sm group5 dell
TRANSCRIPT
STRATEGIC MANAGEMENT
Dell Inc.in 2008
Case Analysis & Decision (Case 2)
PREPARED AND SUBMITTED BY GROUP
ELMAHI ELSHIKH ELAJAB ELSHIKH MR081123
LIu XIA MR081157
MOHAMAD AZRAAI AHMAD SHUHOD MR 081107
KHAIRUL ANUAR MOHAMAD MR091076
HAJIR ROHANI MR081093
SUBMITTED TO:
DR. LAI YENG CHAI
December 31-12-2009
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1. STRATEGIC MATTERS
2. ISSUES
In order to address each of the strategic matters, the most important things to do are:
3. ALTERNATIVES
Generated alternatives for the identified issue are:
A. TO CHALLENGE AND COUNTER ATTACK HEWLETT-PACKARD STRATEGIES:-
HEWLETT-PACKARD STRATEGIES
Sales 1. Sales made through distributors, retailers and other channels. These included retailers that sold HP product through internet stores, value- added product and services, smaller retailer, customer segments, software vendors, system integrators etc.
Costs- efficient
2. Scrutinize supply chains, streamline the organization structure, trimming corporate overheads and site worldwide.
IT utilization
3. Simplified complicated IT operations; to engineer HP’s IT architectures and operations.
Provision of PCs and servers.
4. Outsourcing to assemble PCs and servers (e.g. x86) by contract manufacturers throughout various part of the world.
New 5. Introduce new products and services and capitalize data centre
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DELL INCORPORATION LOOSE WORLDWIDE LEADERSHIP IN PERSONAL COMPUTERS TO HEWLETT-PACKARD (HP).
TO REGAIN GLOBAL MARKET LEADER IN PERSONAL COMPUTERS.
Products architecture, mobile computing and digital printing.
Customer services
6. Assembled of orders according to customers’ specifications with maximize manufacturing efficiency by contract manufacturers.
Acquisition 7. Acquire software-technology and services companies such as Compact ($7bil), Electronic Data System (EDS)($13.25bil), 1000 salespeople
B. TO CONTINUE THE EXISTING DEL STRATEGY INORDER TO OVERTAKE HEWLETT-PACKARD
DELL STRATEGIES
Sales 1. Bypassing distributors and retail dealers eliminated the markups of resellers via direct sales and build-to order business model.
2. Customer-based sales and marketing focus at corporate, government, household and individual buyers segments.
3. Supplementing the direct sale strategy with sales at the retail stores of select partners.
4. Installing direct store kiosks as a hands-on complement to internet and phone sales (e.g.; Japan and U.S.). Entry into the white-box PC segment (i.e., unbranded).
Costs- efficient
5. Making build-to-order manufacturing and partnering with reputable key suppliers of PC parts and components.
6. Ongoing improvement in assembly efficiency by making innovations and redesigning the PCs.
7. Commitment to just-in-time inventory practices into market place.
8. Continuous pursuit of cost-reduction initiatives, organizing operations more efficiently across company value chain-design, supply, logistic, materials, manufacturing, labor etc.
IT utilization
9. Web site strategy via incorporating e-commerce technology and internet and use of IT into everyday business practices, value-added services for customer with large IT operations.
Provision of PCs and servers.
10. Produce standard technology of PCs and servers (e.g. x86) via seismic shift in server technology.
11. Outsourcing the full assembly of some laptop models to Asian contract manufacturers (e.g. Taiwan’s Foxconn Group)
New 12. Expansion into new products offerings to include data storage 3
Products hardware, switches, handheld PCs, printers, and printer cartridges.
Customer services
13. Provide custom-built products and custom-tailored services, on-site services, on-line training program, customer service centers, premier pages web sites, product design services, enhance services and support for large enterprises, online shoppers with customer reviews of Dell products, customer-driven research and development and standardized technology.
Acquisition 14. Acquire software-related companies such as; Ever dream corporation (SaaS), SilverBack Technologies Inc (IT infrastructure), MassageOne Inc (e-mail services), EqualLogic (storage area network), ASAP Software, Network Storage Company.
Quality control
15. Quality control processes on components, parts, and subassemblies internal and from suppliers.
Advertising 16. Advertising through leading computer publication such as PC World, PC Magazine, Wall Street Journal.
