Dell Case Study – Analysis – Internal Challenges

This post analyzes a Dell case study. The analysis explores several challenges that Dell is facing introduces a number of solutions.

Introduction

Dell’s products adapt to many market sectors including students, gamers, programmers, businesses, etc. Dell positions itself firmly in both hardware and software industries by using its core competencies. Dell offers reliable, cost-effective and customizable computer products to all its customers worldwide.

Challenges

Dell transformed consumers’ shopping experience with its mass customization strategy. Dell has continued the same strategy for years and left a door of opportunity open for HP. In 2006 Dell faced many unfortunate incidents: some rechargeable battery packs had the potential to self-ignite, very low earning reports and analysts gave Dell a very negative outlook for coming years. Recently Hewlett Packard (HP) has taken a big market share from Dell. HP as well as Sony, Lenexa, Apple, and other competitors are continuously evolving and becoming a bigger threat to Dell. Competitors can take more market share over time. They can also try to beat Dell’s core competencies and take it out of the market.

Internally Dell is also facing some challenges. The employees at Dell are not completely satisfied, turnover seems to be a growing problem. Other companies are recruiting talented employees from Dell. If all these employees are quitting, then Dell will have to look for new talents. Recruiting new employees is not only time consuming, but also very costly. The fact that employees are not satisfied with the company is a result of other internal problems: company culture issues. There is no deep connection between Dell and its employees.

Main Challenge

Dell is losing market share in its industry. Strong competitors are becoming bigger threats. Competitors are an external challenge that could be overcome by enforcing Dell’s core competencies. Dell has many competitors and some of them have very attractive value propositions. Dell has lost its attractiveness toward clients and may continue to do so due to the decay in the company’s values and objectives. The core problem is that Dell has failed to demonstrate stakeholders its desire for innovation and continuous improvement. The employees are working toward making processes cheaper and not towards new technologies. In general, the culture in the workplace is in decline. Employees do not find the workplace suited for a technology company.

Other stakeholders have also seen a similar picture in these past years. Dell has continued with the same strategy, without getting major advancements in the market. Dell has released products that fail the minimum requirements and that are also a potential hazard to the users. It has also reduced revenue significantly, reducing shareholder’s interest. Dell has not been keeping up with competition and has not been improving over time. All the issues in the problem are completely or in part due to the core problem inside the company.

Solutions

Several solution paths can be taken to solve the core problem, some of these are the following:

1-Dell could come up with another marketing strategy only focusing on a specific aspect of their company. They could focus more on software or customer service for example.

2-Dell could continue with their high customization strategy, but increase the desire for innovation. They can continue evolving their core competencies and add new ones along the way, focusing on continuous improvements. They need to focus on the stakeholders working in the company too, spread the company’s culture and objective.

3-They could also adopt their competitor’s new strengths and try to implement them. They would have to figure out how to adapt them in their own way and be creative.

Solution Analysis

If Dell decides to go for solution 1, it will have to become more competent in the specific competency. Even though Dell is part of the hardware and software industry, if it inclines more, either way, it will need to develop new skills. These skills will be gain over time but could cost time and money. If Dell focuses on a specific part of its business, it will be so much easier to manage and promote. The biggest problem in this solution is the timeline. Competitors will continue taking away market share if Dell does not act quickly.

Solution 3 is also a fair solution. Competitors are definitely doing something right, and possibly better than Dell. Dell could focus on researching those aspects and learning from competitors. Some of their strategies may be public information, but most of them will be confidential. This could be an issue because Dell won’t be able to get the whole picture without all the information.

Expanding on Solution 2

Solution 2 can solve the core problem more efficiently. The company should continue developing its core competency since for years its competency has to lead them to success. The difficulty is that Dell has to accelerate the creative process and focus more on developing its core competency. 

Dell has to start from the core of the company: the employees. Talented workers are hard to find. Dell needs committed employees that will discover new technologies and processes. Having a high commitment to the company is usually a product of great company culture and outstanding work environment.

Following this solution, Dell won’t have to reduce the services and products they provide. Earnings are distributed among all the offered services and products. Dell’s customers are interested in specific ones that adapt to their needs, taking products or services out can be a big risk.

Following solution number 2 customers and communities will definitely get benefits; they will be able to have access to more reliable services and products. Technology is evolving, businesses need to be on top of the game with their tools, computer equipment is nowadays a must-have and Dell can offer them high-quality products. Environmentally, this strategy won’t produce many changes, but definitely Dell cannot increase environmental impact or pollutants trying to develop better products, because the communities will get affected.

The competition was tough in the past and will continue to be. It will be expected that competitors will bring new strategies and new products to the market. Dell has been at the top of the market share for years and hopefully enforcing its competencies and following solution 2 will help it defend its position.

Implementation

To execute the solution Dell should have the core problem clear and start by making a program with employees. Dell has to be aware of the challenges it is facing and why does it need to focus on improving the competencies and innovations. The best start will be a program for employees to clarify the company’s culture, objectives and also threats. At the same time, Dell will offer employees a more dynamic and open work environment to incentivize creativity and growth. Once the company is working towards the improvement of services/ products they can start advertising to the public and showing their improvements. Using its core competency (custom-built computer services) will help attack customers since many of the customers have been loyal to the company for years. Also, among its competitors, Dell is experienced and still owns a big percent of the market share.

The part involving employees and inside the company training has to be implemented now. Employees may take some time to be able to assimilate the changes and start working towards the new objectives. On the other hand innovation and custom build, computer improvement can take some more time.

The optimal outcome is that Dell will win back the market share it lost and continue growing. Dell will then become more profitable and also be able to keep stakeholders satisfied with the company. Turnover among employees should be reduced and motivation increased.

Metrics

To measure the success of the solution, some factors can be measured directly:  net income, market share, and sales. These parameters should increase; it won’t be difficult to measure since it is quantitative information. Employee satisfaction is measurable in opinion surveys and turnover rates.

Contingency Plan

In the case there is no difference after the solution has been executed, Dell could implement solution 3 as a contingency plan. The other companies will be more experienced in the matter, but Dell could possibly still get some benefit from inspiring some of their work in other competitors. Competition is very hard, and sometimes it can lead to ethically questionable practices. Companies can go into battles to prove their products are superior. Even Dell could follow one of these practices because they are very strong in the market and the may get external support. On the other hand, following any unethical practice could lead to long-lasting mistrust.