Inc. This isa company within the technology sector that services and sells computer components. Dell services customer's world wide. This analysis is current as of 2004 and focuses on Dell's China market. I. Current Situation A. Current Performance Dell Inc. has continued to be a leader in the marketplace. Dell's greatest challenge was entering the global marketplace with operations in China. Currently (2004) Dell has 18.2% of the global market share in the computer industry. The company has continued to have increased sales (currently about 8 million). Dell has successfully entered the Chinese marketplace and holds 7% of the market. Dell is forth in sales in China followed closely by IBM and Hewlett-Packard. Dell lags behind Legend, Founder, and Tongfang. Dell's greatest challenge has been competition from local venders who can market a product at a fairly low price. B. Governance Corporate governance consists of a board of directors. The board has several committees with a different board member chairing each. "The Board of Directors is responsible for oversight of and supervision of the overall affairs of the company" (Dell, 2007). Dell's Asia Pacific Region President is Bill Amelio and Kevin Rollins is the CEO. C. Top Management The Dell Executive Leadership Team is chaired by Michael Dell. Mr. Dell founded the company in 1984 with $1000 and big ideas. He leads a team of 13 other highly qualified executives that share the same goals and objectives for Dell. Mr. Dell and his team have been exceedingly successful building the company and expanding its business to the global marketplace. Dell's leadership has made it a competitor in the Chinese market. II. External Environment (Opportunities and Threats) D. General Environment The market for computer products and services in China is very competitive. With the large increase in ownership of computers has come an increased usage of the internet. As China moves to withdraw tariffs on computer products the demand for these products will rise. Chinese businesses and individual consumers will continue to seek out and buy these products. B./C. Industry Environment/Summary of External Forces The computer industry is full of potential competitors. With China's withdrawal of tariffs and barriers to trade the market in China for personal computers and components will be more and more competitive. The market remains competitive in China because, in addition to brand name computers, the market includes clones (generic non branded computers) that can be purchased at lower prices. Currently Dell's sales in China make up only 10% of its overall sales. U.S. sales are at about 69% of overall sales. Dell's major competitors in China are Legend (27% of market share), Founder (10% of market share) Tongfang (8% market share), IBM (5% market share) and HP (3% market share). Dell's current market share in China is 7%. With the raising of tariffs, Dell, and other foreign competitors, will be able to compete on a more level playing field for customers. III. Internal Environment (Strengths and Weaknesses) E. Corporate Structure and Corporate Culture The company is lead by a board of directors. Each director provides oversight of different segment of Dell. Dell's Asian Pacific Region is led by Bill Amelio. Dell's Chinese market for personal computers uses the direct selling method that cuts out the 'middleman'. The inventory system used by Dell is called the "just in time" model that keeps inventory levels at a 6-day supply rather than stocking up and having a larger inventory in the warehouses. Inventory is replenished as needed. Inventory costs are kept to a minimum thus Dell can pass on the savings to its customer. Chinese customers can expect Dell's products to be lower priced than its competitors. F. Organizational Activities Analysis Dell uses a direct business model. The company has made it a corporate practice to listen to the customer and delivers innovation technology and services. Dell provides its customers the best possible customer service. Dells direct focus on customer satisfaction differentiates it in the personal computer industry. Dell also focuses on state-owned entities that require servers and high-end products. These include governmental and educational institutions G/H Core Competencies and Summary of Internal Factors Dell's core competencies lie in their ability to look at the industry and change their approach to doing business to exploit possibilities within the market sector. Dell is able to manage a diverse workforce by providing them with common goals and a corporate culture that encourages all positive that one would want in an individual. Dell's team approach, core values and competencies push Dell to the leader board in the industry. Although not number one in the computer industry in China, Dell is certainly in a competitive position. If it can continue to curb costs and market a product at a lower price Dell can expect to garner a larger market share and thus move from fourth place in sales to first place. IV. Analysis of Strategic Factors Dell has established itself as a leader in providing products and services in the Chinese marketplace. Dell provides its customer with servers, storage systems, peripheral devices, workstations, notebooks, desktop computers, etc Dell can continue to keep its market share by continuing to find approaches to marketing and customer care unique to the industry. Dell has taught others in the industry about customer care and others have followed Dell's lead. Dell's greatest challenge is finding new ways to differentiate itself in the industry. The Chinese market is one of the most competitive markets that Dell has entered. Dell's challenge will be to find a niche in that marketplace and exploit it. V. Identification of Strategic Issues Strategic issues for Dell include delivering a product at a rate that equates to less than the competition. Dell will need to work hard to garner a larger market share in China. Dell's greatest competitor may be the grouping of native producers that sell clones equivalent to Dell's offerings at a lower price. Dell's customer service and support may be its key to success. VI. Strategic Alternatives and Recommendations Dell has a wonderful opportunity to expand and grow in the Chinese market. Dell has the opportunity to gain, and build upon, public sector buyers in China. Educational institutions, government institutions, and the personal computer sector can all be targeted for increased sales. Dell needs to continue to differentiate itself within the Chinese marketplace by providing a high level of customer service and support. Dell should continue to advertise in China to reinforce any branding of Dell products and services that already exists. Dell should also make sure that local Chinese are involved in Dell's Chinese operations. This will give Dell the opportunity to be a friendly neighbor as well as having locals to help keep track of what's happening in the Chinese marketplace. VII. Evaluation and Control Dell has a leadership team in place to manage Dell's Chinese operations. Dell has a strong corporate culture with core values in place. Continued support of the infrastructure in place in combination with strong leadership will contribute to Dells success. This success can be measured by monitoring sales and services provided to customers in the Chinese market. Without price gauging Dell must be able to continue to sell products at a lower price than others in the marketplace and continue to be profitable. Dell can continue to be competitive by coming up with new approaches for market differentiation. As always, Dell will have to continually seek out what the customers want. Read More