MANAGING PEOPLE

Is Del too Big for Michael Dell?

QUESTIONS:

1. How does the case describe Dell’s transformed strategy over the years in terms
of where to compete, how to compete, and with what to compete?

According to Michael S. Dell, he has a clear plan. He believes the company’s supply chain
and manufacturing can be improved. “I think you’re going to see a more streamlined
organization, with a much clearer strategy” as stated, Dell will continue to compete in the
supply chain and manufacturing sphere but with a more streamlined organization and a
clearer strategy. And because innovation is not in Dell’s DNA unlike Apple or HP and any
effort to “crank up” R&D would affect margins; it may require that Dell would move away
from it’s direct-sales model and shift into mainstream retail. However, founder and
returning CEO Michael Dell however, believes that direct-sales model is a significant
strength of the company and would want to continue into to compete with that sales
model. Michael Dell prefers to change the company in a slow and steady fashion, much
like Lou Gerstner at IBM before him. Dell is behind that curve, and doesn't have the luxury
of time. (Business Insider, January 16, 2013)

2. What are the major people issues that exist as Michael Dell retakes reins at Dell?

Looking at the business perspective Dell is losing share in business spending, while
Lenovo and Apple are gaining. In terms of market share, while HPs market share grew to
18.1% Dell’s market share dropped to 14.7% according to market researcher IDC.
However, when Michael Dell initiated to the board to “push” Rollins out as CEO for him to
takeover, the company’s shares prices immediately jumped 3.6%, and we are only talking
about a couple of hours since it was announced. Dell needs to fill in slots to fill in the
executive suite; Rollins is only the latest departure among key managers. Since mid-2005
the PC maker has battled problems with customer service, quality, and the effectiveness
of its direct-sales model. As such, Dell needs a more comprehensive strategic human
resource strategy, particularly in its manufacturing supply chain. While streamlining is a
strategy as announced by founder Michael Dell, a defined HR strategy is needed to
support its streamlining activities.

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 MANAGING PEOPLE
Is Del too Big for Michael Dell?

3. How would HR help in addressing the issues that Dell faces?

The strategy to resolve issues in customer service, quality and that Dell faces is clear.
But since it doesn't have the innovation DNA, it will focus on supply chain, manufacturing
and distribution. This means that Dell needs to work on its human resources to be able
to execute the strategy. Strategic HR needs to be wholistic in its approach, from Analysis
of Work Design to HR planning, Recruitment, Selection, Training and development,
Compensation Performance Management and Employee relations. There is no one size
fits all in strategic HR, the approach and execution of strategies is directive and purposive
based on need and purpose – it is very complex. In April of 2007, at the time of writing of
this case, Dell’s Supply Chan is the best in the world. Direct sales and customization of
PCs and laptops are unheard off in the industry because available technologies now were
not available fully developed then. But Dell was able to pull-it off through the complexity
of executing the direct sales strategy. Supply Chain studies in 2005 say that the average
inventory turn-over for a Dell computer is 17mins. If done well, can be a financial
advantage since the company does not have much stock on the front end, there are no
finished goods inventories. But in the back end, parts suppliers Sony, Hitachi, Fujitsu,
were having major challenges in inventories and costs due to fluctuating and
unpredictable requirements. Inventory techniques such as JIT cannot be executed
seamlessly. There considerable in-process inventories. This shows that Dell’s direct-
sales supply chain business model is highly complex, technically and operationally.
Moreover, product returns can be another challenge, a customized Dell PC or laptop
cannot be easily sold to another customer. People need to be highly trained technically,
highly skilled, highly motivated, and must have the level of customer service orientation,
loyalty and morale to push for that extra mile so to speak is a must. This can only be
resolved by a strategic HR program geared towards the different departments involved in
Dells value chain.