Dell Business Information Strategy

Dell Business Information Strategy XECUTIVE SUMMARY The business information strategy helps a business in identifying ways and means of sharing information across the organization and across all the departments of the organization. This report highlights the business information strategy at Dell, a well known computer manufacturing company. The industry has been led by the major players like IBM, Compaq, Intel, Lenovo, HP, Apple, Microsoft, Dell, Sony, Samsung, LG, etc. The top two manufacturers of computers apart from Dell are Apple and Microsoft and they pose a stiff competition to Dell and the market is led by the top two to three manufacturers. After comparing the financial performance of Dell, IBM and Apple Inc, it can be said that the level of operations of Dell is much lower as compared to Apple Inc and IBM. Some of the recommendations made to the companies in the manufacturing industry are as follows Focus on quality of products, adopting innovative manufacturing processes, improved customer support, competitive pricing, improved supply chain, etc. The strategy for Dell would be to adopt an innovative manufacturing process thereby helping it to stay competitive by bringing in a change and by manufacturing technologically advanced products. This technological change will have an impact on almost all the aspects of Dells business, like management, information needs, business locations, staffing requirements, employee training, etc. INTRODUCTION The strategy in a business organization plays a key role, be it a business strategy, marketing strategy, HR Strategy, or business information strategy. The business needs information at all levels and the success of the business can be directly attributed to the level of information that can be accessed by the employees of any business. A business should strive hard to provide information to the employees, as it is likely to improve the performance of the business as a whole. The business information strategy helps a business in identifying ways and means of sharing information across the organization and across all the departments of the organization. This report highlights the business information strategy at Dell, a well known computer manufacturing company. INDUSTRY SECTOR ANALYSIS Computer manufacturing industries differs somewhat from other manufacturing industries in the way of production and mostly workers make up a relatively very small proportion of the workforce. Computer manufacturing industry is considered as most innovative industry. With the moving trend, improving technology and increase in technological innovation, this industry creates its own identity and drives much of the industrys production. This industry is also considered as a place for technological as well as innovative advancements. This is the only manufacturing industry which requires maximum number of engineers, technicians, and many other technical assistants who can take the research and development work further. In addition to manufacturing, it also requires promotion of products manufactured by the different segments of the industry that requires more eligible marketing as well as sales executives or workers. U.S companies in this industry manufacture as well as assemble the compo nents manufactured in foreign countries, in order to take advantage of lower cost of production and regulatory and favorable environments. Most of the electronic products include different intermediate components that are needed to be purchased from various manufacturers. So these companies that produce intermediaries and goods mostly locate themselves nearby to industry so that the companies can receive their intermediate products in very less time in order to lower down their inventory costs. Most the computer manufacturing companies in this industry are very large and many are relatively small. The computer manufacturing industry has also had its share of impacts of the recent financial crisis. The computer manufacturing industry was also going through a transformational crisis. The sales of the major players have decreased considerable and the profits have also declined. In fact, some of the manufacturers have incurred losses from their operations during the crisis. Moreover, the industry has been very competitive in the recent past with more and more medium level manufacturers entering the global markets. The low cost computers manufactured by the Indian and Chinese manufacturers have increased the level of competition in the industry. There have been various influences on the computer manufacturing industry over the last few years or so. The influences were due to the increase in the number of computer manufacturers, use of latest technologies, rapid decrease in the cost of manufacturing mainly due to the outsourcing of components manufacturing ton countries like India a nd China. Overall, it can be said that there are various challenges faced by the computer manufacturing industry and it is likely that the future is going to more challenging for the manufacturers, as they compete hard in order to attract and retain the market share. Market Leaders The Computer manufacturing industry has experienced an increase in the number of computer manufacturers over the last five years or so. But the industry at large has been led by the major players like IBM, Compaq, Intel, Lenovo, HP, Apple, Microsoft, Dell, Sony, Samsung, LG, etc. The top two manufacturers