Global Impact of Dell in Selling PC - Essay Example

EXECUTIVE SUMMARY In its chosen domain of PC computers and software development, especially in marketing of personal computers and books, Dell Inc. has gained the position of ultimate supremacy, and till date, has retained it, despite the onslaught of competing brands and fast-paced technological changes. This has been largely possible due to its innovative and strategic thinking, market forecasting and offering a host of business solutions to attract and retain customer loyalties, reinforced with sound and market savvy business practices. Dell success story is not just about selling computers to the world. It is about reaching out to individual customers and establishing brands to suit individual requirements. This study seeks to address the fundamental reasons for the tremendous ovation accorded to Dell over a period of time. Since Dell seems to have gained popularity as the most sought after computer Company, it is but natural, that other Companies would like to emulate its ways to chart and navigate the courses for their success. This business study seeks to highlight the reasons for the success of Dell, especially in the context of its close liaison with customers and vendors and building an work culture that fosters individual growth and development through performance. The fundamental reasons for Dell’s success could be attributed to its unrelenting passion for innovative ideas and sound techniques, seeking better and newer avenues for corporate growth and development and gaining the active involvement of all relevant contributors to its success, within and outside the organization. Its unique marketing plan, devoid of middlemen, has ensured that its customers get their products straight off the ‘assembly lines.’ Its product features, including user-friendly navigation and high comfort, safety and convenience of use, besides closer proximity to ultimate user has set it well in its path of achieving $80 Billion Business mark by end of 2007. Yet another feat worthy of emulation by rivals is the Dell Venture which entails $80 Billion as equity investments in 90 Private Limited Companies. This has been done with the prime objective of sharing future technology in these companies and partnering the sharing of joint technological advancements in commonly interested computer fields. It is widely believed that the future years would witness the advent of highly relevant and advanced technologies, through the use of innovation and state-of-the-art engineering designed products, without the need for Dell to have to invest in heavy Research and Development infra-structure, which may not always be successful and would yet require heavy injections of capital investments. Finally, the aspect of legal and ethical values is firmly ingrained in the work culture of Dell and is manifest in all its business endeavours. Dell’s protection of intellectual property rights and Trade Marks, along with its constant efforts to uphold customers’ privacy and confidentiality rights are well documented and are areas which could be followed by business competitors. DELL IN E-COMMERCE Introduction Dell is an American hardware company situated in Round Rock, Texas in the United States of America. It is mainly dealing with production, sales network accessories, and software programmes. It is not only providing sales, but also certain after- sales services. Mr. Michael Dell who is the founder, Chairman and CEO of Dell.”Dell’s direct relationship marketing eliminates 25% to 45% dealer mark-up.” (Dell Computers 2004). Context of Use: “Dell wants to see better software drivers for Linux so that the firm can ship more notebooks and desktops running the operating system, according to one of its software engineers.” (Mooji 2007). Making better relation with Linux is a Business to Business or B2B commitment. The major customer of Dell at present requires new adaptation of Windows XP. “Dell changed the policy in response to pleas posted on its Idea storm website which invites customers to post suggestions about how the PC maker can meet their needs.” (Users force DELL to resurrect XP, Customer Clamour 2007). Most of the Dell users popularly demand the desktop of Dell with AMD processors. Moreover, it also lays emphasis on the sales of computers to a wide range of quality and quantity with Linux distribution as an alternative to Microsoft Windows. Major brand names of Dell in several markets are for business enterprises - Optiplex, Latitude etc; for home and personal use - Inspiron, XPS brands etc; Similarly, Dell is also providing its customers certain methodological steps to carry out computer based programmes with the help of some checking agreements like basic, silver, gold, platinum plus. “The Top Online Display Advertiser during the last three months of 2004 was Dell Computer Corporation, with 5.83 billion impressions.” (Fadner 2005). Nowadays, personal computers in the homely environment are increasing rapidly. Moreover, it is significantly depending on the product development and its marketing. It should covers up the reputation mechanisms, consumer media, on line community, game theory, e-business, mechanism design, electronic markets, incentive based computer systems etc. (Dellarocas 2006). “Dell believes that high performing PCs should come with excellent services.” (Dell Advantage 2007). The impact of website design and its contents should be minimized. “The search engines must index all of those links so that they can calculate and record the link popularity. Google and all other search engines can only consider links that they have recorded.” (Minimizing the impact of website content/design changes on brand visibility in Google 2004). The corporate career websites are in demand by Human Resource Executives for