Business Information Systems at Dell - Essay Example

Full title topic Dell is a growing technology-based organization. It is a successful organization of the United States but recently it lost is lead position in the technology market to Hewlett Packard. This became a matter of great concern for the management of Dell. And therefore, research started on the reasons as to why this happened. It was found that in late 2006, HP sold more units globally than did Dell. This was the statistical part of it. But the theory behind it says that Dell should now use reactive management in dealing with this loss. They should focus on all sorts of key e-business elements to recover their position. They can focus on better customer relationship management (CRM), enhanced human resource management (HRM), wider availability of Dell products to its customers, value-added services, promotions and offers and lastly, better communication and collaboration within all components of the supply chain. Dell has been effectively performing all the above functions but at this stage in time, it needs to further elaborate and build on all of these functions so as to regain its leadership position. Dell is still growing as an organization but not at the speed with which its competitors are growing. Dell still maintains a favourable position in the marketplace. Furthermore, Dell should keep on using Internet technology to attain that competitive advantage. It should further invest in doing e-business and e-commerce for its trading ad conducting purposes so as to receive more loyalty from its customers and ensure their utmost involvement in the company. INTRODUCTION TO DELL Dell is a very old and successful company of America which deals with the sales of products that are technology-based. Its business scope not only includes selling these products, but it also encompasses development and manufacturing of these components of technology. Moreover, it also will support these products and their presence in the market. Dell has very diligently used technology in making a very prominent place in the market. For years and years, Dell had the competitive advantage over other companies in the same field. It managed in maintaining this competitive edge for many decades, but only recently the company Hewlett Packard has made its name prominent in the market place and has left Dell behind in the technology race. USING INTERNET FOR COMPETITIVE ADVANTAGE During the time at which it was at the peak of its success, it had very intelligently used the Internet technology to achieve that competitive advantage. We can call the world of Internet as one of the core competence of the company Dell as it was the business activity which it used particularly more efficiently than did the other organizations in the same industry. Firstly, Dell provided value to its customers through presenting their products online. Not just that, they gave special promotions of quick buys and discounts for those who would pay immediately. This created value for those customers who wanted to buy Dell products and yet save on their pocket. This provided further incentive to the customers to go online and shop, with convenience for themselves as well as for their budget. Moreover, Dell was giving their valued customers the same service and performance which they would find it they go to a physical Dell store. This quality really attracted customers. The website was absolutely user-friendly. The customers found navigation within the site very easy and there were many useful tabs to help them go to useful links and let them know of the content of the website. Furthermore, Dell was thoughtful enough to provide personal attention to the customers. This was done through the use of personalized web sites for different target audiences, for example there would be separate web pages for the ladies, the men, young children. Of course there are variations in likes, dislikes and choices in adult men, adult women and young children even when it comes to the use of technology. Moreover, bio-data of the customers who visit the website are asked and fed and then likewise, personal suggestions for buying a particular product out of a whole product-line are given to them. Likewise, personalized special offers can also be made to the customers based on their bio data. Adding to this, Dell also indulged in providing a sense of community living to the customer when they visit the website. This can be achieved by the discussion boards and chat rooms that are open and free for anyone to come and use. This generates discussion between various people and allows a positive image of the brand to develop. BUSINESS MODEL OF DELL Dell's business model is a very strong and effective one. It uses the internet and the telephone network to deal with customers and then engages in direct sales with them. It sells its product line to both individual as well as corporate customers. When we talk of the product line that Dell is manufacturing and selling, it includes personal computers, servers, data-storage devices, peripheral devices, software items, television sets, network-switches, personal digital assistants (PDAs) many other products which are related to technology. The cash conversion cycle that is the time it takes for Dell to pay for its raw material and then receive payment for its sales are so strong that it is negative. That is, dell receives the payment of its sales before it pays for the raw material. This shows the implementation of a very strong business model. BUSINESS MODEL OF HP HP is an information technology company which has recently in 2006 surpassed Dell in its products. This shows the use of a very strong business model. HP deals with all those products that Dell is selling, with the inclusion of digital cameras, printers and calculators and the exclusion of network switches and personal