of computers apart from Dell are Apple and Microsoft and they pose a stiff competition to Dell and the market is led by the top two to three manufacturers. In spite of the top manufacturers holding larger shares in the market, the market is wide open for all the other manufacturers. So, the open market makes it all more important for the manufacturers to adopt effective strategies in order to achieve competitive advantage and sustain the competitive advantage with a view to increase the sales revenues, profits, market share, and also to increase the wealth on the investors. The competition in the industry has been very stiff and thus it made the computer manufacturers to increase their product line and also to adopt innovative manufacturing processes to come up with latest and innovative products. The computer manufacturing industry or market leaders have also adopted innovative strategies to stay competitive and increase the market share, thereby leading to the organizational success. The important point to remember here is that Dell is also one of the market leaders in the computer manufacturing industry and it also poses stiff competition to the other competitors in the industry. Comparative Performance of Competitors The comparative performance of some of the major computer manufacturing industry leaders gives us an insight into the level of competition that exists among the top competitors and also the position of Dell in the overall computer manufacturing industry. The revenues of Dell for the year 2009 were $61.101 Billion and its operating income was $3.190 Billion, whereas its Net Income was $2.478 billion. The Net income, Operating Income and also the revenues have all shown an increase as compared to the year 2008, which shows that there has been an improvement in the performance of Dell over the last one year or so. The revenues of IBM for the year 2009 were $95.757 Billion and its operating income was $17.012 Billion, whereas its Net Income was $13.425 billion. The Net income, Operating Income have increased and the revenues have shown a decrease as compared to the year 2008, which shows that there has been an improvement in the performance of Dell over the last one year or so with respect to the profitability, but it has lost some part of its market share, as compared to its performance during the year 2008. The revenues of Apple Inc for the year 2009 were $42.91 Billion and its operating income was $11.74 Billion, whereas its Net Income was $8.24 billion. The Net income, Operating Income and also the revenues have all shown an increase as compared to the year 2008, which shows that there has been an improvement in the performance of Apple Inc, over the last one year or so. Revenues ($ bn) Operating Income ($ bn) Net Income ($ bn) Dell 61.1 3.19 2.48 Apple Inc 42.91 11.74 8.24 IBM 95.76 17.01 13.4 The above table shows the financial performance of Dell, Apple Inc and IBM. The above graph shows the financial performance of Dell, Apple Inc and IBM. After comparing the financial performance of Dell, IBM and Apple Inc, it can be said that the level of operations of Dell is much lower as compared to Apple Inc and IBM. So, it suggests that Dell has to adopt innovative strategies in its operations at all levels in order to compete with its competitors. The positive that goes with Dell is that it has been improving its performance and the rate of growth is much better than some of the other industry leaders. Current Technology used in the Computer Manufacturing Industry In the past, the computers used to be so big, even bigger than the refrigerators, but now-a- days, the computers are as small as a PDA, which can fit into a palm of human beings. So, this has been possible mainly due to the advanced technology and continuous advancements of technology that has been adopted in the computer manufacturing industry. The latest technology has reduced the size of the computers, hard disks, etc, without comprising on the quality, in fact with better quality and durability for the customers. These computer manufacturing companies have their own research and development departments, so as to continuously look for new ways of manufacturing the computers. The technology plays a key role in the success of any product and computers are no different. The better technology helps the manufacturers in manufacturing latest computers. The technology used by the computers has been so much helpful for the people. The technology used in computer manufacturing has been helpful in other industries as well. These latest technologies made it possible to use computer in almost all the aspects of human life. Future Technology that can be used in the Computer Manufacturing Industry The future of the technology and the advancements in the technology looks to be more effective, as there is a lot of scope for improvement and advancements in the technology. The future technology can make it possible to produce much smaller computers with better features, and better performance, as compared to the performance of the computers manufactured today. With the advancements in technology, almost anything is possible. The things that look impossible today are becoming possible and a reality tomorrow. So, with the advanced technology anything is possible. The technology is surely going to play a key role in the computer manufacturing industry. If one company adopts a latest technology then the other competitors must adopt it or come