Dell Companys Business Networks

Dell Company’s Business Networks

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‘Firms operate in extended business networks. To be sustainably profitable, a firm needs to

be able to operate in an attractive network position and to manage that position effectively

by having powerful relationships with its customers and suppliers.

Critically discuss this statement, using relevant examples to illustrate your answer'.

Introduction

Aversa, Haefliger & Reza (2017) argue that ccurrently, logistics, as well as supply chain

management, has turned out to be the most critical issues for firms. Dell company has recognized

this, and has lain much of its emphasis on direct sales, logistics and supply chain management.

Therefore, it has turned out to be a successful computer company in the universe. The company

was created by Mr. Michael Dell on November 4th, 1984. Initially it adopted a direct sale supply

chain approach of direct sales where it took commands as given by customers. However, later

the company tried to embrace the retail channel, but again it went back to the direct model that

saw it grow to become number two PC Company in the universe and number one in the US

(Aversa, Haefliger & Reza 2017).

Competing with giant companies such as Hp, Apple, and IBM, Dell has an estimated number of

96000 staff all over the globe. Besides PC, the firm handles scanners, cameras, HDTVs as well

as other electronic equipment that are made by numerous manufacturers (Altuna et al., 2015).

The company relies on innovative suppliers that deliver and supply their products with value so

that it maximizes profit, customer satisfaction, growth, innovation and above all positive impact

on customer relationships. In this paper, I will discuss Dell Company’s business networks.

Target Audience

Dell Company has categorized its target market into four segments, large companies such

as government organizations, home users, small and medium firms. The company contents all

customer subdivisions using direct transactions (Altuna et al., 2015). However, 73% of the

company's transactions match with their big company customers.

Market Position and Performance Goals

Dell'Era & Landoni (2014) argue that the performance objectives of Dell Company are

high-quality computers are fast speed and low cost because this enables the company to get

major saving advantage as opposed to the its competitors. Additionally, the company adopts the

direct sales model, and by that, it does not pay retailers. On the other hand, the company uses just

in time inventory technique which helps it to avoid holding inventories for long. In return this

helps the company to reduce cost thus delivering PC at reasonable quality, price and faster than

the company's competitors. Additionally, the Dell Company has high reliability. Therefore,

clients can trust the corporation because it offers significance to clients by allowing its them to

brand and sell their commodities directly (Dell'Era & Landoni 2014).

Regarding market position, Dell Company has gained reputation for its exclusive

performance objectives that are high speed and quality of laptop as well as Pc at low cost that

makes the company unique in the market (Della et al., 2016). On the other hand, the company's

unique and efficient supply chain as well as after sales services of Dell also enable it to gain a

unique place in the marketplace.

Performance Objectives model

Capacity

Gamboa & Gonçalves (2014) argue that the capacity of Dell Company is high because it

daily recaps the process of producing PCs. The company adopts systemization and specialization

by embracing the model of direct sales as well as ‘build-to-order’ policies. Therefore, this level

enables the company to lower its cost of production.

Diversity

Dell's level of diversity is low since it does not add invention varieties. This is because it

invests least in R&D arena (Luo & Child 2015). Therefore, the company usually contents its

customers with existing merchandise lines as opposed to presenting new product diversities.

Variation

Ross (2016) argues that Dell's level of disparity in demand is low and stable because it

follows the build to order policy. Therefore, the company makes the PC as per the demand of the

customers. Additionally, there is no supercilious disparity in demand that can be evident.

Visibility

In dell, the level of discernibility is low since the company adopts centralization and

standardization at every level of production (Rothaermel, 2015). Dell Company exposes internal

operations of its computers to clients that have ordered. The company takes orders and estimates

the date of delivery.

Marketing Channels of Dell and Logistics Flow and distribution channels

Saebi & Foss (2015) argue that Dell Company’s marketing channel is made of customers

and suppliers. The company does not accept intermediaries such as retailers and wholesalers.

Therefore, this has enabled the company to offer customers orders at fast speed. The company's

network of distribution begins with dealers who supply it with essential components that are

required in building computers. After the building procedure, the computers are sent directly to

the customers. The company uses a short channel to distribute its commodities for it aims at

reducing complexity, cost and time that keeps increasing in case there are numerous

intermediaries. Basic elements of Dell’s success are the adoption of the company's three main

supply chain tactics namely; Direct transactions model, build to order, as well as supplier

integration (Saebi & Foss 2015).

