The Dell Case Study

Customer satisfaction must be attained through integrated organizational activities. For optimal productivity, marketing must involve players outside of the marketing department, such as those from finance, production, engineering, and research & development.
In an effort to abandon its traditional business practices and adopt cutting-edge technology in the face of other industry players' revolution, Dell Inc. underwent a change, as described in the case study. The company has for the longest period produced and distributed inexpensive but effective computers, contenting itself with the lower end of the market. However, the scenario changed when the market shifted after its competitors including Hewlett-Packard, IBM, and Apple introduced new sophisticated products with superior and attractive features distributed through retail stores. Dell reacted to this by changing the management team and providing new products and services that matched the needs of its consumers. However, the dramatic changes in the market had already deeply affected the organization. Despite selling the most competitive products and remaining one of the leading companies in the technology industry, key financial ratios from 2006 and 2010 were a clear illustration of its problems as profit margins and revenue growth dropped significantly. This prompted the CEO, Michael Dell, to take the decision of making the company private. Transforming the organization will take it back to profitability and ensure that the products meet the current market standards.

Key Problems

Organizations mainly face problems when presented with financial, operational, and legal issues. When matters of grave economical, functional or legal intensity affect a company, it is bound to suffer loss, and the management must formulate strategies to turn around the newly found misfortunes. The problems at Dell Inc. began to manifest themselves when the market shifted. Initially, the organization provided customized built to order computers to consumers, with corporates being the major clients. This arrangement turned Dell into a production and distribution expert, with strong relationships budding between the company and its customers, as opposed to retailers. Dell was well aligned with its market, with the shift throwing the company into disarray. The previous marketing strategy no longer fit the as the marketplace shifted from corporate to consumers. The importance of design over machine power and software over hardware pushed the company into unfamiliar ground where the straightforward organization that Dell was comfortable with earlier could no longer meet the new intricate market expectations. This prompted the CEO to make critical changes in the top management, a move which was aimed at bringing the company to par with competitors. Dell performed exceptionally well, remaining a leading player in the technology industry. However, key financial ratios experienced a worrying decline which the top management hopes to rectify.

Alternatives

The alternatives presented by the newly appointed managers included shifting the company’s traditional model of direct selling to consumers. To maintain its competitive edge, there is need to approach the market through retail channels. However, the company is also presented with the alternative of direct selling, where it could still reap the benefits of customizing computers for direct delivery to consumers, albeit the shrinking market. This means that Dell could operate using a hybrid model, embracing both direct selling and reselling channels. However, strategists must be wary, noting that the channel chosen should be dictated by the product being sold, and the level of maturity of the product.

Pricing is the second alternative that Dell could consider working on. While it is apparent that the current profit margins are wanting, Dell could use a different price that could work in its favor. Alternatively, the management could work towards reducing its production sales, while maintaining the current price. This move would significantly increase the profit margin.

Adopting a promotion strategy is another alternative that is available to the organization. Concentrating on an aggressive marketing campaign through television adverts, the internet, and via print media, marketing publications including catalogues, newsletters, and other promotional materials would make an impact on the company’s turnover.

Proposed Solutions

Of the alternatives provided, the best solution to solving the financials problem is reducing the costs of production. This will increase the profit margins. Dell could do this by outsourcing some of the processes or products, and also by producing in bulk. Manufacturing products in large quantities benefits the company through economies of scales. To increase the volume of revenue, Dell should maintain its direct selling channel as it adopts the new retail distribution channel. Despite the shrinking corporate market segment, any few units sold would still make a significant contribution on the company’s revenue turnover, while having the best of both worlds.

Conclusion

The man objective of any organization is to create and maintain a satisfied customer. In relation to this, Dell Inc. must ensure to adopt the strategies that prioritize their customers by understanding their needs and then trying to align their products based on those needs. However, satisfying the needs of customers must be done in conjunction with improving business performance. In view of this, Dell must focus on its consumers, competitors, and partners in order to maintain a healthy business environment. This is because achieving customer satisfaction solely depends on integrated efforts.

References

Cawsey. T.F., Deszca, G., & Ingols, C. (2013). Organizational Change: An Action-Oriented Toolkit. Wiley.

Dell. (2009). Dell - Customer-Driven Innovation [online]. Retrieved from http://content.dell.com/uk/en/corp/d/corp-comm/cto-customer-driven-innovation.aspx

Kotler, P. (2008). Principles of Marketing 12th Edition. Pearson Education Inc

McGee, J. et al (2005). Strategy Analysis & Practice. McGraw Hill

Waters, R. (2009) Dell predicts return to growth. Financial Times, 27 August [online]. Retrieved from http://www.ft.com/cms/s/0/5c4d55dc-934c-11de-b146-00144feabdc0.html