C. TO ESTABLISH NEW STRATEGY TO OVERTAKE HEWLETT-PACKARD
DELLS’ NEW STRATEGIES
New product concepts
1. Introducing new concepts of products with diversify multiple dimensions in term of products with servers, storage, printing and services.
Market share
2. Grow market share outside the U.S which Dell Corporation currently has at 10%.
Sell computer factories
3. Sell its worldwide network computer factories in an effort to stabilize financial and reduce production costs.
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4. CRITICAL FACTOR
A. TO CHALLENGE AND COUNTER ATTACK HEWLETT-PACKARD STRATEGIES:-
CRITICAL FACTORS
CURRENT SITUATION
FUTURE SITUATION LOGICAL ASSUMPTION
Sales Bypassing distributors and retail dealers eliminated the markups of resellers via direct sales and build-to order business model.
Sales made through distributors, retailers and other channels included retailers that sold products through internet stores, value- added product and services.
More attraction from corporate, government, household and individual buyers segments.
Costs - efficient High cost of operation in supply chain, organization structure and corporate overheads compared to rivals.
Scrutinize supply chains, streamline the organization structure, trimming corporate overheads and site worldwide.
Offer higher quality of product but with lower cost.
New Products and technology innovations.
Products offerings include data storage hardware, switches, handheld PCs, printers, and printer cartridges.
Introduce new products and services and capitalize data centre architecture, mobile computing and digital printing.
New generation of customers want more high-tech, glitzy, fashionable and more customizable products.
Provision of PCs and servers.
Produce standard technology of PCs and servers via seismic shift in server technology.
Outsourcing to assemble PCs and servers by contract manufacturers throughout various part of the world.
High productivity of product for customers and fast supply chain.
Customer services Provide custom-built products and
Assembled of orders according to
It encourages new customers and loyal
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custom-tailored services, on-site services
customers’ specifications with maximize manufacturing efficiency by contract manufacturers.
customers to buy more.
Supporting industrySuch as IT, component supplier, raw materials.
Limitation of supporting industry such as IT, component supplier, raw materials etc.
Increase number of supporting industries with large IT operation.
High productivity of product and fast supply chain.
Change in consumerPreferences.
Mostly younger customer and partly old fashion customer.
Differentiation from the Rivals.
Satisfying and increasing number of IT conscience consumers willDistinguish the firm from its rivals.
B. TO CONTINUE THE EXISTING DEL STRATEGY INORDER TO OVERTAKE HEWLETT-PACKARD
CRITICAL FACTORS
CURRENT SITUATION
FUTURE SITUATION LOGICAL ASSUMPTION
Capturing a new customer segment
Mostly loyal customersfrom urban areas
Enhance services and support for large enterprises, online shoppers with customer reviews of Dell products, customer-driven research and development and standardized technology.
Younger generation tend to do everything online, hence attracting younger and new customers from urban and rural area.
Promotion gift/discount
Only a “thank you” letter along with catalogue
Giving gift/discount after a certain amount of buying
It encourages customers to buy more
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Aggressive e-Marketing
Moderate E-Marketing activities.
Higher brand image due to aggressive e-Marketing activities
Aggressive E-Marketing is a branding tool that keeps Dell on customers' minds.
Customer loyalty Minimal customer loyalty program.
More program such as; giving gift, bonus, discount, and free delivery charges to keep the customers loyalty.
More new customers and loyal online customers programs.
C. TO ESTABLISH NEW STRATEGY TO OVERTAKE HEWLETT-PACKARD
CRITICAL FACTORS
CURRENT SITUATION
FUTURE SITUATION LOGICAL ASSUMPTION
New product concepts
Products offerings include data storage hardware, switches, handheld PCs, printers, and printer cartridges.
Introducing new concepts of products with diversify multiple dimensions in term of products with servers, storage, printing and services.
Satisfying numbers of consumers would grow globally.
Market share Most of market share within US.
Capturing a broaderMarket by growing market share outside the U.S
Faster ability to gain share in new markets versus limitation market.
Sell computer factories
Higher overhead costs of worldwide network computer factories compared to rivals.
Sell its worldwide network computer factories by entering into agreement with contract manufacturers to produce in PCs.
Ability to offer competitive price as reduction of production costs.
Increase Sales 15% and 5% worldwide market share of PCs and printing products
The leader in sales worldwide market share of PCs and printing products.
Both on line sale and retail shops are able to sell more PCs and printing products
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respectively.
