From the first and second e-Activities, evaluate the effectiveness of Dell’s current turnaround strategies. Present at least three (3) examples to support your evaluation.
Dell’s turnaround strategy was about changing the mode of selling PCs to the customers. Dell’s turnaround strategy involved the changing of direct-sales model and to offer computers in retail outlets. The aim of this strategy was to increase the revenue for the company after it had made loses in the past. The supply chain that was used in the past was different like the current way of supplying the PCs. Also the manufacturing cost was higher therefore limiting the number of customers who came to purchase their products.
The turnaround strategy that was introduced by Dell after returning back to the company as the CEO in the company had the greatest impact on the performance of the company. Some of the Dell’s turn around strategies included; cutting down the cost of PCs, moving away from computers internally and opening more manufacturing branches in other places, changing mode of sales to indirect sales and introducing more products. These strategies are important for the PCs business in that in cutting the cost of selling the products, the company is able to generate more revenue and profits since they will get more customers. For example, when the price of a commodity in the market is reduced to the level that is affordable to all, it will move faster and the company will get more revenue within a short period of time. Also, in the opening of other manufacturing places in other places, the number of customers who will purchase the products will increase since they will easily access them. This again will increase the revenue collected by the company. Indirect sales also increase the supply of products to the customers since the products will be distributed everywhere. The retailers act as agents for the Company (Shirani, 2012). For example, when the products are sold by several agents who have been given authority by the manufacturers, products will move faster and will also be available to many customers.
The introduction of new products on the other hand will attract more customers since “new products introduced into the market will be on a higher demand within the first few months” (Rao, 2009). This will therefore help in increasing the revenue earned within the company. For example, if the company manufactures new model of mouse or desktops, the company will get more revenue because the demand for the new product will go up since many people will want to get to taste the new product
From the first and second e-Activities, analyze Dell’s declining industry strategy. Next, compare the company’s strengths, relative to remaining pockets of demand, to the intensity of the competition in the declining industry. Provide one (1) example of Dell’s strength over the competition to support your response.
Dell’s declining industry strategy involved the direct sale model. In this kind of sale, the manufacturer had to make direct sales to the customers without selling PCs first to the retailers or to the resellers. This strategy fails the company since the revenue that the company was getting from the supply of the PC was lower than that of the HP Company. Supply chain for the company was direct therefore limiting the number of customers who come to purchase PC.
One of the company’s strengths relative to the remaining products of demands is that, the company have a potential of getting more customers and generating more revenue since the cost of their products have been reduced to an affordable price. As compared to the declining industry, reduced price of the products will make the company competitive since they will have more customers who come to purchase products. The other strength is the supply of more products because of more manufacturing places and also more retailers. As compared to the competition in the declining industry, the company will be more competitive since it will be able to produce more products that will move faster. For example, the reduced cost on the products, that is, the PC will make Dell’s company to be more competitive since more customers will come and purchase PCs at lower prices. This will in turn increase the revenue for the company.
Rao, V. R. (2009). Handbook of pricing research in marketing. Cheltenham, UK: Edward Elgar.
Shirani, M. (2012). Strategy Creation and Change – Dell Corporation. München: GRIN Verlag GmbH.
how would you evaluate the effect of the Material Management change you posted (PC Home Delivery to Retail Sales) to the rest of the changes that Dell explains (e.g. Hardware and software solutions in Healthcare; Integration of Security measures across different platforms (e.g. servers and mobile devices); or International aspects (e.g. China $500B business) of the Turnaround strategy? All of these areas, as discussed in the 2 videos allows us to use Dell as a discussion piece to use our understanding of functional-level strategies with respect to business-level strategies involved with a company (Dell) undergoing a significant Life-Cycle model challenge!
· Watch the video titled “Michael Dell talks turnaround strategy” (5 min 17 s). Be prepared to discuss.
Video Source: Kulikov Boris (2011, November 22). Michael Dell addresses Dell’s future [Video file]. Retrieved from http://www.youtube.com/watch?v=HbcQC7nbcBo
This video can be viewed from within your online course shell.
· Watch the video titled “Michael Dell addresses Dell’s future” (33 min 46 s). Be prepared to discuss.
Video Source: Fortune Magazine (2013, January 16). Michael Dell addresses Dell’s future [Video file]. Retrieved from http://www.youtube.com/watch?v=7ivFDvzAzw8