the purpose of both internal and external recruitment, creating a budgetary target with relation to staff, etc. Likewise, a new era with respect to PDF download concept has emerged. Majority of the websites are using ASP.NET, JSP Pages etc.for providing necessary resolution. “With Web 2.0 revolution, it is more and more important to find good web designers able to build websites that are user friendly and easy to maintain.” (Denis 2007). Co-operative web catching is another important phenomenon for providing many response The computer manufacturer Dell now sells $6 million of Personal Computers via its web site each day. (Chaffey, et al. 1999). Usability For attracting numerous new customers as well as for retaining the existing customers, appropriate web service facilities are essential. “Dell said the pricing and promotion simplification augments a previously announced $100 million investment and efforts to regain its leadership position in customer experience, including: Hiring and training thousands of sales and support personnel to handle inquiries Expanding its call centre network to accommodate growth; Deploying DellConnectTM, a diagnostics tool used to troubleshoot and help solve a customer’s computer problems remotely; Simplifying navigation and making content and usability enhancements to dell.com to improve the shopping experience; and Improving product designs that simplify access and use while delivering quality and reliability.” (Dell to simplify pricing reduces mail in rebate offers 2006). Dell is providing a user friendly web site facility, which helps to provide satisfaction to the demands of all kinds of fastidious customers. “The move is part of Dells $100 million customer-service improvement initiative announced in April." (Dell e-commerce: Case Study 2006). Usability feature is important, since, whenever any customer visits Dell’s web site, the first and foremost relevant question being asked is to which category does the package of customer belongs to. One of the prime reasons behind the growth of Dell is the increase in its useability value of the sites. For making proper customer interaction, web sites were very essential. Due to the enhanced innovation and technology, the popularity of Dell has tremendously improved. By laying emphasis on the development of most frequently user sites and indulging in frequent customer interaction, Dell has become more practicable and useful to its user community. Page layout and Navigation- It is very essential to plan about the sites which are going to be develop. In relation to the page lay out and navigation as well as the creation of web design several procedures have to be carry on. They are- 1. Analyze the purpose of the site- it deals with the decision about the web design, co lour, and graphics etc. 2. Sketching of site- After made a well developed plan about the site, then make use either pen and paper or computer system for making the layout of sketch and page. 3. Put proper address for the web- it is essential for easy identification of the site, those who are using the internet sites. 4. Identify the host of the web site- “Web site must live on a computer called a Web server. The Web server delivers your Web pages to users who request it using their browser. For most small businesses, it makes sense to pay a hosting service or Internet service provider (ISP) to keep your site on one of their Web servers. Professional service providers know how to monitor, maintain and secure servers so your site is available to visitors almost 100 percent of the time.” (Dell small business360 2007). 5. Construct and analyze the Site- For building or constructing a site, it is important to obtain the help of certain professionals of IT. 6. Provide publicity about the web site. A web site having certain e-commerce or business to business facility is widely common for the over all impact of any business. E-commerce is essential for maximizing the business growth and at the same time it is very cost effective in nature. In order to identify about the marketing strategy and potent ability, it is significant that to obtain the support of web.com; moreover it is also giving stress to the areas of retail sectors, tele marketing and tele communication facility. "Dell is committed to being an environmentally and socially responsible market leader, and our public goals and annual reporting on global process underscores this focus," said Tod Arbogast of Dells sustainable business group, in an April 5 statement. (Jonathan 2006). Information Content- Web sites are providing several information to its customers or clients visiting sites, it helps to expand the business and economy. “Dell and its service providers and agents do not generally pre-screen, monitor, or edit the Content posted by participants in chat rooms, message boards, or other interactive areas on Dells website(s), including Learn Dell. However, Dell and its service providers and agents have the right at their sole discretion, but not the obligation, to remove any Content that, in Dells sole judgement, does not comply with the guidelines in this Code of Online Conduct or is otherwise harmful, objectionable, or inaccurate. Dell is not responsible for any failure or delay in removing such Content.” (Code of Conduct 2007). Dell, an excellent computer, having variety of approaches towards its markets. The major rivalries of Dell are belonging to the personal computer category. Main competitors are Acer, IBM etc. Dell is offering several technical assistance to its clients; it is a direct link between its consumers and business. A recent announcement by Dell Inc., on August 02, 2007 to be precise, relates to the agreement for the formal acquisition of ASAP Software, a premier Software Solution Company, for $340M. “The acquisition will