NanYang Institute of Management University of Ballarat

Student name: Vo Thong Tu Student number: 30120200 Course name: Operations Management Course code: BUMGT6935 Tutor: Mr. Wong Wai Nam Date: 19-08-2013

Assignment topic: Is it possible for a world-class organization to achieve superiority in all five major competitive priorities-quality, speed, dependability, flexibility and cost? Explain your reasoning. Provide examples pros and cons of its implemetation and consequences. Use relevant evaluation criteria to back up your statement. I. Ability for an international organization in achieve successful in all five major competitive priorities. Due to the strengths, the weakness and the limitation of resources, organizations need to choose which major competitive priorities that they will focus on. It means organizations will have to trade off which competitive priorities are less excellent in order to achieve excellence in other competitive priorities. There is no such thing as a free lunch, in fact there maybe a trade-off between performance objectives. It means improving the performance of one performance objectives could be only achieved by sacrificing the performance of another. There are two points of view of "trade-offs". The first mention is the sacrifice in some competitive priorities that can be achieved improvement in other competitive priorities. The second emphasize that, it can be get over the "trade offs" in operations to achieve improvement in one or more competitive priorities without any sacrifices. II. Dell Inc and five major competitive priorities a. Dell Inc background Mr. Michael Dell founded the company in 1984 with an initial capital investment of US$1,000; 25 years later, Dell is recording revenues of US$61, 101M and employs approximately 78, 900 employees worldwide. Dell Company is one of the leading companies in information technology market that designs and produce follow the demand of customer. Dells corporate philosophy is outlined in a set of values referred to as the Soul of Dell. Dell performs a differentiation strategy, which incorporates cost, flexibility, speed and dependability as the operations performance objectives. b. Five major competitive priorities Dell focuses on speed, dependability, flexibility and cost. With the Dell direct model system, customers can order and configure product directly from Dell Company.

Assembly line, product design, operation process, supplier relationship are the key factors incorporate in "make to order" strategy that creates cost competitive advantage. Customers computers, which ordered, will arrange to be ship and assembled then delivered to customer in the way that can save time and costs. Direct selling system of Dell Company described by the high speed, low-cost distribution channels, direct relationship between Dell and customers, build-to-order, JIT process, products and services pointed at specific market segments. By this system, Dell was gave not only the first hand information of customer demand but also the feedback about quality of products. Dell has decided to sacrifices the quality objective to trade-off the excellent in other objectives. From the polar representation 1, it easy to know that quality and design of Dell PCs is not as better as Apple PCs. However, every coin has two sides, with the same configurations, Dell PCs price will be lower. This is the key factor in Dell strategy.

Polar representation 1

The speed objective Speed reduces inventories:

Most PC manufacturers have used the strategy of IBM sales approach since 1981. The products had been sold and will be delivered to end users through distributors and reseller channel. It means that their cost structure would be increased by factors indirectly.

Initially, Dell did not have ability to create their value chain. Sales approach of Dell is portrayed by selling directly from the Dell factories to the business customer or to end consumers. Dell sells products directly to customer over the phone, and reduces the cost and risk of transporting and inventory. Michael Dell said that if they had got 11 days of inventory and their competitor had 80, and Intel introduced new chip, that would mean Dell were going to get to the market 69 days sooner. Dell Pc is built on customers configuration order. Dell's manufacturing processes are synchronized in order to avoid delays in production since supplier ships the components. A finished product it will be brought out of the factory. This operation process is based on close relationships with suppliers. For example, it only takes 15 minutes to a supplier's delivery to the Dell. With a reliable supplier, dell can focuses on reducing inventory and increasing operation speed. Dells inventory costs are always kept at a minimum that is one of the competitive advantages of Dell, which is achieved from speed objective. Speed reduced risk

The relationship between Dell and suppliers was built on high-speed cooperation by improving supply chain or quality. If there is a faulty component, it will be fixed or replaced immediately by informing the suppliers. The dependability objective Dell Pcs were made based on customer's need, so customer want to receive what they had ordered with the best quality and lowest price. Dell and their partner (suppliers, maintenances, vendors...) deal with customer in the ways that bring to the customer the feeling of trading with a large corporation. By the direct sales system, Dell brings to customer the best buying experience. From dealing with customer and supplier, Dell can verify the right quantity of components inventory. The developments of Internet also help to develop Dell service effectively. Customer can track their shipment with the tool of Dell called web based order tracking system. This tool is easy so customers can do it themselves instead of calling to Dell at least three times to check their shipments status. With this tool can satisfy customer's saving time demand and it also increase Dell's value chain.

Additionally, Dell's customers can maintain their PCs by themselves with Dell's technical support online that they can update their PCs with soft wares, device drivers, or patches easily and directly.

The flexibility objective Business online has been chosen because of its advantages and opportunity. Dell's products or services can be delivered through new channels of distribution with new technology. Service and support are the strength of Dell. Dell technical support staffs are able to contact 24 hours a day to help via phone or online, this is one of the best after sales services strategy that customers can achieve from Dell. Moreover, Dell outsources maintenance providers to solve customer's problems as soon as possible although the geography. Despite of warranty expiring, Dell also provides maintenance services free or with the lowest prices.

The cost objective The competitive strategies of dell are based on direct distribution channel and low cost structure. Distribution costs are cut down dramatically by rejecting the traditional indirect distribution channel. Not only Dell but also their customers are able to save cost and time by doing transaction over the internet, such as configuration, ordering, tracking on the internet via dell web site. Dell started the direct distribution channel strategy because this strategy can help Dell in keeping their product's prices are lower than other company with many indirect stages of distribution channels. In addition, with the combination of productive process and sales strategy, Dell has ability to achieve the low inventory costs. Due to the number of semiconductor and computer parts manufacturers are increased dramatically, and Dell established the good relationship with them to be offered the lowest price for input materials so that the low prices output can be control at minimum. These strategies are aimed at creating customer's benefits The advantages of low cost strategy lead dell to the leader position in low-prices market. Although with the lower price products can affect to Dell's profitability, but this strategy can compensate for profit loss by mass consumption in low-prices market.

III. Conclusion Low cost strategy, the effects in sales approach and built-to-order customers are the key factors of achievement of being leader in Computer industry. Dell strategies are based on incorporate between computer's component suppliers and operation process strategy in Dell assembly line. Customer also satisfied with the after sales service and technical support 24 hours a day, which are the important factors help Dell to increase their value chain. When a traditional market become saturated, and more competitive, all the PC companies will focus on the increasing dramatically of emerging markets that based on low price products and this is the target that Dell has aimed on since the start of their business. In summary, Dell has to trade-off quality in order to achieve the excellent performance in cost, speed, flexibility, and dependability. This strategy leads Dell to the success in computer industry full of competitive. Reference Dell.com Nigel Slack,Stuart Chambers & Robert Johnston. (2010). Operations performance.Operation Management. Place name: Pitman Pulishing. Michael Dell.(1999). Direct from Dell: Strategies that Revolutionized an Industr. HarperBusiness. New York Times.(2010). Dell Inc. Retrieved from http://topics.nytimes.com/topics/news/business/companies/dell_inc/index.html