Analysis of Dell Corporation Essay
Dell Corporation is a household name when it comes to computer hardware. Dell has over the years developed great computer and electronic devices that have become useful for the varieties of it customers, consisting of business persons, company usage, and students of every grade level. The organizational structure in Dell Incorporation is one that is based on situational leadership style. The management of the organization carries out decision-making base on the current market trends and situation that need to be determined instantly.
This situation has made the organization very successful in its operations. The situational leadership style is one that is considered as most effective, as management and organization’s leaders adopt any leadership style that is most feasible and applicable at any given period. Customer relationship formed in the organization is one that encourages bonding for the organization with its customers and those workers in the organization.
The Dell‘s product are specifically tailored to suit customer purchasing power and their taste, thus the organization of relationship build up for the organization is one that follows customer relationship bonding through effective HR practices. Thus, Dell organization practiced a flexible relationship with its customers and workers; this is done to make the organization carry out
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HISTORICAL BACKGROND OF DELL CORPORATION
Dell Inc started as a small one man business called PC’s limited in 1984 with $1000. During this period Michael Dell, the founder was in his room selling IBM-compactable computers built from stock components. The principle adopted by this firm from its inception is selling personal computers directly to the customers. In 1985, the organization produced its first own design computer, i.e. ‘Turbo PC’, which contained an Intel 8088-compatible processor running at a speed of 8 MHZ.
The growth in the PC’ Limited, made it to set up its United Kingdom operations in 1987, and eleven more international operations followed in the next four years. In 1988, Dell’s market capitalization grew by $30 million to $ 80 million on its initial public offering day. The company’s name was changed from PC Limited to Dell Computer Corporation in that year. As the organization expanded it still maintained its configuration of computer to suit personal taste.
And thus, engage in selling personal computers directly to the customers. This made it overtook Compaq to make it the largest seller of personal computers in the United States of America. The expansion of the company’s operation in multimedia and home entertainment; including television, handhelds, and digital jukeboxes changed the company’s name from dell Computer Corporation to Dell Inc in 2003.
Dell received a 100% rating in 2004 third quarters, Corporate Equality Index released by Human Rights Campaign group in US. Also the Fortune Magazine ranked the organization in February 2005 as the ‘Most Admired Companies’. Dell Inc in March 2006, officially purchased the computer hardware manufacturer Alienware. (Wikipedia, 2006, Lee 2006, Dell official web, 2006).
In 2005, Dell Inc is considered the second largest computer manufacturer after Hewlett-Packed. In the word of Michael Dell, “I just want to build up my company until it’s the biggest in the world” (quoted in Bhoyrul & Hipwell, 2002:2). The computer magnate Michael Dell’s personal fortune is rising at the rate of $1 billion a month, and in times he looks likely to become richer than Bill Gates (ibid).
SWOT ANALYSIS FOR DELL CORPORATION
The SWOT analysis shows the strengths, weaknesses, opportunities, and threats of an organization’ in regards to its operations and adopted strategies. For Dell corporation its strength lies in its commitment at winning the customers’ trust to the organization, through its strategy of direct personal selling and selling quality product at low prices at all time. Also, the organization’s ability to carry out the manufacturing of products to suit different category of people, this give it an edge over its rivals in the industry.
The Dell Inc strength is also imbibed in the diversified products and services the organization deals in. this range from Desktop computer systems with different brands: Optiplex, Dimension etc; Laptops: Latitude, Inspiron, and Precision; Power Edge servers for larger corporation; Power vault storage (NAS); Dell EMC; XPS; Microsoft’s Windows Mobile; Digital jukebox; MP3 players; Monitors; Plasma TVs; Projectors; Printers, and Dell on call extended support services (Dell.com, 2006). The expanded network of operation and the spread of the Dell organizations on a global scale is another avenue of giving the organization an advantage over its rivals.
The weaknesses associated with Dell has to do with the criticism that it had a policy of selling computers with Intel processors, and did not offer AMD based systems. But this stand on the organization’s policy has changed since May 19, 2006, when it announced the organization’s intension to start offeri8ng servers based on AMD Opteron processors.
Another criticism is that the organization stick to its old tradition and this has not given room for innovative pattern of conducting its business. According to Lee (2006), “Pressure on Dell to break with some long standing traditions is high. Hewlett-Packard (HOQ) and other competitors have vastly improved product performance and customer service, while dell’s service ratings are in the doldrums and recent sales have disappointed investors”.