strengthen Dell’s existing software business by integrating ASAP’s complementary expertise in managing software licensing, purchasing, renewals, and compliance.” (Reuters 2007). These are very significant in nature. Maintenance of Customer Relationship Management (CRM) is also practicable in this regard. “Dell has seen better days. The worlds largest personal-computer maker, famous for its direct-to-consumer sales model, is struggling. Last week, the Round Rock, Texas-based Company forecasted that its second-quarter 2007 earnings would dip from previously expected earnings of 32 cents per share to between 21 and 23 cents per share -- not the type of news investors had hoped for after a weak first quarter during which profits dropped 18% from the year-earlier period.” (Katz 2006). Dell computers arte offering E-commerce facilities to several companies. One of the important advantages of Dell is that it is providing customer satisfaction and improves its own efficiency. It is following the style of direct business strategy, because it has yet to have any sales outlets. The total inventory turnover rates of Dell were 60times per year, by comparing it to its competitors. (Kraemer and Dedrick 2001). Navigation: Since Dell has a good feel of the market pulse (and impulse) it is also prepared to meet the product needs of the customer. It has therefore, adopted software technology that is extremely user-friendly, convenient and easily negotiable. Its navigational ability is such as to create different options available for customers for them to exercise their discretionary choices. The assured consistency and applicability helps the user’s thought process and helps to elevate his assurance levels, especially while navigating uncharted territories on the Internet. In the context of computer applications, data flow is very important and Dell Inc. software serves this excellently. The hyperlinks strictly follow HTML norms and stipulations and remain clear to the user. Thus, it is fairly easy, even for a first-timer in computer to be able to handle Dell technology with apparent ease and operational comfort. For regular users, they could correctly rely on their past knowledge and experiences to navigate the system. The Navigational system is totally centralized in the homepage, and at the same time, it is also possible for users to know about their present position, their followed path and, how to get back to previous pages. Dell also facilitates the use of intranet and extranet technology. “Companies that want to set up special employee –only websites can use an intranet, a private internal corporate network.” (Schatzman 2003 P 406). Through the use of intranet, the customers of Dell could gain access to previously denied global products or services information. This intranet is of vital importance for corporate, in the sense that it could allow professionals worldwide to combine, or pool efforts towards the development of new technology or to control various aspects of a corporate like manufacturing activities, research and development, marketing and delivery etc throughout all locations of the corporate through intranet. As a matter of fact, Dell technologies are trying to bring out better and more improved versions of their PC models to cater to a burgeoning Intranet Market. Another area where Dell technologies are fast gaining total market ground from their competitors is in the marketing of extranet aided technologies. “An extranet is an external intranet that allows people to communicate and exchange data within a secure network. Unlike intranets, which limit access to employees only, extranets allow qualified people from the outside- such as suppliers and customers – to enter the network using a password. Extranet can enhance communications with clients, suppliers, and colleagues, and they can save companies time and money.” (Schatzman 2003). Information Content Internet transactions have scaled new heights thanks to Dell Technologies. It offers chats with the customers to determine their reactions and feedback on their purchases. Dell feels that this communication is essential in order to create the right business interactions for better vendor-buyer connectivity. The feedbacks, complaints and suggestions received from customers would be effectively utilized for improving the products/services and accelerating the growth process. “Dell Computer Corporation announced deals with AT&T Corporation, Excite Inc., and SBC Communications on Wednesday to offer Internet services for its home and small office personal computers.” (Windows IT Pro: Dell signs Internet Partners 1998). Engineering aspects of web technology One of the most important aspects governing Internet is with regard to application of the right engineering practices. Engineering ads to costs since only good designs would be accepted by the ultimate customer. It serves to increase the aesthetic appeal, content value, navigational aspects and prospects for future improvements in content, layout or features. All these aspects are important since only well built designs would meet the customers’ approval and ultimate acceptance, and others would add to cost. Engineering aspects take up special significance in the present day world, since the degree of competitiveness, market share and progress plans are very well reflected in the total engineering design and layout of the site. Section 2: Current strategies of Dell Although Dell is well poised for excellent market growth in future years, there are concerns due to loss of competitive edges in certain key functional areas of the Company. One of the key factors for the success of Dell has been the customization of the products marketed by the Company, through direct selling to customers, without the need for middlemen, which, in effect, has