up with something innovative on their own, otherwise, they will lag behind and may not be able to compete in the industry. So, the continuous changes in the technology keep the computer manufacturers on their toes, to make quick decisions and adopt effective and innovative strategies to produce high quality computers, mostly a low costs. (Buzzel, 1987). Recommendations for the companies in the Computer Manufacturing Industry based on the Sector Analysis to stay competitive in the industry Innovative Manufacturing Processes The companies in the computer manufacturing industry needs to stay competitive and they can do so, by adopting innovative manufacturing processes. The old and out dated manufacturing processes are not going to help the companies in staying competitive. With a view to achieve competitive advantage, most of the companies are adopting innovative strategies. The competitive advantage once achieved needs to be sustained in order to stay competitive. The competitive advantage can be achieved and sustained by adopting innovative manufacturing processes. (Parker, 1989). Focus on the Quality The companies should always look to improve the quality of the products at all times. The low quality products will not be helpful in staying competitive for long. In order to attractive in the market and also stay competitive, a computer manufacturer needs to focus on the quality of the products regardless of the internal issues. A low quality product will survive for long in the market. (Swan, et.al, 1976). Improved Customer Support The customer support and after sale service by the companies can be helpful in staying competitive. If the questions of the customers are not answered properly, then it is likely that the customer will be attracted by other companies with better customer service. So, in order to stay competitive, the companies should look to improve their customer support service. (Gale, 1992). Competitive Pricing Gone are the days, when the manufacturers were the price makers, now-a-days, in fact, the customers are the price makers. In other words, the customers look for the prices from various manufacturers and finally purchase a product from the manufacturer with the most economical price, so if a manufacturers pricing is not competitive, then the manufacturer will not stay competitive. So, the companies should price their products competitively. (Gale, 1992). Improved Supply chain for Quick Delivery The supply chain often helps a company in staying competitive in almost all the industries and the computer manufacturing industry is no exception. The effective supply chain ensures quick and efficient delivery of products to the customers, whereas, an ineffective supply chain is the main reason for the failure of any company to stay competitive. Thus, an improved supply chain can help a company stay competitive in the market. (Parker, 1989). BACKGROUND OF DELL The company selected is Dell and it deals with the manufacturing of computers and its components, and it comes under the computer manufacturing industry. Computer manufacturing companies are mostly considered as electronic manufacturing companies and these companies produces products like computers, its peripherals, equipments related to communications, and many more products similar to these products. These products can be used at many places like offices, schools, industries, colleges, as well as homes. These products are also used for military as well as government establishments. In addition to all this different computer peripherals or different components are built in into many industry products. Dell has been a well known manufacturer of Computers, mainly Desktops, Laptops, Notebooks, and PDA. Dell has emerged as one of the largest manufacturers of computers. Dell competes with the industry leaders and with the best in the industry. Dell grew as a computer manufacturing company in the year 1980s and 1990s, and it also became the largest computer manufacturer at one point of time. Dells core business was to sell Desktops, Laptops and Servers, etc. Dell also sells some other electronics products, which it acquires from its suppliers around the world and sell them under the brand name of Dell. The operations of Dell have increased significantly over the last few years and have been competing with the best in the business. CURRENT SITUATION ANALYSIS The current situation analysis of Dell helps us to analyze the situation and also the various factors that affect the operations of Dell. Following are the components of situation analysis. Customers Dell serves a wide range of customers ranging from individuals, small business to large multinational companies. Dell also supplies computers and other devices to the government organizations in various countries. Its customers are spread all across the world, making it a truly global company. The global customers of Dell also points out the presence of Dell, which all across the world. So, it is satisfying a large base of customers and thus there is lot of scope for increasing the customer base of Dell Costs The costs of any company play a key role in the profitability and success of any company. Higher costs lead to low income or losses in some cases, so it is always better to reduce the cost of manufacturing and also the other indirect costs. Dell manufactures most of the products on its own and it also acquires some of the products from suppliers around the world, with a view to