Dell Corporation Management Case Study
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Ashu SimsDell Corporation Management Case Study
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Ashu SimsEssentials of
Management
CASE STUDY ON
DELL
CORPORATION
Laptops | Desktops | Business Laptops | Business
Desktops | Workstations | Servers | Storage | Monitors
Assignment Submitted By:
Abhishek Maurya (01)
Ahmad Abbas (03)
Kapil Dev Tiwari (22)
Phool Chandra Chaudhary (32)
Santosh Kumar (47)
MBA HR & IR 1st Sem
IMS Lucknow University
Submitted to:
Mrs Swati Raman
Lec. Essentials Of Management, IMS LU
Introduction:
This all case is about Dell Corporation. Dell is basically founded
by Michael Dell in [Link] organization is having a well
disciplined direct communication system for its customers as well
as employees in organization. Dell company is producing both
customers based PC’s and also organizational based servers. Dell
offers its products & services to a customer based different
segments including large & global businesses, education sector,
wealth care sector, Govt., small business & consumers. Dell is
apturing30% of market in US market and 14.3% of global PC
market. If we look sales at its two segments, 27% of Dell’s sales
came from enterprise products and73% from desktops &
notebooks. Their basic purpose is to cut off middleman and selling
to customers directly for its lower cost. This organization is having
well image in US & Global market. Its structure is very complex &
fluid rather than flat. Their sale growths were high till2000 but
then global crisis came and its sales revenue declined from 21.3 %
to17.6%. It started reducing its employee’s nearly 8% in US &4%
of its total workforce.
Dell is having “Loose Matrix” corporate communication team
based on customers, products & geography. Its structure is
complex & fluid. Everyone in organization can talk to higher
authority through Direct Mail system. So it’s easiest way of
communication. Dell has unique relationship with GCI & other
public-relation firms. When GCI won Dell’s account, then both
Dell & GCI evaluated relationships, budget targets & results
achieved. So Dell’s agency budget was being allocated in line with
business needs. Dell looked internet as a source of staying
connected with these agencies by using its own extranet for file
sharing and online dialogue about specific issues.
Team communication is very strong in Dell. Because every once
can communicate through mails. In 2001, due to global crisis,
Dell’s corporate communication team was reduced to80. In this
team,50 were based in US and remaining in Dell’s regional offices
abroad.
Talking about its corporate strategy, company strategy came from
senior management rather than formal strategy process. Michael
Dell found its strategy very important. Dell would find in late 2002
that its commitment to communication played a direct role in
allowing company to implement strategy, even during crisis
situation. And of course, Dell prove itself a successful company
from both customer & financial perspectives in market during this
crisis.
Michele Moore, Allen’s predecessor, started formal & structured
Approach for team communication including standing meetings &
Conference calls. Allen was impressed by Moore work. Elizabeth
Allen, vice president for corporate communication at Dell, is
providing its services at Dell. She has received mails and is
preparing its meeting for senior communication director around the
globe. She focused on one mail and stated the criticism on Dell’s
lack of spending on Research & Development. As organization is
following low-cost strategy, so it’s spending low budget on
research & development. She received bad comment from COO of
Sony to whom Dell had a strategic relationship. So Allen is
thinking about how to handle situation and what should Dell do to
remedy the situation.
Financial Highlights
For fiscal year 2011, second quarter (ended July 30, 2010),
Revenue — $15.5 billion, Operating income — $745 million, Net
income — $545 million, Earnings per share — $0.28
Questions and Answers:
Question No.1
(a) “Give how the case describes Dell’s overall business
structure?”
Answer: Dell’s overall organizational structure is very complex
and fluid. But its corporate communication system is “loose
matrix”. They are using direct system in both selling &
communication. They are adopting lower-cost strategy to cut off
middleman. Dell has also agency relationships with different
public-relation firms. It corporate communication strategy is very
strong, everyone can communicate with higher authority because
of Direct Mails System. Dell is expanding its business all over the
world and it was supposed to be the world’s 2nd largest company
for enterprise products such as severs etc.
Michael Dell: CEO OF Dell Company
Tom Green: Corporate Sector
Tom is controlling five corporate functions at Dell
HR Legal Administration Corporate Communication
Elizabeth Allen: vice president of corporate communication at
Dell She is having control on corporate communication team of
approximately 80 professionals. There are five regional directors
under Elizabeth. These directors control following departments
Employee Corporate Chairman’s Specialized
Communicati public communication group for
on relation Dell’s
Enterprise
Service Group
Question No.1
(b) “What are the strengths and weaknesses structurally
of its corporate communication function?”