The threat to Dell Inc operations comes from the stiff competition it faces from its rivals, such as Hewlett-Packard, Apple, Sun Microsystems, gateway, Lenovo, Sony, Toshiba, and MDG Computers. Also, the newly acquired Alienware has its own competitors to compete with such as Falcon Northwest, Voodoo PC, Window PC, Sin systems Inc, among others.
DELL CORPORATION BUILDING A FORMIDABLE RELATIONSHIP MARKETING STRATEGY
The product of Dell Inc is unique in the sense that they are configured in a fashion to meet the need and status of the customer. The category of which each customer belongs is taken into cognizance when the organization’s products are being produced. For example, in their official web page you see personal computer made for student. These computers are packaged in portable fashion; notebooks are design to meet the financial capability of an average student.
This mode of production with consideration for the financial status of customer is a very vital way of creating a bond between the customer and the organization. As Stern (1997), puts it, “Bonding is an increasingly popular marketing strategy in which services marketers seek to establish personal long-term bonds with consumers so that current ones may be retained”. The need to retain old customers through bond formation is seen more cost effective than the cost for a continual prospecting for new customers.
Apart from the producing products to suit customer, the Dell Inc has further utilized its culture of selling directly to customer to tighten the bond between the organization and the customers. Personal selling is a very vital tool for relationship marketing. “In personal sales, factors such as characteristics of the customer and the sales person, pairing dynamics, and situational influences have been found to influence customer preferences.
These reflect the customers’ assessment of the costs/ benefits of entering, remaining, or leaving the relationship” (ibid). the advantage of personal selling to advertisement in relationship marketing is that personal selling happen in real time and space between real people, while advertisement takes place in media; an imitation of relationship in terms of communication. The option of direct personal selling has been the culture of the Dell Inc, even right from its inception as PC’ Limited. This is vividly display in the organization’s official website.
Customers are asked to make their orders directly, and shipment of this would be made directly to them, sometimes on a free cost basis. This strategy of relationship marketing adopted by the Dell Inc has greatly built the cordial relationship between the organizations and their customers in world wide. This also has led to the steady advancement of the organization from its humble beginning to the enviable state it is presently in. According to Karp (1998), “Dell has created success by selling its computer directly to customers and manufacturing them one at a time, as ordered with fiscal revenues for 1998 at $12.3 billion- a 59% increase over the previous year- Dell is now ranked third in the PC industry worldwide. The company now sells $ 5million in computer goods each day direct from its internet site”
Dell Inc has a general policy of manufacturing its products close to their customers. The assembly of desktop computers for the North American market takes place at dell plants in Austin Texas and in Winston- Salem, North Caroline, with servers built in Nashville, Tennessee. Also, Dell Inc assembles computers for Europe in Limerick City, Ireland (Wikipedia, 2006). This policy of manufacturing its product close to its customer is also a way of bringing the organization close to the people, for it to effectively carry out the organization policy for direct sales. This still goes on to tighten the bond between the customer and the organization, in the different countries it operates.
As a w ay to compete favourably in the global arena, the idea of bringing the product closer to the people is an ideal one. According to Hoffman & Preble (2003), some firms have gained increased advantage by adding mobility to their franchised operation by bringing their product/ services to the customer where and when they demand them.
Other marketing strategies adopted by Dell Inc which strengthens its relationship marketing include the lowering of prices at all times of the year, offering free bonus products (such as Dell printers), and offering free shipping in order to encourage more sales and to stave off competitors. (Wikipedia, 2006). The competitive advantage theory of Michael Porter can be analyzed here. In this case it is seen that Dell Inc have a strategy of lowering cost as a way of having advantage of its competitors, thus has not affected the quality of product the organization produce to its customers.
Hence, it contradicts the competitive advantage theory of Porter, which argues that an organization can not have competitive advantage by lowering cost and engaging in product differentiation. He strongly argued that the danger is that a firm may be caught in the middle and lose to those firms that do specialize (Flynn & Flynn 1996, Porter 1985). The stand of the Dell Inc goes on to support the argument of critics to the theory, who argues that it is possible to combine both strategies and have competitive advantages in both. As a way to maintain its low prices, Dell continues to accept most purchases of its products via the internet and through the telephone network, and to move its customer- care division to India (Wikipedia, 2006).
