Executive Summary
The organization being chosen to carry out such change management process analysis is the computer industry and the organization company in focus is amicably regarding DELL Computers. Thus, change processes in business organizations involves the reality behind every process and is considered as a daily cycle in dealing to various issues and concerns of the organization as it depends on the managements actions and its respected change of nature in dealing with effective change management as directed at overcoming anger and resentment evolving into a program that supports acceptance and internalization. As a consultant commenting on the organizational change process choosing DELL organization as the focal point for discussion and analysis for this presentation, my role to the organization is to have a clear emphasis dealing to the external and internal change drivers and other essential points needed for the realization of purpose for this report presentation for the senior management of the DELL in providing factual information that will be able to give a better substantive spontaneity of understanding of such organizational state needed for selection and the application of the appropriate management models as well as concepts perse.
Introduction
Background Information
DELL was founded in 1984 by Michael Dell on a simple concept: that by selling computer systems directly to customers, DELL could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. DELL is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures and is by far the most renowned name in the computer industry for customers worldwide. The mission of DELL is “to be the most successful computer company in the world at delivering the best customer experience in markets we serve”, by means of meeting customer expectations of highest quality, leading technology and company accountability and support as well as flexible customization capability, and financial stability.
General Issues
DELL is enhancing and broadening the fundamental competitive advantages of the direct model by applying the efficiencies of the Internet to its entire business. Dell led commercial migration to the Internet, launching in 1994 and adding e-commerce capability in 1996. DELL became the first company to record million in online sales. DELL in the Chinese market is perceived to be a highly competitive environment by strict legislation and different cultural and social values. The Chinese government promotes national PC vendors to foreign companies and strict control of internet usage. The technological advancement is getting better at a quicker pace. The economy of the country is also doing well but the societal view of internet sales is rather blinkered and Dell does not have much success in its online sales. DELL produces high quality PCs by using their Direct Business Model approach and sells them directly to the customers. DELL’s weaknesses are single sourcing, new product and reliance on corporate clients. DELL has opportunities like the potential growth in overseas markets as the industry is still in growth phase and the entering of the new product markets. Henceforth, the threats are technological changes that are expected since technology can only get better. Global economy and increased competition in which DELL’s financial ratios identifies that the company is no match for their competitors. The one problem concern faced by DELL is the fierce competition in the industry. If DELL enters into a merge it would not have to spend so much money and time trying to develop a face to face communications, if the local business is already well known. DELL initiated ways to overcome its weaknesses and use its strengths to gain advantages over its competitors by careful analyzing of the factors that contribute to the company’s success in business strategies that had implemented created the path for the company’s continued success.
Environment and Drivers of Change
Environmental Analysis
In general, DELL company is dynamic and complex organization because of its proven best quality services and being dedicated in serving the world with its management values that has kept them to be one of the best and most renowned in the computer industry business in relation to DELL’s climb in terms of market leadership which is the outcome of a consistent focus on delivering the best possible customer experience by means of standard based products and services in engaging the global market per se.
The external environment of a company consists of outside conditions that affect a firm’s performance. An analysis of this external environment allows a firm to identify key conditions that are beyond its direct control and those elements on which it can have an affect. Analyzing these areas of the external environment help DELL identify the opportunities and threats in the computer industry. There are a lot of factors affecting DELL’s business from the external environment. DELL has tight competency with other big computer sellers like Compaq and HP. Thus. social factors also affect the business environment of DELL. Computer companies have to acknowledge that in the Chinese culture, people are still unsure about credit card sales because of the huge expense of computers in China. Companies, then have to invest in door-to-door or face-to-face operations to gain consumers’ faith and consumers trust in the company and its product.
PEST Analysis
Political
One of DELL’s biggest threats is involving the fourth element of the external environment, the political/legal environment. The Chinese government prefers to promote national PC vendors to foreign companies. There is a lot of red tape involved in securing government contracts. The Chinese government not only favors local firms but also local companies. Government control of internet usage in China is another threat to the growth of the internet.
Economic
The economic environment refers to the nature and direction of the economy in which a firm competes or may compete. A primary threat that computer companies encounter in China is the problem of software piracy. China has a shortage of skilled labor, even though the country has many economic opportunities. Computer companies have to acknowledge that the average consumer could not afford the investment and very few had a bank account. DELL is aware that Chinese customers go for the cheapest System.
Social
The socio-cultural segment is concerned with a society’s attitudes and cultural values. The potential for Internet growth is huge in China, giving foreign computer companies, DELL the opportunities to expand into a new market. Computer companies have to acknowledge that in the Chinese culture, people are still unsure about card sales because of the huge expense of computers in China. DELL have to invest in door-to-door or face-to-face operations to gain consumers’ faith and consumers’ trust in the company and product
Technological
The technological segment includes the institutions and activities involved with creating new knowledge into products, processes and materials. In the computer industry, technology continues to be smaller and faster than ever. Providing access to technologies developed by institutions has proven a key government resource. It was observed that by the year 2000, mainland China’s annual PC production would reach 7.6 million making it the third largest in the world. The internet is a great opportunity for companies to get their name into the public domain as well as a fast way to tailor services to its customer segments. A threat in the technological segment to DELL’s business in China is that access to the Internet is costly.