Direct Transactions Model

Direct transaction approach implies that Dell Company does not use wholesalers as well

as retailers in selling its computers. However, Dell Company directly takes orders from clients

using established websites as well as directly selling to the clients according to their orders.

Therefore, this approach allows the company to be in close contact with the clients and also to

know the needs of their clients directly (Taran et al., 2016). By using this supply chain model,

the company can also create a direct rapport with all its clients. The clients can also know the

benefits that they need from the company's PCs. There is no extra time and cost because PCs are

delivered directly to the client. Moreover, Dell Company has an advanced direct association to

virtual integration. Therefore, by using information technology, the company's clients have

become the company's main partners. Therefore, the company organizes regional meetings

where many of its customers share the experience with technicians, Dell executive, and

salespeople. The customers discuss their expectations and needs from technology thereby giving

the company modest advantage on various companies that do not offer services similar to Dell.

‘Build-To-Order’ tactic

Voigt, Buliga & Michl (2017) argue that ‘Build to order’ approach refers to the policy

that lays focus on making computers when clients order. The strategy enables Dell Company to

reduce the cost of storing and maintaining computers, unlike other corporations that pay to

maintain their inventory. On the other hand, fast reactions can be given to the changes in

demand. For example, Dell Company does not wait to finish stock to get new components for

customers instead it manufactures what is needed by the customers. Additionally, Dell Company

gets the benefit just in time inventory that enables it to spot defective components and to replace

them before numerous defective components rise (Taran et al., 2016).

Dell suppliers

There are various suppliers across the world for Dell which includes India, China, and the

US. Some of the common forms of suppliers of Dell include Motorola, Samsung, Sanyo and

Sony which helps in supplying components of Dell which follows key strategies of chain supply.

The firm considers suppliers as their main partners and important to their success. To be a

supplier of Dell, one has to have enough experience, expertise and some of the pre-agreed

measures measure capability that delivers the value of the additional components thus the

performance of these types of suppliers (Voigt, Buliga & Michl 2017).

The main objective of Dell is trying to minimize the price of inventory and maximizing

the speed at which suppliers provide the required components. For example, when we say that

we need 10,000 components in our combined warehouse in two weeks, Dell will just say that we

require 10,000 by tomorrow. It has become clear that Dell does not stay long with an inventory

for more than six days. For one to handle high levels of inventory, dealers need to keep the stock

close to Dell, and they can also manufacture the products from somewhere and then later supply

it to the required plants. When the supply has reached the plant, the company follows the system

of vendor inventory when suppliers supply components where there is the only truck of the

inventory until it is taken off (Voigt, Buliga & Michl 2017).

Dell has managed in creating a high relationship with supplier and customers thus

earning trust from users helping them have ordered over the use of key data. To enhance the

value of the market, Dell has created a website in the form of valuechain.dell.com which

suppliers can get clear information about inventory, required data, supply chain and getting

above components. The company can notice any form of fault component and will work hard to

make the necessary changes. Other than these initiatives, the firm can get information about part

of transitions.

Manufacturing plants and process of transformation of Dell

The firm organizes its plants of manufacture by region thus making two or more plants to serve

them in the regional markets. There are various manufacturing plants in different locations such

as Nashville, Austin, and Tennessee that has the capacity of serving the North America market.

These factories help in manufacturing Dell hardware products (Voigt, Buliga & Michl 2017).

Process of transformation of computers

The process of transformation of Dell computers is mainly divided into seven divisions.

Some of the current divisions include; software installation, customer order section, labeling,

kiting, build and Final Testing. For exact needs being met, the company has devised ways

through which shipping, boxing, and various divisions can be placed effectively on various

human resources and technology (Aversa, Haefliger & Reza 2017).

Transformation model

Customer section of ordering

Aversa, Haefliger & Reza (2017) hold that orders of customers are electrically transferred

to management to the system by scheduling through the use of software Factory Planner

Maintenance where they will be sequenced in the production of brain Dell for centers of

manufacture. The servers that are placed in various sections can serialize each track and part

when delivering services to the customers and suppliers.