Dell Inc has also, as a way of providing beneficial services to college student, engaged in the provision of universities with discounted digital music subscriptions through stronger bandwidth for their interest servers. The idea is that to the student, the cost will seen transparent. It saves the university money on bandwidth and helps keep their services running quickly, free of viruses, its usually open to, with masses of students using peer-to-peer networks. The services from Dell to the students provide a legalize and free basis as an alternative to students accustomed to free, albeit illegal music on peer-to-peer file-sharing programs such as Grokster, Kazaa or Morphers (Haberkorn, 2005).
PROMOTING RELATIONSHIP MARKETING THROUGH E-MARKETING IN DELL CORPORATION
Dell Inc has over the years raised it sales on its products through direct sales via its e-marketing services. The organization has increased it sales in computer goods with sales of $5 million each day (Karp, 1998), this is achieved through a broad –based momentum with customers, as well as growth in shipments of servers and storage systems (Birmingham Post, 2002). Dell Inc numerous websites has greatly helped in its relationship marketing. Dell Inc through the utilization of Annuncio’s software, e-marketing solutions, it has been able to automate its e-marketing efforts while substantially reducing cost and turn around time of customer communications.
According to Rich Lloyd, senior manager, relationship marketing of Dell U.S. Consumer Group, “Annuncio was the optimum solutions for Dell’s consumer business to help us better communicate with our customers” (Nester & Vyridi, 2001). Dell is using the most sophisticated e-marketing organization services in the running of its e-marketing program. “Annuncio software provides an industry leading e-marketing platform that enables companies to deliver more revenue from their marketing dollars and build satisfied , loyal customers relationships that drive revenue and profitability” (ibid).
Dell official websites are designed in a way that customers visiting the sites have ease in surfing round them to look for the information they desire. The different icons are structured and displayed to made search for information on the company’s products and other information about the organization easy. The Customer to Business (C2B) in Dell websites gives customer an opportunity to chat live with officials of Dell Inc. also, instant messaging and sending of emails to the sites are allowed in the websites. The Dell Inc uses the B2C to communicate with its customer and build up its relationship marketing.
To further enhance the organization’s relationship with the society in which it operates Dell Inc through its online sales observe social security by screening all of its customers on their intended use of its product. This is to prevent the use of its product for social crimes, such as terrorism. According to Dargie (2004) “Dell has included a series of questions on their online order form- apparently designed to rumble the opportunist terrorist…should a customer indicate that they wish to export or that they intend to use Dell product for the purpose of nuclear end-users or chemical and biological weapons, for example, Dell will contact the customer to inform them of the restriction on the end-uses of its product”
The use of internet to market an organization’s products in contemporary times is a wide covering medium for voluminous sales by many organizations. The wide coverage of the internet has provided a large market for that doing e-marketing through it. For many organizations through the internet they have being able to foster a strong relationship between organizations and their customers. The internet provides a medium for effective communication.
Hence, there are interfaces C2C, B2C, C2B, G2C, G2B. these interfaces here gives users of e-marketing the opportunity to communicate to their customers, in terms of informing them of its products, and new existing ones, receiving orders, informing them the status of their ordered goods, sending invoicing, receiving their queries and complaints, and many other interactive communication in order to better serve the customer and build up a strong relationship.
Web pages should be designed and structured I a way that the users of the site would not find it difficult when trying to retrieve information. The task of making this easy and sophisticated is germane as the e-marketing is expanding. In this view, Wagner (2006) argues that “Across retail sites, easy design efforts to grab visitors’ attention and encourage purchase such as adding colours that jump out or re-arranging features on pages moved the needle on sales. But keeping that need requires more today as online consumers grow more sophisticated”. E-consumers have the wide varieties of choices to pick from, since they have access to virtually plethora sites offering the same product. Then it requires that an organization have a standard and well designed site that would attract the customers.
There are constant changes in the way sites are designed and what attract customers to them. As Bryan Eisenberg, co-founder of web marketing services firm Future Now Inc, puts it “since 2003 there has be en a shift in the way consumer respond. A lot of the old direct marketing or manipulation doesn’t work anymore. Things are starting to affect conversation now that didn’t a few years ago, like consumer- generated content (ibid). There is now a shift on how consumer use sites as well as the design of these sites for e-marketing. Site operates, for example, now most designs around the fact that home pages get less traffic than in the past as more visitors bypass that messaging and access the site from a variety of entry points.