1. What is the story?
The case study describes the success story of Dell Inc., a multinational technology company, as well as the past and current challenges that it should deal with. The company was founded by Michael Dell in 1984 when the personal computers just started to appear. Dell occupied the industry and was considered as the leading producer of personal computers oriented to the customers (Hunger, 2010). The venture grew from the garage startup into a multinational corporation, and this study examines the key stages of it. As a founder, Michael Dell was frequently awarded the title “entrepreneur of the year”, and Dell Inc. broke the sales rates record (Hunger, 2010).
Alongside the key achievements of the company, the case study demonstrates the current challenges that the company encounters. First of all, it suffers from enormous competition from other manufacturers of personal computers such as Apple Inc. and HP. Furthermore, the overall demand for the computer drops together with the rise of the demand for mobile phones and similar movable appliances (Hunger, 2010). This trend is global, and, therefore, it affects the company in the foreign markets as well. At the same time, it is stressed that the main part of the company’s production is sold within the USA, which means that the company depends a lot on the fluctuations in the domestic market. It makes it especially vulnerable considering oversaturation of the market and overall demand for personal computers.
Michael Dell, the CEO of the company, tried to address some of the challenges by luring the top executives from the other companies, though this practice proved to be ineffective at the end (Hunger, 2010). Moreover, the company switched from one business model to another and vice versa. It also carried out the organizational changes and attempted to keep in touch with its customers. Moreover, its sales rates, as well as stocks value, continue to drop tremendously (Hunger, 2010). The paper under consideration will, therefore, provide a brief overview of the current issues prevailing within the company and discuss its future perspectives considering the present-day trends. It will specifically consider the future strategy and outline the option for growth and development.
2. In the fast-changing computer industry, innovation and creativity are essential key success factors. Please discuss Michael Dell’s entrepreneurial character.
The innovations and creativity are indeed the heart of the technology industries. It should be stressed that Dell Inc. definitely bears the features of its founder, Mr. Dell just like other technology companies. The analysis of the key features of his character and entrepreneurial spirit might be beneficial for understanding the company’s present-day affairs and for drafting future strategies.
Michael Dell was not afraid of accepting risks in order to establish a new company and develop his business idea. At the same time, he possessed certain expertise in technologies as well as in business handling. Therefore, the level of risk was medium and Dell understood that. Having weighed the choices and options, he finally decided to invest all his savings and took the loan from the bank to finance the operations of Dell Inc.
Another important trait of his character that stems from Dell’s description in the case study is the determination. Michael was determined to establish a new venture that will serve as the source of profit for him, his friends, and his family. Moreover, he was assured that this business idea was worth investing in and developing. The case demonstrates no signs of hesitation or doubts experienced by Dell.
Michael Dell had also inborn confidence in himself as well as the innovative and lively mindset that caused the founder to look behind the things to understand their essence (Hunger, 2010). The interest in technology developed into the passion of Dell’s life causing him to still handle the affairs of the company working as its CEO. The case study specifically indicated that Dell is the heart and soul of the company meaning that he is inalienably connected with it.
However, assessing the further development of Dell Inc., it should be stressed that the drive for innovations and ongoing changes is applicable to the business model of the company only but not to its products. Probably, such a tendency might have been positive in itself since Dell Inc. and its CEO Michael Dell is still looking for the best way for optimization of the business operations. Apparently, Dell focused more on the organizational aspects of business instead of on product development; and it is definitely a positive tendency for Dell as a person. Yet, it is definitely detrimental for the company, which is currently at risk due to the numerous challenges it faces. Moreover, as it is demonstrated in the cassette, the top managers from other innovative companies such as Motorola and Apple could not have helped to change the situation.
3. Is Dell “doing the right thing” by continuously changing its business model?
The case study demonstrates that Dell Inc. frequently changes the business strategy and structure and is quite flexible while meeting the organizational and market challenges. Such an approach towards the handling of the issues in the company might have both its advantages and disadvantages, which are further discussed in the paper.
First of all, running different strategies might be beneficial for the company as it enforces a specific atmosphere filled with the prediction and awaiting the changes. As a result, the employees of the company become resistant to the stress associated with the changes and are more effective in responding to the challenge and alterations that are occurring in the markets often shattered by the crisis and downturns (Hunger, 2010). Moreover, it actually encourages the changes in the organizational structure and business model in case they help to raise the revenues and leverage more from the sales of the products. Therefore, the first advantage refers to the increased number of staff members that are resistant to the stress associated with the changes. It also deals with the ability to be flexible in meeting new challenges and completing new tasks.
