The University of Newcastle

GSBS 6060 Strategic Management

Case Study Seminar on

Dell Computer Inc.

Presented by

Outline

Company Background Strategic Analysis Strategic Objectives Key Current Strategies Strategic Implementation: General Perspective Key Strategic Implementation Issues Leadership Organisation Structure Innovation Evaluation of Strategy Recommendations Conclusion

Company Background

Dell Inc. established in 1984 by Michael Dell Operational regions : Americas; Europe, Middle East and Africa (EMEA); Asia-Pacific and Japan (APJ) Today the number one supplier of computer systems in the United States and second worldwide

Strategic Analysis
General Environment
Social

Demand shifting towards emerging markets

Cloud computing

Economic
Technological

Buyers
Matured PC market Intense competition Low margins
High customisation Industrial design

Specific Environment

Discontinuous Unpredictable turbulence in the industry

Competition

Industry

Strategic Analysis
Core Competencies
Competitive Advantage
Unique Business Model Brand

Price/Cost Mass Customisation

Bureaucratic Organisational Structure

Today
Low Innovation

Strategic Objectives
Currently

Long term value creation by driving revenue, operating income and cash flow
Suppliers Dominant Customers Dominant

Shareholders Definitive

To succeed

Customers Definitive

Employees Dominant

Key Current Strategies

Ansoffs Matrix Currently: Market Development (PC) Penetration (Enterprise IT) Diversification (Enterprise IT) Porters Competitive Strategy Currently: Cost Leadership & Differentiation Miles & Snows Adaptive Strategies
1st Curve PC
Prospector Analyser Defender/Reactor

2nd Curve Enterprise solution

Analyser

Strategic Implementation: General Perspective

Strategic Drift & Flux

Strategic Implementation: General Perspective

Second Curve Activity
Enterprise IT Solution - LATE

PC

BCG Matrix:
PC Business Cash Cow
Enterprise Solution Question Mark PC

Enterprise

Leadership
Two-in-a-box Management & Cost Leadership Leaders Market Acumen Corporate Culture & Leadership Style Executives Core Competence & Organisational Needs Leadership Style of Michael Dell & Diversification Strategy Radical change in Dells structure to flat organisation Dell: Efficiency to Decentralisation and Delegation Less directive and more supportive in leadership style

Organisational Structure

Decentralised since inception Bureaucratic & Autocratic: late 1990s mid 2000s Hierarchical & Structurally Bulky: mid 2000s till now Implications
Structure Inflexibility Low innovation Reactor in the market

Strategic implementation
Diversification Flat structure Strong culture

Innovation

Dell less innovative

Product
Process Organisational
Industrial design

Costly desktop production system Bureaucratic/hierarchical structure Autocratic leadership

Strategic implementation Diversification Innovative in the three types

Evaluation of Strategy

Strategic objective: Creating value for shareholders Key Strategies: Cost Leadership, Differentiation Market Development, Penetration, Diversification Implementation: Leadership, Structure, Innovation

Evaluation Criteria: (Viljoen & Dann, 2003)

Consistency Consonance
YES PC NO Enterprise IT YES YES
Only within its established client groups

Feasibility
Advantage

Assessing Strategic Performance

Is performance consistent with strategic objectives? NO

Are strategic objectives realistic? YES

Are problems related to strategic implementation? YES

(Viljoen & Dann, 2003)

Recommendations

Less directive and more supportive in leadership Supporting style

Reducing geographic division of middle management Explicit strategic objectives to address and improve employees motivation and skills

Conclusion

Dell has lost its game in the global market. Dell shows no indication of significant change in implementing its strategies. Dell stands to lose its competitive advantage in the next 3-4 years, unless significant change is brought about in leadership style, organisational structure, and innovation.

Case Study on Dell Computer Inc.

Q&A

Appendix
http://www.theofficialboard.com/org-chart/dell