Brand awareness Moderate well-known brand outside the US. Also, some reps cannot present the brand adequately.
More brand awarenessoutside the region via well trained and more committed employees
Well trained and more dedicated employees enable to present theBrand adequately and appropriately sell it outside the region.
5. EVALUATION OF ALTERNATIVES
A. TO CHALLENGE AND COUNTER ATTACK HEWLETT-PACKARD STRATEGIES:-
CRITICAL FACTORS BASED ON FUTURE
SCENARIO
ALTERNATIVES
To challenge and counter attack Hewlett-Packard strategies
Not to challenge and counter attack Hewlett-Packard strategies
Sales made through distributors, retailers and other channels included retailers that sold products through internet stores, value- added product and services.
Yes; increase in sales and better services for customers and capable to offer competitive price.
No; decrease in sale because customer will prefer better service at nearest stores.
Scrutinize supply chains; streamline the organization structure, trimming corporate overheads and site worldwide.
Yes; production costs will reduce significantly and consequently lower the price.
No; production costs maintain high and unable to offer competitive price.
Introduce new products and services and capitalize data centre architecture, mobile computing and digital printing.
Yes; attract new generation customers with different preferences.
No; poor customer interaction due to outdated products.
Outsourcing to assemble PCs and servers by contract manufacturers
Yes; reduces operation costs effectively.
No; high operation costs
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throughout various part of the world.
Assembled of orders according to customers’ specifications with maximize manufacturing efficiency by contract manufacturers.
Yes; capable to offer competitive price at higher quality of products and satisfy customers.
No; poor competition due to limited offer to customers.
Increase number of supporting industries with large IT operation.
Yes; reduces operation costs effectively.
No; high operation costs
Differentiation from the Rivals.
Yes; attract new generation customers with different preferences.
No; poor customer interaction due to outdated products.
B. TO CONTINUE THE EXISTING DEL STRATEGY INORDER TO OVERTAKE HEWLETT-PACKARD
CRITICAL FACTORS BASED ON FUTURE
SCENARIO
ALTERNATIVES
To continue the existing Del strategy in order to overtake Hewlett-Packard
To discontinue the existing Del strategy
Enhance services and support for large enterprises, online shoppers with customer reviews of Dell products, customer-driven research and development and standardized technology.
Yes; better growth in market demand with appropriate customer approach strategy.
No; poor market demand due to poor customer service approach.
Giving gift/discount after a certain amount of buying
Yes; satisfying and increasing number of consumers and loyal customers.
No; poor customer attractions owing to poor incentives offered to customers.
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Higher brand image due to aggressive e-Marketing activities
Yes; encourage customers to buy more and attract the others.
No; poor customer promotion
More program such as; giving gift, bonus, discount, and free delivery charges to keep the customers loyalty.
Yes; more attraction tool that keeps Dell on customers' minds.
No; poor customer attractions due to minimal programs and activities
C. TO ESTABLISH NEW STRATEGY TO OVERTAKE HEWLETT-PACKARD
CRITICAL FACTORS BASED ON FUTURE
SCENARIO
ALTERNATIVES
To establish new strategy to overtake Hewlett-Packard
To maintain with old strategy.
Introducing new concepts of products with diversify multiple dimensions in term of products with servers, storage, printing and services.
Yes; increase in sales and revenue with the multiple choice of product.
No; decrease in sales due to limited product offered.
Capturing a broaderMarket by growing market share outside the U.S
Yes; more segmentation customers and product categories
No; limited customer in local market.
Sell its worldwide network computer factories by entering into agreement with contract manufacturers to produce in PCs.
Yes; Increase in cash flow and reduce production costs resulting in more competitive in global market.
No; Unstable financial High production costs.
The leader in sales worldwide market share of PCs and printing products.
Yes; more aggressive in marketing globally
No; poor in marketing locally and globally.
More brand awareness Yes; Increase in sales and No; poor customer
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outside the region via well trained and more committed employees
revenue globally with the brand awareness program domestically and outside the region.
attractions due to poor brand awareness.
