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Essay: Management styles

23 July 202414 June 2012 by Essay Sauce

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Management Styles

At the age of 27, Michael Dell became the youngest CEO ever to head a Fortune 500 Company; he was a billionaire at the age of 21. In early 2003 Michael Dell owned about 11.8 percent of Dell’s common stock, worth about $8.5 billion. Michael Dell is considered one of the mythic heroes within the PC industry, having been labeled “the quintessential American entrepreneur” and “the most innovative guy for marketing computer in this decade

Michael Dell started PCs Limited at the age of 19, the company was hampered by growing pains; specifically, a lack of money, people and resources. Dell sought to refine the company’s business model; add needed production capacity; and build a bigger, deeper management staff and corporate infrastructure while at the same time keeping costs low.

Dell had an approach which he believed had two advantages: (1) Bypassing distributors and retail dealers eliminated the markups of resellers, and (2) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components, and finished goods.

The core Dell Computer’s Strategy in 2002-2003 was to use its strong capabilities in supply chain management, low-cost manufacturing, and direct sales capabilities to expand product categories where it could provide added value to its customers into in the form of lower prices.

Dell Computer Corporation under the longest serving CEO, Michael Dell had used direct business model in his company. The commitment to evaluate its external environment before making strategic decisions is part of the pattern Dell follows when using its direct business model. Its success was founded on the direct business-to-customer model, which revolutionised the PC industry, at first in the US and then in over 170 nations around the world.

The direct model was founded on a simple concept: that by selling personal computers directly to customers whereby Dell could best understand their needs and provide the most effective computing solutions to meet those needs. Dealing directly with customers meant that Dell knew exactly what its customers wanted. Only by three ways Dell communicates with the customers, which are www.dell.com, voice-to-voice and face-to-face.

Dell even applied an expansion strategy that involved selective introduction of the direct model, country by country. The strategy followed the same pattern in each country. The benefits of the direct model have increased attention to customer experience and satisfaction.

The standards for pricing and performance worldwide which includes cost-efficient, fast and customer friendly operation has thrust Dell to the top of the computer industry all over the world.

Dealing directly with suppliers was essential for the successful application of Dell’s direct model. Dell chose to build PCs to order, and Dell was the first PC manufacturer to offer free installation of applications software as a standard service option. Just-in-time inventory control created advantages that had an immediate implication on customers. Inventory costs were kept to a minimum, and new technological breakthroughs could be delivered to customers within a week as opposed to two months.

Besides that, dealing directly with a few main suppliers on a global basis reinforced Dell’s competitive advantage. Michael Dell emphasized that through closer contact with customers and with more information about customer needs, there was less need for massive amounts of inventory. The formula worked well for Dell. The direct model has led him for globalisation. Its build-to-order manufacturing operation for the US was located in Texas, for Europe in Limerick (Ireland), for Asia Pacific in Penang (Malaysia) and for China in Xiamen.

Apart from that, this American concept made its direct approach even more direct through the Internet where he launched Dell On-line in 1996 and the sales reached US $1 million by the first quarter of 1997. By August 1999, daily on-line sales have reached US $30 million, accumulating a total of US $11billion per annum. Dell had become the first computer company to provide a comprehensive on-line purchasing tool.

E-Support Direct was the fourth phase of Dell’s electronic commerce strategy because the Internet improved the speed and flow of information at much lower costs. It was the perfect and natural tool for Dell to deliver the ultimate in customer experience, the direct-service model. In 1998, Dell announced that the new direct-service model for building the business of the future and unveiled E-Support-Direct.

In conclusion, Dell implemented its marketing strategy with the Dell advantage, which is based on direct relationships, low cost, speed to market and e-commerce expertise as much as it is on Internet hardware, appliances and customer services and support. And the management team of the dell incorporated is one of the most efficient and productive team in the world.

Recommendations and conclusion

It becomes clear that Dell is a pioneer in creating long lasting value to its customers which helps in generating loyalty. By using e-commerce as the medium Dell has successfully retained its corporate customers Dell is clear in its customer segmentation approach. It is targeting the end users in the corporate segment. By the introduction of PremierDell.com it has successfully establish one to one relationship with its end customer. It is a benchmark for initiating the significance and power of technology to reduce cost and increase convenience. PremierDell.com is already helping Dell to learn working styles of different end users. Within a corporate segment Dell can differentiate different types of influencers and decision makers. It should strive to understand the customer behavior more closely. Dell can also learn to deduce computing skills of different users. This would help Dell to further customize its offerings and increase the value added. Dell can also link its customer to its suppliers as it would help the suppliers gauge the requirement first hand and would further help in reducing inventories both at Dell and the supplier facilities. This would increase the response time to customers. Dell can provide assistance to its corporate clients to support their own customers in terms of business processes, IT and Interactivity. It would also help in increasing its customer base. Dell should break into new geographic markets, with their low cost products and services. A firm like Dell would only have to show that they create quality products, their global position and their efficiently priced products. Especially since they have experience in international markets.