Terms of referenceDell has been a market leader in the personal computer market for a very long time but it started having issues at the beginning of 2006. This was followed by a loss of its market position and share to its competitors such as HP and IBM. Mounting competition, changing consumer demands and technology development are the key drivers of strategic change for Dell. This report will highlight Dell’s areas of enhanced performance. It will also give an overview of three business improvement methodologies namely Investors in People, Business Process Re-engineering and Six Sigma, including the pros and cons of each method.
In addition, it will present a theoretical overview of leadership of change as well as the human dimensions of change. Lastly, it will recommend the best business improvement methodology that needs to be applied to Dell. Business Excellence: Case Study on DELLIntroduction to DELLBackgroundDespite Dell being a market leader in the personal computer sector, it started facing problems in 2006, with its rivals such as IBM, Sun Microsystems and HP taking up its share in the market in the established servers which operated business data networks and websites.
In the initial three months of 2006, the company’s profit decreased by 18 per cent. This forced Dell to go for AMD’S Opteron fragments in the established servers segment in order to get back its market share. However, towards the end of 2006, Dell lost its market leadership position to HP. In the last 3 months of 2006, it reported revenue of $14.4 billion which was 5.1 percent lower than that of the previous year. In addition, Dell was performing poorly in its printer section and experienced a 2.6 percent decrease in its market share.
Analysts argued that, the company’s direct retailing business method needed to be changed since consumers were shifting to preconfigured methods in stores. In response, Dell considered to shorten new product lifecycle, focus on the needs of consumers and foray into the growing Chinese market with personal computers customized for Chinese consumers (Ray, Paul & Krishna 2009, p. 1). Drivers for strategic changeThere are several drivers pushing for strategic change in Dell. To start with, Dell is facing increasing competition from its key competitors in the personal computer industry such as IBM and HP.
It is because of this competition that, Dell lost its market share in 2006. A lower market share means that, there are few customers to buy the company’s products or services which in turn lead to a decline in sales volume and eventually low profits. Competition in the personal computer sector keeps on mounting with more and more participants coming in. Increasing competition can be said to be the key driver for change for Dell (Ray, Paul& Krishna 2009, p. 1).
In addition, rising consumer demands is leading to the call for change. Ray, Paul & Krishna (2009, p. 3) says that, Dell has functioned under its old business model of direct selling since its invention. Consumers are no longer interested in such a method. There is thus a need for Dell to adopt a new selling method. Advancing technology is also another driver for change. Dell’s products and delivery of services should be up to date with the current technology.