DELL’s product life cycle is very good and being the best among and top company selling PCs, it can be said that DELL is in maturation stage as they are dominatinf the computer world. The internal business environment of DELL is very good and has achieved the ISO 14001 Environmental Management System, as the organization implemented goals where by the goal is to improve internal environment performance as used to share successes throughout the company. DELL’s direct customer business model is the key to the company’s dramatic growth and success and has focused on selling directly to customers. This helps eliminate the middleman and offers customers more powerful configured systems than most competitors. The direct model enables DELL to develop a thorough understanding of customer expectations which strengthens customer relationships and increases customer satisfaction and loyalty.
Five Forces Model
The five forces model of competition expands the arena for competitive analysis and include the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitute products and the intensity of rivalry among competitors.
Entry Barriers
New entrants to a market can threaten the market share of competitors already in the market .New entrants, such as IBM, are interested in entering the Chinese market to try to gain a large market share from existing competitors in the market. DELL is using a different approach to catch the eye of Chinese consumers. DELL’s Just-In-Time (J-I-T) inventory keeps inventory costs to a minimum. A barrier to entry in China is dealing with the governments political and legal issues. Many foreign firms have to depend on Chinese resellers to make their product available to the public. China’s regulations state that if goods were not manufactured in China, they could not be sold directly to the mainland. Despite protectionist tariffs on foreign firms as DELL can still undermine Legend prices.
Buyer Power
The bargaining power of buyers is an important aspect in the computer industry. The buyer segment is especially powerful in China because computers are so expensive that consumers do everything they can to get the best deal for the cheapest price because of the cost savings derived from cutting out the middleman, DELL believes it can sell computers at lower prices that its competitors can.
Supplier Power
The bargaining power of suppliers is moderate in the computer industry. Dell Computers is a vertically integrated company. Substitute products are goods or services from outside a given industry that perform similar or the same functions as a product that the industry produces.
Substitutes
The computer industry has a low to medium threat of substitute products. Alternatives to the PC include written communication. Calculators can compute numbers. Books are an alternate source of knowledge but do not have the amount of information available at the touch of a button like the Internet. The computer is also a form of entertainment as substitutes for entertainment value includes radio, television and movies.
Rivalry
Competition is intense in the PC market. Legend, a government backed PC company is the market leader in China. Legend has a domineering presence in Mainland China. Other foreign firms include IBM Hewitt-Packard and Compaq. Success requires foreign companies to partner with Chinese companies to gain distribution-channel and market access while they also operate their own independent subsidiaries.
Analysis of Issues
People
DELL has approximately 39,000 employees around the globe and has a large
and diverse corporate organization. DELL company has lot of computer
systems in many locations such as Austin, Texas and Nashville that could be of high staffing cost and value that has contributed in maintaining sales to over thirty four offices around and then serve as the front line in terms of selling its products and services worldwide. In human resource side, DELL conducts training for all employees in order to reduce absenteeism and human errors as well because the high-quality staff is required in enhancing the best quality performance of the company.
System
DELL has positioned to extend its brand name beyond mainstream computer products by leveraging its reputation as an e-commerce leader. In the year 2000, Dell began to redefine itself as the company that knows how e-business works. It has shared its online sales expertise with a few large customers as they developed their E-commerce capabilities. DELL faces some forces from its competitors in terms of Information Technology as the EDI tool gives very effective opportunities in reducing costs and it can establish the tight linkage between DELL with its suppliers and DELL with its customer. DELL started selling its own brand of handheld computers, called the Axim, at low price which can be considered as high potential and CEO, Mr. Michael Dell stressed how DELL’s success lay in making it as easy as possible for someone to buy a computer. There are some applications that are currently being used by DELL and they are critical to the core operations of DELL business and the DELL direct which are its operational factors for success. Some applications that are currently being used by DELL that are valuable but are not considered for certain critical success. Source:
Internal Growth Model
DELL’s internal growth model can be related to their profitability management as it intends to coordinate the company’s daily activities through great management at the core of DELL’s growth in critical period. Thus, DELL had created an aligned growth model that enabled it to manage within the need for its stages for their growth in the business.
The stages of the growth model are as follows:
Account selection
DELL company developed a core competence in targeting customers and kept a massive database of DELL’s business from corporate relationship accounts, customers having predictable needs closely tied to their budget cycles. DELL developed powerful customer-specific intranet sites with predetermined custom specifications and has used higher price-points and the latest technology products to target buyers who had regular upgrade purchase patterns.
Demand management
DELL developed the crucial function of matching incoming demand to predetermined supply and that the functional department leaders balanced and agreed on internal product strategies and competitive factors. DELL’s pricing had reflected demand management that varies from week to week as the company modified its prices to push products beyond its prescribed levels.