Answer: There are some strengths & weaknesses in its corporate
Communication System. These are given below
Strengths:
1- Direct Communication
2- E-mail Based Culture
3- “Loose Matrix” Corporate communication structure
4- Relevant Communication structure in each specific area
5- Agency Relationships through internet
6- Direct Selling because of communication
7- Good Image in market
Weaknesses:
1- Corporate Strategy only by senior management
2- Low Budget of 10% on Research & Development sector
as Compared to its competitors
3- Lack of R & D Programs with other companies
4- Reducing corporate communication team from 120 to 80
5- Low Standard of enterprise products in market
Question No.2:
“What challenges do you foresee for Elizabeth Allen and her
team going forward and what advice would you give her?”
Answer: Elizabeth Allen is the vice president for corporate
communication at Dell. There could be certain challenges which
she and her team have to face in future. The most important point
is the Dell’s lack of spending on research and development. As
Dell was also being criticized in the leading Japanese business
weekly about their research and development, they certainly need
to think about it and take some action.
The operating cost of Dell including research and development
totaled only 10 percent of revenue in 2001 which is quite less as
compared to the other companies. In order to maintain its position,
Dell should increase its spending on research and development.
Moreover, in enterprise computing, Dell did not spend much on
research, but their rivals did. Instead of spending directly on
research and development, Dell formed cooperative R&D
programs with other companies or licensed technology needed to
develop or enhance its own products.
The philosophy of Dell focused on five major areas “customers,
the Dell team, direct relationships, global citizenship and
winning”. Now the challenge for Dell is that, it has to maintain a
balance between all the five areas. It has to satisfy the customer’s
needs and wants, and maintain a good communication system
within the organization which it has been doing in the past as well.
Another challenge for Dell is that it has to maintain its strategy like
it was doing in the past, by communicating with the suppliers,
customers, management and all other important pillars of their
company.
Question No.3:
“What role could corporate communication play at Dell to help
the company advance its strategic goals?”
Answer: Dell is having E-mail base communication culture. This
environment made relatively easy for employees to communicate
with manager and senior management and also communication to
customers. E-mail based corporate communication system is an
efficient source for dispersed people of the team across the zones.
Senior management of the Dell Corporation began to use formal
and structured approach to communication among the team
including standing meetings and conference calls. Dell has been
using these communication tools with other agency relationships.
For instance Dell is using internet as mean of staying connected
with other agencies and also using its own extranet for file sharing
and online dialogue about specific issues.
Corporate strategy typically came from senior management rather
than formal strategy process. Communication played a direct role
in allowing the company to implement strategy. Strategy viewed as
essential part of the process to be involved with execution is where
you can really make a difference.
Dell work according to its strategy plans even in crisis situation for
handling this situation in better way; they set precedent of being
constant communication with its counterparts and suppliers in
Malaysia, Taiwan, and china also along with its US based transport
partners. Dell was able to successfully develop and implement a
contingency plan that enabled the company to upload.
Dell maintain and reinforce its overall strategy and business
objectives , and emerge from the crisis from the both the customer
perspective and the financial perspective in the end Dell did work
well which were impossible for them and they are surviving in the
business from long time by using effective communication and
strategies.
Conclusion:
In the last, I would like to conclude that Dell is having good image
in the market that’s why it is retained in the market. Its corporate
communication was effective and appropriate strategies have been
applied to satisfy customer and staff by using direct
communication techniques.
Although there has been crisis but Dell is able to handle situations
because of its proper communication techniques. It needs further
advancement by spending more budgets on Research &
Development sector. It’s also retains its lower cost commodities
according to its goals and strategies.
References:
[Link]
Common questions
Powered by AITo manage its internal communication systems effectively during international growth, Dell should continue leveraging its 'loose matrix' structure that allows flexibility and adaptability across regions . Implementing a robust, scalable extranet system for communication and collaboration across global teams will ensure information flow is efficient and secure . Regular cross-cultural training and development programs can enhance communication effectiveness among diverse teams. Dell should also integrate feedback mechanisms from regional offices to refine its strategies and practices, ensuring they are culturally relevant and aligned with local market needs .