been the key selling point of this Company. But lately, this strategy has weakened, since its competitors, especially Gateway, have also started adopting similar tactics to enhance their market share. Therefore, it is necessary for Dell to restrategise and reposition itself in this area, after considering present market conditions, and presence of active competitors. Another factor that has stood in Dell’s advantage is that it has invested substantially in Advertising and, according to Nielson/Net ratings adrelevance for the month of January 2004, it is ranked 2nd with impressions (000) of 3,881,738. (Wong and Kim 2004). Another strategic area in which Dell has excelled over the years has been the significance attached to customer care and servicing. During the past several years, it has been perceived that customer servicing has not kept pace with the exponential business growth. As a direct result of this, it is feared that market ground may have to be conceded to rank competitors in the future, especially in the Core Corporate PC Markets, to Compaq, IBM and Hewlett Packard, and in the portable laptops, to strong competitors like Sun, SP, IBNM etc. The main target for the present for Dell is to achieve a turnover of $ 80 Billion in 2007 (Strategic Analysis are recommended for Dell Inc. 2006). To achieve this end, it is necessary that its liaison with vendors is reinforced, especially with chip manufacturer, Intel. Presently, the strategy of Dell is to bring only few products and using the technology of others. It is believed that since Dell’s pricing policies are higher compared to competitors, it may be unable to compete successfully in world markets. Therefore, the strategy to be adopted would be to market more customized products by increasing its prevailing contacts with key suppliers and vendors. It is also believed that Dell has good navigational systems to save time and convenience to the user. “As Search engine evolve to meet the changing needs of the Internet’s content and its users, new forms of these tools are emerging as well. Met search tools allow searchers to enter search terms once, running the search simultaneously with several engines and compiling a combined results page.” (Lesikar and Flatley 2005). In a bid to capture a larger chunk of the B2b market, Dell Corporation has embarked on a more proactive business strategy. In the words of Mr. Michael Dell, Chairman and Chief Executive Officer, “We are combing Dells Internet expertise, and our unique ability to organize resources around distinct needs to create new Web-related capabilities. The Dell advantage is based on direct relationships, low cost, speed to market and e-commerce expertise as much as it is on Internet hardware, appliances and customers services and support.” (Dell Reveals New Business Strategy. 2000). This strategy also included a three- pronged package of services and supplies which would help the companies to be better positioned for taking up web hoisting activities. “A second initiative is Infrastructure Computing. Dell announced Power appliance servers designed for specific Internet infrastructure tasks such as Web serving, caching and load balancing. This will provide customers will a full range of server and storage solutions for building their Internet infrastructure.” (Dell Reveals New Business Strategy. 2000). This is primarily designed to offer customers with a better range of ‘server and storage structures’ for building their web business and expanding their business prospects in the area of Web application by upgrading their existing in-house systems. “Its all about the business process, said Eric S. Michlowitz, the director of supply- chain e-business solutions at the Dell Computer Company. You have a set of objectives in mind. You need a process to achieve them. The process will involve Dell, a build-to-order computer company, and its suppliers, along with the information needed to support that process to meet the business objective. (Margot 2000). According to Mr. Dell, the expert services has now expanded the vistas of internet activities and the range of services offered to give e- Commerce the necessary impetus for growth and total business orientation in their functional areas. Another strategy adopted by Dell, seeks to combine state-of-the-art aids, better connectivity and access choices which seeks to improve the services of narrow and broadband services and wireless products and services. “The computer maker will sell one desktop and three notebook models, all from its consumer product lines, at Bic stores. The notebooks will include its recently released high-end XPS M1330 model.” (Zehr 2007). However, a major breakthrough of Dell would be the setting of Dell Ventures which has made equity investments of around $700 Million in around 90 Companies, with the objective of sharing technological advancements. “Dell Ventures formed a year ago has invested more than $700 Million (US$) in more than 90 Corporations, including Red Hat Inc. Storage Networks Inc. and Sina.com. Investments have been aimed mainly at companies that can capitalize on the growing Internet infrastructure for business-to-business (B2B) and business-to-consumer (B2C) e-commerce.” (Macaluso 2000). It is expected that, in the years to come, these private companies would create new innovative products and technological revolutions in the Internet world, which could be shared with Dell. Its primary objective in heavy investments in these companies is to develop future technologies, without the need for building in-house Research and Development facilities. Legal and Ethical issues involved in Dell functioning: The legal aspects are important since any compromising on them would leave the user open to prospects of indemnity or lawsuits. Dell is fully aware of its