digital assistants. It has a global presence when it comes to terms like computing and technology. It has recently started a spin off with the name of Agilent Technologies. HP is partners with SAP AG which is a leading software application company. Moreover, it supports the relationship of Compaq with Microsoft. Furthermore, it makes use of many major software and hardware vendors in the world. LEGAL FACTORS There can be many legal issues when a company is exploiting new markets. The company should firstly make sure that it is not using any unfair practices in the obtaining of the infrastructure, the building, the location, the machinery or any such equipment which will go in the use of the establishment of the company in the new market. People can file lawsuits for even obtaining good incentives if they feel they are through unfair means. Moreover, care should be taken that the employees are given the top most priority in terms of importance in the company as valued members. Many lawsuits are the ones which are filed by employees because they feel that they have been treated unfairly. DELL'S MARKETING STRATEGY Dell has advertised its products using many various channels of media. Whether it is newspapers, magazines, television ads, catalogs describing in details the products of Dell, or the internet providing an online shop and online catalogue, Dell has used many resources in marketing its valued products efficiently to its target audience. Dell has indulged in many marketing strategies over the time period in which it was reigning over the market. One of them is that Dell used to keep its prices low and quality the same as compared to all the other companies in the market. These companies, belonging to the same industry, somehow could not attain this cost efficiency. Moreover, when people used to purchase some product of Dell, a bonus product used to be free with that purchase for example a printer or a scanner of Dell itself. This used to increase the attractiveness of going for Dell when buying something. Furthermore, it also offered free shipping for customers who used delivery services. DELL'S CRM STRATEGY Customer relationship management is not just the application of software so as to facilitate dealing with customers. It is a broader term in which the whole organization is designed in such a way which shows to the customer that the organization's philosophy is better service and relationship with the customers. Dell has very effectively matched the CRM strategy with its overall strategy of providing value products. Dell initiated the front-of-house customer services which allowed the customer to see the range of products and choose their option while sitting in the vicinity of their homes. Moreover employee training was made such which allows the employee to be extremely useful and informative for the customer. The employee should provide utmost service to the customer and help him make a decision. Furthermore, systems and information management software were installed which helped the sales representatives to be better aware of a particular customer's link with the company, their buying history etc. Dell believes in a fully integrated CRM application in the whole organization. CREATING ECONOMIC VALUE Economic value can be created by increasing the gap between price and cost. This way, if there is a large gap; Dell can pass on this cost efficiency easily to their customers in the form of discounts and bonuses. This giving of discounts and cost-effective products will ensure that the customers are loyal and keep on buying HP products. How can this economic value be achieved? This can be achieved by exploiting opportunities within the value system and the supply chain. Through the Supply Chain A supply chain in Dell involves those people, particularly employees, suppliers and other raw material vendors as well as activities, information and resources which help and are used in facilitating and making the move of the product from the organization's producing end to the customer's using end. There are many activities which fall under the domain of the supply chain. For instance, activities which help in the extraction of raw material and then transforming this raw material into finished goods for the use of the customer. Dell has exploited the opportunity of a cost effective supply chain by keeping track of all relevant information regarding all components of the supply chain. In this way, the entire supply chain is optimized to meet the needs of the company as well as better fulfill customers demand in terms of quantity and cost. Through the "Value System" There are three value categories in a value system. They are Core Values, Protected Values and Created Values Dell has exploited these three value categories to their highest potential so as to infuse the spirit of a learning organization within the whole company and within all components that are considered a part of the company. These components can be any: the customer, the supplier, the employees etc. In Core Values, the attitude and the character of the organization is displayed. Dell has kept a very positive attitude, providing utmost importance to its customers and striving to provide value to its customers. Secondly, in Protected Values, rules, standards and certifications come. Dell is an active organization when it comes to environmental responsibility. It was the first information technology company to have a recycling goal. Moreover under Created Value comes that value which has been created for the stakeholder in terms of its share in the company. Dell has efficiently increased the worth of its share in the market through providing value to everyone involved in the company. EVOLVING AS VIRTUAL ORGANIZATIONS Dell and HP are both information technology based organizations. Therefore, most of their operations are also virtual based. When