Dell's corporate communication structure is characterized by a 'loose matrix' which allows direct communication throughout the organizational hierarchy. This structure supports its strategic goals by promoting efficiency and responsiveness, as communication is facilitated through an e-mail-based culture that connects employees across different regions and levels . The use of standing meetings and conference calls ensures structured communication, aiding in strategic alignment . Furthermore, Dell leverages internet technology for global communication with partners, helping to implement strategies effectively, especially in crisis situations .
Dell's cost-focused business model significantly impacts its global competitiveness by enabling it to offer competitive pricing, which is a strong market differentiator . This model involves direct sales, bypassing middlemen, and maintaining minimal R&D expenditure, which helps in reducing operational costs. However, this approach may limit Dell's ability to innovate rapidly compared to competitors with higher R&D investments, potentially affecting its adaptability and long-term competitive positioning in the fast-evolving tech industry. While the model has facilitated significant market capture in the US, it demands strategic balances between cost management and innovation .
Dell's corporate communication strategy during the global crisis played a pivotal role in maintaining operational resilience. By employing a formal and structured communication approach, including regular meetings and conference calls, Dell ensured strategic alignment and continuity. The emphasis on direct communication with counterparts and suppliers across Malaysia, Taiwan, China, and the US was crucial in implementing effective contingency plans . This constant engagement helped Dell maintain customer relationships and mitigate financial repercussions, thereby reinforcing its strategic goals despite adverse conditions .
Dell can leverage its direct communication system to enhance customer satisfaction and loyalty by facilitating open, efficient, and customer-focused communication. By allowing customers to communicate directly with Dell representatives, Dell can promptly address queries, feedback, and issues, thereby improving customer experiences and perception . This direct system enables Dell to gather insights into customer needs, which can inform product development and service improvements. Additionally, fostering a transparent communication pathway helps in building customer trust and long-term loyalty, as customers value responsiveness and personalized attention from service providers .
Elizabeth Allen, as vice president for corporate communication, plays a critical role in addressing criticisms regarding Dell's R&D spending. Her leadership involves managing stakeholder communications to mitigate negative perceptions. By facilitating open dialogues and presenting Dell's strategic rationale for cooperative R&D efforts, she can educate stakeholders on the benefits of its current approach while also advocating for adjusted budgets or strategic partnerships to enhance innovation . To manage criticism effectively, Allen could implement a communication plan that highlights Dell's commitment to innovation within its low-cost strategy framework and engages with critics to collaboratively identify areas for improvement .
Dell's approach to research and development is aligned with its low-cost strategy, characterized by minimal direct investment in R&D. Instead, Dell engages in cooperative R&D programs and technology licensing, allowing it to maintain its cost leadership position . This approach, however, poses challenges, as limited R&D spending can hinder innovation and responsiveness to market changes, drawing criticism from external partners like the COO of Sony and potentially impacting competitive standing . Raising R&D expenditure could address these challenges but might also increase operational costs, conflicting with the low-cost strategy.
To address market criticisms and sustain growth, Dell should prioritize strategic objectives such as increasing investment in R&D to enhance innovation and product differentiation, thereby addressing criticisms about low R&D spending . Additionally, Dell should focus on strengthening global partnerships to leverage external innovations and market access. Enhancing its corporate communication strategy to address stakeholder concerns transparently will build trust and maintain its market reputation. Dell might also explore expanding its product and service offerings to meet evolving consumer demands while diversifying revenue streams .
Dell's strategic partnerships are significant influencers of its market presence and product development. By collaborating with public-relation firms and maintaining strategic relationships like that with Sony, Dell leverages external expertise and markets to enhance its offerings without incurring high R&D costs directly . This cooperative approach in technology and product development supports Dell's goal of maintaining a competitive edge while adhering to its cost-efficient business model. These partnerships facilitate mutual technology sharing and innovation, which can expand Dell's market reach and improve its product quality .
Dell's 'Direct Mail System' significantly enhances organizational communication by allowing employees at all levels to communicate directly with higher authorities. This open line of communication fosters a culture of transparency and empowerment, encouraging employee engagement and enabling quicker decision-making processes . This system also contributes to a strong team communication culture, as it facilitates seamless dialogue across regional offices and departments, ensuring alignment and rapid response to issues .