reduce costs. This helps it in pricing its products competitively, thereby helping it to stay competitive in the market. Competitors Some of the competitors of Dell are well known companies around the world. The competitors of Dell include Microsoft, IBM, Apple Inc, HCL, HP, Sony, LG, Samsung, etc. These competitors are well known companies with a wide range of products and a wide base of customers, which also helps them to mark their presence all over the world. The competition is very stiff in the computer manufacturing industry, with the presence of these popular global brands. STRATEGY FOR DELL The strategy for Dell would be to adopt an innovative manufacturing process thereby helping it to stay competitive by bringing in a change and by manufacturing technologically advanced products. Change Required Dell needs to bring about a major change in the size of its desktops and laptops. Dell can manufacture sleek laptops like Apple, Inc, and thus would be able to compete with Apple Inc. It would also give Dell an advantage over its competitors. Moreover, it gives Dell an opportunity to increase its market share by serving a new base of customers with its sleek products. This can be achieved only by adopting a technology like Apple Inc, or even a better technology than Apple Inc. Impact on Management This change is likely to impact the management at Dell. The impact of the technological change would require dell to bring about a change in the way the management at Dell operates. There may be a need to include a new of level of management or to remove an existing level of management positions based on the requirements. With a change in the organisation with regards to the structure or the technological changes, the management also needs to change, as per the requirements. So, it can be said that the change in the products to be manufactured, is likely to bring about a change in management. Thus, it can be said that there is an impact of this change on the management. Impact on Business Location Dell might need to start its manufacturing units to manufacture sleek products, or else it can use the existing manufacturing facilities to manufacture such products. With a change in the computer manufacturing technology, Dell has to expand its operations by starting manufacturing units in new business locations. Dell might need to change it business from location to another considering its impact on the operations. Most of the manufacturing companies are starting their manufacturing units in countries like India and China, so Dell might consider India and China, as a proposed location to start its manufacturing units to manufacture sleek laptops, and small sized desktops. Impact on Information needs of management The management needs an upgraded information system, so as to provide an accurate and updated information at all levels, as and when required, (Malhotra, 2008). The information needs of the management at Dell are also likely to change, with a change in the technology and operations of Dell. So, depending upon the information needs, the information system should also be upgraded, so that it provides required information to the management at all levels, which could ultimately help in achievement of the objectives of Dell. Impact on Staffing Plan As discussed earlier, Dell might need to hire additional people to manage its new processes of manufacturing sleek laptops. The staffing plan is also likely to change with a proposed change in the technology. Some employees might need to be transferred from one position to another, and some others might be needed to be hired, depending upon requirement. The proposed technological change at Dell is also likely to impact the staffing plan at Dell; therefore, a new staffing plan has to be developed, considering its operations. Impact on Training Dell also needs to provide adequate training and education to its employees with a view to upgrade their skills and improve the productivity and efficiency. The training and development of employee should be given highest priority, as the highly developed employees enhance the productivity and performance of the organisation as a whole. With a technological change, there will impact on the training provided at Dell. There are likely to be new training programs, to suit the needs of the new business development i.e. incorporating the proposed technological change. CONCLUSION Finally, it can be concluded by stating that the business information strategy plays a key role in the success of an organization. It also plays an important role, when an organization intends to bring about any change in its operations, because, a major change is possible only with the free flow of information. Dell can manufacture sleek laptops, by bringing about a technological change and also a change in its manufacturing process. The impacts of such a change can be seen on the current management, business locations, information needs of management, staffing, training, etc. The strategic level of management needs to adopt innovative strategies to achieve the objectives of Dell. The strategic management plays an important role in the success of any organisation, so the key policy changes or developments take place at the strategic level of management. The tactical level of management needs to follow the policies developed by strategic level. Finally, the operational level is responsible for implementing the policies and achieving the final objectives.