Kitting and Logistics

Components used in making Dell components are later used for building orders where

suppliers are given a chance of creating divisions and then supplied to build section. Dell has

inbound logistics where materials are needed for fabrication of PCs where suppliers use logistics

of companies where the code of conduct is essentially observed and capable logistics help in

delivering components safely and the exact time (Aversa, Haefliger & Reza 2017). In some

instances, Dell has managed in devising ways through which it can get transportation services

from various companies such as SAIA, SCHNEIDER, DHL, ODFL, CEVA, and FEDEX. These

firms can ship some orders that address the exact requirements of the customer which help in

meeting the satisfaction of the customer.

Call centers

Dell company uses call centers extensively to assist customers and suppliers as well as

technical support. The firm further tries to establish the call centers and major segments to solve

different transactions between the customer and suppliers thus increasing the existing

relationship with them. In general, the firm tries to recruits people from its regional location for

its call centers where it optimizes the use of regional language thus helping in telecommunication

process (Zhang et al., 2017). Uses of global headquarters are the main streams used for

marketing where some special messages are sent to target audience. The messages sent and

various marketing materials made by Dell are precise and straightforward enabling accurate

delivery o messages to customers.

Conclusion

Therefore, it can be concluded that Dell falls among the secondary manufacturers of

various components of pc that meet the supplier and customer’s needs. With the use of effective

supply chain strategies, Dell has managed in executing the pcs according to the needs of its

customers and suppliers thus taking advantage of the accurate invented inventory. Furthermore,

integration of suppliers has helped in increasing and improving the relationship that exists

between the uses of the latest technology in each step of the supply chain. The strategic

positioning of Dell in the market has helped it to make considerable amounts of profit making it

one of the most successful pc producers in the current market. Additionally, Dell exists in the

global market where there are constant variations. However, it manages to use favored locations

of manufacturing plants. Moreover, the existence of various corporations has helped the firm to

adequately increase its network to Texas of South America, idle East, Europe, Asia, and Africa.

The expansion has also helped the firm to create customer value by adequate provision of price

incentives which accommodate special bundles of computers. Setting up of IT centers situated all

over the world has critically helped in dealing with various technical problems concerning

customer queries and suppliers needs. If the firm continues to meet the customer and supplier

requirements, it will not take time for the organization to become number one in the world

market.

References

Altuna, N., Contri, A.M., Dell'Era, C., Frattini, F. and Maccarrone, P., 2015. Managing social

innovation in for-profit organizations: the case of Intesa Sanpaolo. European Journal of

Innovation Management, 18(2), pp.258-280.

Aversa, P., Haefliger, S. and Reza, D.G., 2017. Building a winning business model portfolio.

MIT Sloan Management Review, 58(4), p.49.

Della Peruta, M.R., Del Giudice, M., Lombardi, R. and Soto-Acosta, P., 2016. Open innovation,

product development, and inter-company relationships within regional knowledge

clusters. Journal of the Knowledge Economy, pp.1-14.

Dell'Era, C. and Landoni, P., 2014. Living Lab: A methodology between user‐centred design and

participatory design. Creativity and Innovation Management, 23(2), pp.137-154.

Gamboa, A.M. and Gonçalves, H.M., 2014. Customer loyalty through social networks: Lessons

from Zara on Facebook. Business Horizons, 57(6), pp.709-717.

Luo, Y. and Child, J., 2015. A composition-based view of firm growth. Management and

Organization Review, 11(3), pp.379-411.

Ross, D.F., 2016. Introduction to e-supply chain management: engaging technology to build

market-winning business partnerships. CRC Press.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Saebi, T. and Foss, N.J., 2015. Business models for open innovation: Matching heterogeneous

open innovation strategies with business model dimensions. European Management

Journal, 33(3), pp.201-213.

Taran, Y., Taran, Y., Nielsen, C., Nielsen, C., Montemari, M., Montemari, M., Thomsen, P.,

Thomsen, P., Paolone, F. and Paolone, F., 2016. Business model configurations: a five-V

framework to map out potential innovation routes. European Journal of Innovation

Management, 19(4), pp.492-527.

Voigt, K.I., Buliga, O. and Michl, K., 2017. Customized and Built to Order: The Case of Dell. In

Business Model Pioneers (pp. 55-66). Springer International Publishing.

Zhang, M., Guo, L., Hu, M. and Liu, W., 2017. Influence of customer engagement with company

social networks on stickiness: Mediating effect of customer value creation. International

Journal of Information Management, 37(3), pp.229-240.

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