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Dell - management and innovation

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Dell, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, sale, and support of various computer systems and services worldwide. It offers various products, including desktop computer systems and workstations, notebook computers, mobile workstations,  MP3 players, software,  printers, monitors, plasma and LCD televisions, projectors, as well as third-party printers, televisions, software, and digital cameras. “Dell has a value-priced business model which means firms has done a good job of controlling costs.”[i]  Dell combines this model with direct customer model. Direct customer model means selling the product directly to the customers instead of going through wholesale dealers. “Dell’s phenominal success over the last two decades was due to its tightly disciplined operations and relentless  controls, however in order to increase profits  and growth it needs to consider innovation.”[ii]

There are several advantages as well as disadvantages of “value-priced” business model. “Dell’s greatest difficulties are related to one of its biggest oppurtunities – consumers.”[iii] Dell  sold computers to directly to consumers via telephone first and then internet. This helped them save the product distribution money, but with the course of time other companies like HP has narrowed the gap between producitvity and price. Dell is in a tight spot and needs a break through in innovation or else it will be out of business due to keen competition. Dell has very good relations with microsoft and Intel, the two companies responsible for domination of Dell, however Dell has a deal with GOOGLE to install key software. Such deal can definitely affect its relationships with Mircosoft and Intel. Dell has always been known for its strict financial and operational discipline. But what it needs now, is the willingness to experiment, either by innovation or selling computers through retailers or may be both. What Dell needs to do is invest more in R & D. Dell has received lot of complaints from its customers who are extremely dissatisfied. They complain that Dell has most of its service stations located in India which makes communication very hard. Also, customers has to wait for long times, which dissatisfies the customers. Dell has flexible, build-to-order manufacturing process that enables dell to turnover inventory every five days on average, and thus reduce inventory levels.

Operations control focuses on the processes the organization uses to transform resources into products or services. [iv] “Operational control consists of prelimnary control, screening control and postaction control. Prelimnary control concentrates on the resources-financial materialm human, and information- the organization brings in from the environment.”[v] “Screening control focuses on meeting standards for products or service quality or quantity during the actual transformation process itself.”[vi] “ postaction control focuses on the outputs of the organization after the transformation process is complete.”[vii] Dell has screening control, where each of its pc is put togather by team of three workers. Each indivudal has a specialized set of tasks, which eases training, speeds assembly, and reduces errors by 30 percent.[viii] Its team is made up of tester – who performs a quick check when ever machine is finished to see that it’s wired correctly and will boot. Machines that pass will undergo more extensive testing, but the quick test allows rapid spotting defects.[ix] Most defects are caught in 4 minutes which used to be 60 minutes before, so Dell uses postaction control to maintain the product quality.

Dell needs to give businesses new ways of architecting and managing their computing and networks. Dell customer service has to be fixed, and the world has to hear about it. Maybe Dell could put some money into marketing its service operation to a wider audience by offering fee-based support for products it didn't sell - other companies' PCs and peripherals. The service business is changing dramatically, and economies of scale could work to Dell's advantage in re-establishing a service operation that will sell its hardware.[x] Dell needs to provide customers with a different kind of access to technology that can upgrade their hardware without disrupting their routines. More modular machines coupled to vastly improved Web-based services might do it.[xi]

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Samar Reviewed this free essay on Jun:15:2008

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