an organization uses telecommunication tools to start, maintain and then sustain their relationship in the environment around them and then even to make the organization work, we can call it a virtual organization. Moreover, Dell and HP have outsourced most of their operations so that they can focus on the marketing aspect as well as maintaining customers in this competitive market. This feature of outsourcing also makes an organization virtual because then the organization does not have a fixed physical existence as in a building but it exists through networks of people who are connected together and are doing work for a single product, product line or organization. There is no single locus of control and there is efficiency of resources as all the parties are using their personal resources to the best of their talent, capabilities and interests. Their businesses have continued to evolve mainly because this is the Information Age that we are living in. Organizations are now moving towards a "paperless office". People are moving towards an era where they forever want to stay connected with their loved ones and other useful correspondences through any means possible. This change of living style has greatly benefited companies who are dealing with products who facilitate this living style. HP and Dell are producing products which will help people to stay connected and help organizations achieve the dream of the "paperless office". Moreover, if seen from the perspective of HP and Dell, keeping their environments neutral, we can say that the organizations are really committed to what they are doing. They endeavour in creating value in whatever they do. They wan to have satisfied employees, happy employees and well-maintained suppliers. They want to give the best in whatever they do, whether it is a small step or a big change. They know how to adapt with the changing environment and they keep their research and development going on. DELL'S CURRENT PERFORMANCE Dell has been a market leader from many years but since 2006 things changed and there has been a visible decline in market share of Dell as against its competitors. It has been reported that Dell is facing a 8.8% loss year over year especially to its competitors EMC and IBM. Moreover, Hewlett Packard, which was its biggest rival in the technology industry, has successfully beaten Dell in the race of market share. In late 2006, HP shipped more products world wide than did Dell. In the very same period, that is the 4th quarter of 2006, Dell grew only 3.6% as compared to the 15% growth of HP. Yet in the rankings made in the year 2007, the company Dell is ranked 38th in the Fortune 500 List and 8th on the top 20 most admired companies of the United States of America. This shows that the company is still in a favourable position in the eyes of its customers, even after losing the lead position in the market. The problem with Del was that it underestimated its competitors. A proactive management is one which is done before the problem occurs that is it tries to prevent the problem from happening rather than curing it after it has occurred. In the case of Dell, a proactive management would have meant a better look out for what was going on with the competitors especially HP. This would have warned the management of Dell about the supernormal growth that HP was planning to make and then Dell could have increased its marketing and sales vigorously to match up to their level. Moreover, a reactive management at this stage would also work because Dell has not lost everything. It can still recover its lead position. KEY E-BUSINESS ELEMENTS There are many key e-business elements which can help Dell continue to have a competitive advantage over its competitors. The company just needs to exploit these elements to their highest potential. Firstly, the company needs to further elaborate on its customer relationship management (CRM). It should install further software and surprise customers with the amount of interest they hold in them. The customers should be blown away with the concern and care that Dell shows. They should feel as if they are part of the Dell Inc. and they are valued by the company like anything. They should receive notifications of the company's new products and should be reached out and invited to special connection-making events. The company should organize celebrations and invite the general public to generate positive feelings for the company in the eyes of the customers. The second key element is human resource management (HRM). The employees should be taken special care of and should be trained and developed to their highest potential. Promotions should be given and the employee should be satisfied with the wage and salary structure. Other benefits and fringes should also be part of the overall compensation package. Satisfied employees mean a healthy and growing organization. Dell can easily counteract the threat of HP by spending more on Research and Development (R&D). This way, through bringing further innovation in its products, Dell can steal away the market share from HP. It can also increase its sales through better marketing efforts. This acceleration of sales will definitely buy back the market share it lost. Moreover, the company can increase the ways in which the customer can buy a Dell product. This can be achieved by opening more retail outlets and starting door to door sales. Bibliography 1. Catherine Fredman. Direct From Dell. 2. Dell. Dell at a Glance. Available from www.dell.com [Accessed 25 December 2007] 3. HP. HP 2006 Annual Report. Available from http://media.corporate-ir.net/media_files/irol/71/71087/pdf/HP_2006AR.pdf [Accessed 25 December 2007] 4. Dave Chaffey. (2006). E-Business and E-Commerce Management 5. Simon Hickie. (2005). Business Information Systems 6. Ed Peelen. (2005). Customer Relationship Management Read More