Another benefit of the ever-changing model is the company’s awareness of the alternatives that currently exist in the business management and which can be employed to solve particular issues. In other words, the company tests all the options and has the opportunity to choose the best one and the one that suits its mission, vision, and understanding of the values. Moreover, the knowledge that has been retrieved in the course of this business experiment could be shared during the pieces of training and conferences used in the framework of the content marketing strategy promoting Dell, its brand, and products.
The changing of the business model also ensures that the company is responsive to the problems that are not tackled in the workplace. In other words, the company’s managers are courageous enough to recognize that the problem actually occurs in practice and should be dealt with. There is a number of examples when the CEOs pretended that their companies were succeeding whereas they lost dramatically. Therefore, in this regard, Dell is bulletproof at least against the possible speculations on the success stories of the company and its achievement.
Finally, the changing of the company’s structure and business model demonstrates its ongoing assessment and monitoring of its business affairs. Such scrupulous attention to the details and business trends protects the company from overseeing the possible tensions and problems and helps to solve the latter when they are just emerging. At the same time, one should also bear in mind that the change in the business model is only the consequence of the assessments and evaluations.
On the contrary, there are a lot of disadvantages associated with the changes in the business model, which lead to organizational, human, and financial implications. First of all, the frequent amending of the business model does not allow the managers to see the development of certain processes in perspective and to assess them in dynamics. In other words, the company relies on short-term data that does not always reflect all the trends within a certain industry. As a result, the company cannot make the right decision in regard to the adoption of the final business model, thus switching from one to another.
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Secondly, such a tendency towards frequent changes in the organization of the distribution channels and work operations puts enormous pressure on the staff employed by the company. Every time the change is implemented, the personnel have to adapt to the new schedule, tasks, KPIs, suppliers, partners, etc. All of these things bring feelings of fear and anger, especially among those who are afraid of uncertainty and future changes. Moreover, the implementation of the business model changes requires a lot of the resources: the human, organizational, and financial ones, which might be spent on the development of the products and services delivered by the company.
The changing of the business model and the non-achievement of the significant financial (and other) results demonstrate that the innovativeness of the company actually is not paid off in regard to the business model. Most probably, the assessments of the factors that are made before the changing of the business model are important and do not include the consideration of the most critical moments. Another probable cause for Dell’s misfortunes refers to the managers’ inability to offer a new solution to the existing problems. The decreased sales rates and the drop in stock value is a warning sign that demonstrates that the changes in the business model do not work.
The business model that evolves on a constant basis is also detrimental in terms of the financial implications. It might be rather hard for the investors to understand the current approach towards the handling of the operations. Moreover, frequent changes might also be regarded as the options employed by the company to solve certain organizational and financial problems. Next, the latter demonstrate and prove that the company experiences the downshift in sales or other rates, and, therefore, it is not worth investing. Therefore, Dell Inc. is recommended to consider the appropriate business model and eventually adopt the one that will serve for a certain period of time.
4. What would be the most dangerous thing for Dell to extrapolate into the future?
There are basically a few things that should not be extrapolated into the future as they might put the company at the peril of shutting down. First of all, it should be stressed that the company should cease to ignore the innovations of the product. Currently, it is asserted that Dell drives innovations in regard to the business model switching from one distribution method to another and reconsidering its approaches towards the handling of the local operations. Additionally, the company carries out the restriction of the business and shuts and opens new departments. The management team of the company is amended as well since Dell switched between the two positions, the CEO and the head of the board. Yet, all of these amendments and changes are undertaken by the company concern only the instrument of the selling, not the product. If the present-day approach and strategy will be followed, the company will eventually find itself in the midst of the organizational experiments with zero account and customer dissatisfaction with the product. Therefore, the company should slow down its experiments with the business model and focus on the development and improvement of the product.