6. STRATEGIC DECISION
6.1. Dell Incorporation is capable to address both of its aforementioned strategic matters via the following steps decisions processes:-
6.1.1. First and foremost, Dell Incorporation is to challenge and counter attack Hewlett-Packard strategies by making sales through distributors, retailers and other channels included retailers that sold products through internet stores, value- added product and services. Scrutinize supply chains; streamline the organization structure, trimming corporate overheads and site worldwide. Introduce new products and services and capitalize data centre architecture, mobile computing and digital printing. Outsourcing to assemble PCs and servers by contract manufacturers throughout various part of the world. Assembled of orders according to customers’ specifications with maximize manufacturing efficiency by contract manufacturers. Increase number of supporting industries with large IT operation. Differentiation from the Rivals.
6.1.2. The second step, Dell Incorporation is to continue the existing Del strategy in order to overtake Hewlett-Packard by enhance services and support for large enterprises, online shoppers with customer reviews of Dell products, customer-driven research and development and standardized technology. Giving gift/discount after a certain amount of buying. Higher brand image due to aggressive e-Marketing activities. More program such as; giving gift, bonus, discount, and free delivery charges to keep the customers loyalty.
6.1.3. The third step, Dell Incorporation is to establish new strategy to overtake Hewlett-Packard by introducing new concepts of products with diversify multiple dimensions in term of products with servers, storage, printing and services. Capturing a broader market by growing market share outside the U.S. Sell its worldwide network computer
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factories by entering into agreement with contract manufacturers to produce in PCs. The leader in sales worldwide market share of PCs and printing products. More brand awareness outside the region via well trained and more committed employees
7. IMPLEMENTATION ACTION PLAN
7.1. Owing to numerous internal organization issues, Dell Incorporation should address these issues by implementing integrated production planning and operation control systems as soon as possible. It needs a watchful eye to analyze each and every function in order to find out the best way of doing the job. This is a teamwork job under direct supervision of the CEO.
7.2. Dell Incorporation should take the opportunity of change in consumer preferences by introducing new concepts of products development in order to differentiate the firm from its rivals and to attract diverse group of customers.
7.3. Marketing RND and consumer preferences survey should be conducted in order to find out what exactly consumers need. This strategy should be implemented right after finishing the previous one.
7.4. On the “customer’s loyalty” issue, moreover, today people tend to do everything online! Therefore, expanding online selling system and e-marketing couple with service back-up centre/shop will help the firm to capture a broader market as well as younger generation customer.
7.5. Dell Incorporation is to develop an easy to navigate, multi lingual website and doing aggressive e-Marketing activities as well as to try to take the highest rank in pioneer search engines. Dell can implement this strategy simultaneously with the previous with the help of Marketing VP and a reliable IT counselor.
7.6. Dell Incorporation should be ready for expanding its global sales market. Analysis and records prove that this is the best strategy to take advantage of the growing market. Expanding global market sales for the Dell Incorporation should carry out two steps:-
7.6.1. In the first phase, Dell should sell its worldwide network computer factories in an effort to reduce production costs. After one year, positive results of the previous implemented strategies and after gaining the projected ROI will be ready for more expansion.
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7.6.2. Second phase, Dell is to presence in a wider market and taking more advantage of the growing market, Dell should continue its expansion through grow its market share outside the U.S globally.
7.7. Dell implementation action plan has been summarized in the following table:
ImplementationActions
STRATEGIC DECISION MADE
1. Production planning andoperation control systems
2. Diversify multiple dimensions in term of products
3. Expanding online sellingsystem and e-marketing
4. Expanding global market
4.1 Within the region
4.2 Globally
WHATTo implement?
Production planning andoperation control systems
New product development andpromotion
Expanding online sellingsystem and e-marketing
Expanding sales after service.
Expanding multiple product and functional
WHYTo implement?
To gain a control over thebusiness
To differentiate and attractdiverse group of customers
To capture a broader market & attract younger customers
To presence within the region market but with higher growth rate
To presence in a wider market & higher growth rate
HOWTo implement?
Engineering all functions tofind out how resources are to be utilized
Based on consumerspreferences survey, producingPCs products with moreContemporary high-tech products.
Easy to navigate, multi lingualwebsite and aggressive e-Marketing
Expanding sales after service centre/ shops with long term lease agreement
Through acquiringSoftware-related services such as Ever dream Corporation, Silver Black Tech etc.
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WHERETo implement?
Inside the organization
Inside the organization
Dell’s website US, Europe market
Global market
WHENTo implement?
ASAP, and should be finished atthe end of year 2010
Right after the 1st strategy
Simultaneously with theprevious strategy
After finishing the 2ndstrategy
After finishing the 3rdstrategy
WHOTo implement?