Product lifecycle management
DELL’s customers rapidly adopted new technology and its marketing focus on managing product lifecycle transitions which has provided customer feedback, which led to product development and crisp lifecycle timing. DELL has become AN expert at curtailing the end of its product cycle.
Supplier management
DELL manufacturing system have a combination of build product to order and buy component to plan processes, the company worked with its suppliers to introduce flexibility in its system. DELL has concentrated its supplier base into the suppliers accounting for the enough percent of its purchases
Liquidity management
The liquidity management of DELL has generated a huge amount of liquidity that helped finance the company’s rapid growth and limited its financing needs and was the underlying factor that enabled DELL to earn extraordinarily returns.
Current Cultural State
DELL organization has succeeded because of a culture adapts well to a changing market as DELL’s current state of their culture has “moved from being built around stock price to a culture of accountability, doing a job well and reaching one’s full potential as a business leader’’, as DELL is empowered to take responsibility for “owning” their career which allows the company to take fast action in the workplace. The atmosphere of employee accountability and responsibility influences DELL’s outlook on ethics and corporate responsibility, as ethical people create ethical companies not ethical companies create ethical people. It’s been a challenge to get DELL people to understand global shift, will help build management ranks as employees are encouraged to be critical of underperforming management.
DELL’s current culture state is still a somewhat squishy way to describe all the things that lie beneath the rational and measurable surface of an organization. But most management theorists agree on some variation of this basic definition: DELL’s culture is made tangible by corporate lore and institutional comportment, as well as company’s goals, strategies, management processes, structure and methods of allocating resources.
Sources of Resistance
DELL’s source of resistance is focused on its strengths and ooportunities as it involves internal resources and capabilities that have the potential to be the core competencies. DELL’s core competencies are their cost strategy. In consistent to being an integrated cost leader, DELL also produce high quality PCs by using their Direct Business Model approach and sells them directly to the customers. DELL has many opportunities such as potential growth in overseas markets, the industry is still in a growth phase and the entering to the new product markets. DELL provides the mode to custom the computers of the customers’ choice and taste and deliver the system to the customer as it is the most crucial and critical success factor behind DELL Computers. DELL’s strategy is collapsing profit margins throughout the PC market, a dire development for rivals who cant keep up. DELL is pricing its machines not so much such as high technology products but is more like of an airline tickets and low margin commodities.
Sources of Leadership
The existing style of leadership DELL uses is the ‘’transformational leadership style’’ as the CEO Michael Dell applies this particular style of leadership that involves inspiring employees to transcend their own self interests and work for the lagrer good of DELL company. DELL articulates a vision that convinces subordinates to make important and positive changes in business process and management and relates to profound belief on beliefs and values that goes beyond its changes and achieving ways to transcend proper decision making engaging through such utilization factors as DELL utilizes the IT as a factor for the successful running of its business. The acquisition by means of using some of the leadership styles as DELL will make sure to value their customers and business partners in a form of interpersonal style of expressing to a level of virtually integrated as if they’re inside the company and by having customer information as used for analyzing and forecasting customer demand and achieving the mass customization.
DELL expect that the success would be forever and they expect that other companies might implement such leadership models and believed that Information Technology would play a vital role in the success of the business as well as the centerpiece of the business perse.
Scenario
No Change Scenario
The risks associated in focusing much on DELL’s direct selling process as a means of steady product distribution can be applied as a no change scenario. As always as it is a routinary cycle, DELL comprises a report about a new development in the unfolding current business situations within the competitive aspect. There has been confrontation in many ways that involves a range of customers and partners of DELL: computer industry representatives fighting to retain control of business matters, computer buyers arguing to protect sharing of products and services strategies as struggling to avoid legal liability for computer business organizations which are seeking to safeguard the rights of computer providers as well as customers respectively.
A Change Scenario
It is crucial that in every scenario, DELL will have to encourage the proper adaptation of possible solutions that involves certain stagnation of the strategic development of the overall business transaction as well as the consideration of ways in deciding for such changes in the external and internal environment as it serves as the main structure in maintaining business growth and stability encompassing issues and concerns brought about by the reality of organization competition involving the center for business implementation and that DELL as a matter of change scenario, should engage more on strategic principles for growth and expansion in terms of providing standards of business quality among its computers that will aim in increasing morale in the faces of satisfied customers trusting the services offered to them by DELL company amicably.
Conclusion
DELL decided to change in many aspects regarding its business status in the society like in Chinese society as DELL need have to be aware of the change process, they are working to realize, how it will be realized and ensuring the appropriate amount of management resources to obtain such purpose as the company relies on their reputation in the US market in terms of giving high quality products to uplift customer values. Therefore, DELL needs to have a certain change of agenda as necessarily needed in relevant assumptions for DELL organization to overcome future changes that could possibly affect negatively on the business industry DELL belongs.
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