Another dangerous thing refers to the reluctance of the company to recognize the primary importance of the customer satisfaction with the product. While trying to amend the business model of the company, the team actually focused more on the internal factors of productivity and effectiveness, obviously presuming that the product is good enough and that there are no need for the improvements or handling the surveys that will determine the public opinion about the products offered by the company. Such an approach employed by Dell demonstrates that it is more interested in higher sales rates and profits than in the creation of the products and values that will last. Such an ignorance of the customers’ opinions should definitely be eradicated, and the managers of the company should start finding out the judgments and opinions of the customers in regard to their services and products.
One more thing that definitely should not be extrapolated into the future involves the company’s following of the competitors that is referred to as the use of the standardized technology innovations and the refusal to pursue its own discoveries. Such an approach of the company is economically justified as it helps to save a lot of money that could be invested in developing the company or strengthening it from the inside. However, it should be noted that this approach contradicts the success story of the company as well as the innovative mindset of its founder who has managed to identify the profitable tendency and develop it to the corporation. The following of the competitors is a demotivating factor for the human capital of the company as it demonstrates the refusal from the ambitions of leading the industry.
5. Should Dell continue with its current strategy of following the consumer market down in price and adjusting its costs accordingly; or, like IBM, should it change its focus to more profitable business services; or, like HP, should it do both?
Obviously, the company is currently on the crossroads and is choosing its strategy for the future. On the one hand, it might stick with the present strategy of downing the prices. On the other hand, it considers the probability of developing its services portfolio. It is supposed that the second option is better and more economically visible.
First of all, one should admit that the rowing of the prices is an appropriate strategy for a short-term period. It indeed helps in the fight with mobile phones and other movable platforms that are popular nowadays. However, such a decision is beneficial for the competitors too. They can benefit from the decrease in the prices at no costs at all. Additionally, the dumping of the prices in the long term will mean the decrease of the profit generated by the company and its fear of increasing the prices that might follow after initiating the operations with the retailers.
Another disadvantage following the downing of the prices refers to future instability. The decrease in product diversity might result in extra efforts that should be taken by the company. Moreover, its strategy would rather depend on the suppliers and the prices that they would set for the instruments and needed appliances. In other words, the competitive advantage of the decreased price is not an effective strategy due to its vulnerability as well as non-progressive essence.
Furthermore, the downing of the prices has nothing to do actually with the improvement of the customer experience or the products and services offered by the company. In other words, Dell Inc. is attempting to sell the same products at a decreased price, and such is the treaty for the future. One might say that such an approach is discouraging and demotivating for the staff which is frequently lured by the opportunities to work in the technology companies presuming its inclination to the innovations. Moreover, the changes of the business model, price creation, and the organizational structure will not lead to the improvement of the product. In the future, the company might reach the point of no return when the customers would be no longer lured by the price and choose the competitor’s products.
Additionally, the case study describes that the Dell Company experiences the hardships in relation to the developing markets. Based on that, one can assume that the downing of the prices might be beneficial in these markets. Yet, due to the overall inability of the company to handle the work operations effectively, such an initiative might be silenced and ignored by the local residents. On the contrary, the developed markets already occupied by the company are interested in services and more customized products that will reflect the personality of the owners. Unfortunately, standardized Dell’s computers do not offer that feature.
Therefore, the company is recommended to focus on the development of the services section of its portfolio. There is a number of advantages to such a strategy. First of all, service-orientation is a globalized trend in the Western world. Nowadays, many companies strive for designing but not making the products, as it is associated with complicated procedures and complex management strategies. Moreover, the services are more leveraged in terms of the future perspectives of the development and the profits that might be generated by its delivery to the final customers. In addition, apart from the product that can be easily copied by the competitors, the service is hard in terms of reproducing.
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Secondly, the services are usually welcomed in any kind of market: the developing, underdeveloped, and developed ones. Therefore, whereas the downing of the price strategy is applicable mainly to the developing countries, the introduction of the new services might be offered in many countries regardless of their conjecture. Therefore, in terms of the potential growth of the target audience, this option seems to be more appropriate for Dell Inc.
At the transitional stage, Dell Inc. might offer improved versions of the services that already exist. Moreover, it might consider the attempts to recollect and reassess the experiences of its key managers and experts and try to collect the services that are on the crossroads of the various disciplines, which are demanded by the corporate sector. In other words, Dell Inc. has already certain capital in regard to the development of the services. Thus, the company should definitely consider it to be adopted as a part of its future strategy.