CEO, with assistance of VPs of all functions
CEO + Marketing VP
CEO + Marketing VP + reliable IT counselor
CEO + Mktg. VP
CEO + Mktg. VP
8. POTENTIAL PROBLEM ANALYSIS
ImplementationActions
STRATEGIC DECISION MADE
1. Production planning andoperation control systems
2. Diversify multiple dimensions in term of products
3. Expanding online sellingsystem and e-marketing
4. Expanding retail system
4.1 Within the region
4.2 Globally
PotentialProblem
Negative reactions andresistances
Shift in consumers preferences
a. Threat of entryb. Cost of shipments
Not gaining theprojected return
Intense competition
ContingencyPlan
Frequently informative andpersuasive speeches andmeetings
Continuous marketing research
a. Customer loyalty program and aggressive e-Marketingb. Free or discountedDelivery.
Strong marketingcampaign andbranding activities
a. Brand awarenessactivitiesb. New productdevelopment (NPD)
WHAT
To implement?
A series of informative andpersuasive speeches andmeetings to manage resistances
Continuous marketing research
a. Customer loyalty activitywith aggressive e-Marketingb. Free or discounteddelivery
Graduallyimplementation along with marketingcampaign
a. Brand awarenessactivitiesb. New productdevelopment (NPD)
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WHYTo implement?
To prevent and reduceresistances and encourageemployees to participate
To make the firm up to date interms of consumer preferences
a. To keep customers loyaland to reach to as much aspossible customersb. To increase online sales
To back to theprojected growth rateand minimize loss
To prevent of losingmarket share
HOWTo implement?
Showing befits and positiveoutcomes to employees throughfrequent meetings
Continuous marketing researchand online surveying
Cutting cost of inefficientactivities to offer more free or with discount delivery
a. Well trained staff should adequatelypresent the brandb. Strong marketingcampaign
a. Well trained staff should adequatelypresent the brandb. Intensively NPD
WHERETo implement?
Inside the organization
Online survey and throughoutthe market
Throughout the Dell’s website
In stores & inside theorganization
Externally & outside theorganization
WHENTo implement?
Starts before implementationand will be continued
Starts before implementationand will be continued
Proactive strategy
Proactive strategy
Proactive strategy
WHOTo implement?
CEO with assistance of VPs
CEO + Marketing VP
CEO + Marketing VP
CEO + Mktg. VP
CEO + Mktg. VP +Retail staff
9. CONCLUSION
9.1. With regards to the internal organizational issues, first and foremost, Dell’s CEO should address these issues by implementing integrated production planning and operation control systems to gain a proper control over the business.
9.2. While projected growth rate for Dell Incorporation, surveys shows that change in consumer’s preferences seems to be one of the reasons the firm’s slowdown. Dells’ should take this opportunity by introducing new concepts of products development in order to differentiate the firm from its rivals and to attract diverse group of customers.
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9.3. In facing with “customers loyalty” issue Dell Incorporation should expanding online selling system and e-marketing in order to help the firm to capture a broader market as well as younger generation customers.
Appendix 2:
Mission, Objectives, Strategies:
HISTORY:
Dell Company was established in 1984. Dell operation involves dosing, building and customizing hi-tech product. Their product line today includes Desktops, Servers, Laptops, Peripherals and
Workstation.
Mission:
Dell is a company leader in delivering the latest technology in computer systems to customers, and a broad range of products that enhance the service. The main concept is to sell directly to customers without intermediaries to better understand their needs and provide personalize assistance to take customers to the next level of service.
Strategy:
Dell combines direct customer model which is our initial goal, with relevant technologies and solutions, efficient manufacturing and logistics, and strive to find new distribution channels amongst businesses and individuals around the world. Within the customer experience, superior value, high quality, relevant technology, and customized systems set us apart from our competitors. Also, product differentiation, and new acquisitions are a part of the widening of the business.
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10. BIBLIOGRAPHY
10.1. Lai, Y. C. (Director) (2009, July 12). Case Analysis and Decision. Strategic Management (MRB 3012), IBS, UTM City Campus, Kuala Lumpur.
10.2. Gamble J., J., A., Thompson, A., & Strickland, I. (2009). Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. Boston: McGraw-Hill College.
10.3. David, F. (1986). Fundamentals of Strategic Management. New York: Macmillan Pub Co.
Bibliography
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