commitments towards the legal aspects and therefore has protected the privacy and security of its users to the maximum extends possible by the use of several security including SSL encryptions. Further, data protection and securitization also plays a very important part to strengthen customer data security and safety. Dell provides the highest level of ethical considerations and other competitors may as well emulate the high standards set by Dell in this respect. The fact that Dell takes customer satisfaction seriously is seen from the fact that it is the standard protocol of this company to contact customers in the event of any problem and help in its early resolution. Dell’s intellectual property rights and protection of registered trade symbols, along with other protection measures are well Documented, and it is now its business domain, the standards of which could be emulated by other competitions of Dell in the international PC industry. Conclusion A study of the various websites and literature available about Dell Inc. has sprouted certain relevant aspects about the uniqueness and distinctive approach that the operation of this Company has maintained over the years. Some of these aspects relate to the business acumen, vision, commitment and marketing savvy of the Company, combined with excellent customer rapport and service network. All these factors serve to make Dell a role model for aspiring competitors. In the first place, it has a Homepage which summarizes the various aspects of various sites and links. It classifies its range of products, according to the specific requirements of the stratas of potential customers and its navigability is designed to suit individual customer requirements, Hence,it may be advisable for competitors to reorient their current strategies and reinvent marketing methods for securing better product visibility and brand imaging, besides dedicated customer focus. Apart from the uniqueness of its web designing and hoisting, the fact that Dell Inc.has rendered competition virtually ineffective, could be well gauged from in its growth pattern, and its current goal to achieve turnover of $ 80B by end of the year 2007. From the very inception, Dell Inc.has pursued a marketing policy of directly interacting with its customers, without the need for middlemen. This has effectively, reduced the final cost of product to the ultimate user, and progressively eliminated the middlemen’s profits margin which has now proved to be the nemesis of many computer manufacturing companies. Another factor is that Dell Inc. does not manufacture computer components, but assembles it at its units, therefore exercising greater control over material costs which constitutes the largest segment of costs in computer manufacturing. The global impact of Dell in selling PC through retail outlets like Wal-Mart and other outlets , entering strategic partnerships with giants like Intel, for components, and establishing worldwide networks in emerging markets like Japan, India and other Eastern countries has proved beneficial to Dell and has given them an international status. Dell Inc. Has proved that competition could make brand leaders since it is the ability to override competition and established itself as the numerous undo in the worldwide computer business. APPENDIX 1 The 10 Point Nielsen’s Heuristic Evaluation 1999 as applied to Dell.com Heuristic # 1 – Visibility of system status. The user is kept well-informed about his/her current location and, in the event of any error, on the part of the user, the user-friendly optional methods could be implemented. Heuristic # 2 - Match between system and real world: The comfort and convenience zones of customers, based on their pre-determined pattern of thinking, are activated and Dell utilizes simple and common shopping terminologies to suit the requirements of users. Heuristic # 3- User control and freedom: The color pattern and choice is conspicuous and vividly visible for return to Home Page. Heuristic# 4 - Consistency and Standards: The left of the screen regularly displays hyperlinks and standardized hyperlinks are maintained throughout the layout. Heuristic # 5- Error prevention: It has been Dell’s constant endeavor to provide the most suitable match for the benefit of users. It combines functional effectiveness with enhanced usage functions. Heuristic # 6- Recognition rather than recall: Dell has enlivened help category for user reference and a specially designed section catering to information for recollection for the user. Heuristic # 7- Flexibility ad Efficiency of use The popular use of flash loading devices combines speed with accuracy and operational dexterity. Heuristic # 8- Aesthetic and minimalist design: The information is in conformity with user’s requirements and avoids heavy grouping for better clarity of information. Heuristic # 9- Help users recognize diagnose and recover from errors: By use of standard phraseology ‘sorry, no result found’, the system dispenses with ambiguity and provides instant options for alternative searches. Heuristic # 10 - Help and documentation: Dell provides problem solving section which also has, among other inputs, community platform and information bank, which aids user guidance. APPENDIX 2 The Cognitive walkthrough process is basically intended to validate the effectiveness of the use of the Homepage. By a series of orderly action it is possible to decide which option is best suited , and it is found, through empirical studies , that the Search Engine option is most suitable. In the context of competitors setting to emulate the ways of Dell, it is necessary for them to provide the users with the most varied choices of navigation possible, to ensure least hassle –free web browsing and surfing. 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