Technology can no longer be considered as a support function, as it has become a business enabler and especially in the case of companies like Dell manufacturing computers it has become a pulse of the business. When considering the area of information technology, change is a constant factor affecting the associated industries and it is difficult to overcome the impact of obsolescence. For any company that has invested billions of dollars in the state –of–the –art infrastructure and other machinery and equipments it is difficult to accept the fact that a part of its information technology infrastructure has become obsolete.
The fact still remains that technology changes at a rapid pace and the competitors are able to offer new solutions, products, and services every few months. Hence there is no question that a business can wait to refresh its computers. The businesses may upgrade the technology with the existing infrastructure to keep up with the changes. However the businesses would prefer to stick with what they already possess so long as it fulfills the immediate business needs of the business.
“It is also important to continuously keep pace with developments around the world and evaluate these from a business perspective” (Brian Pereira). Most of the organizations follow a definite pattern for upgrading the information technology infrastructure. After the company decides on the overall business objectives and plans, the company embarks on short-listing the technologies and upgrading plans that would facilitate achieving the overall objectives of the business.
Hence it may be concluded that such decisions to wait for refreshing the IT infrastructure including the computers are business driven and depends on individual business needs in the midst of unceasing technological changes. In the business of Dell, one of the important things the company has to constantly monitor is the technology which changes very rapidly in most of the fields the company is involved. It is critical for the company to adapt itself to the changing technologies, lest the company may not be able to compete successfully with the competitors and may lose its present market standing.
The company protects its competitive strength by improving its ability to respond to changing technology. This, the company is able to achieve through its own zero-inventory model and by enhancing the technical know-how considerably. The company has also developed its ability to outsource the need for that know-how to suppliers. This has made the information technology critical to the company. Moreover, Dell has deployed its products and specialized software that uses the technology from Microsoft.
The company has ensured that every production step is monitored and the quality is ensured by a high quality IT infrastructure. “To keep pace with its growth in the Americas, Dell established the target of designing built-in efficiencies into its high-quality production standards and specialized information technology solutions at its newest and largest manufacturing facility in Winston-Salem” (Case Study). Dell has recognized its responsibility to recycle the products manufactured and sold by the company.
The company has committed itself for the disposal of the products at the end of their useful lives as easily as they have been bought by the customers. Dell is the only manufacturer of computer hardware, which offers its customers a free of cost recycling service. The company offers the recycling service for its own branded computer equipment throughout the world without insisting on any purchase of a new product. The company set out its product recycling goals in the year 2004 and has completed the rollout of the recycling program in the year 2006.
“The company recovered 35. 6 million kilograms (approximately 78 million pounds) of unwanted computer equipment for reuse or recycling from customers in 2006, a 93 percent increase over 2005. As a result of its global consumer and business awareness program, the company is ahead of schedule to achieve a multi-year goal of recovering 125 million kilograms (about 275 million pounds) of unwanted equipment by 2009” (Dell CEO). With the initiatives taken by the company in this direction the recycling program of the company has been running successfully.
Dell continued to seek new avenues for growth and this is the main reason for the company to expand into consumer electronics and corporate networking products. In order to double its revenue to $ 60 billion by the year 2007 the company widened its interest in diversifying in to products with high profit margins. The company found that servers and other corporate networking products offer higher profit margin and hence the company expanded its activities its activities in these areas apart from its core product of notebook computers.
It was also observed by the company that there is a large scope for technological innovations and advancement in the corporate networking products and the consumer electronics where the core strength of the company can be utilized to manufacture products with a competitive edge. “It continued its push into the storage market in late 2001 by entering into an alliance with EMC Corporation to develop a new line of data-storage systems, and it entered the market for low-end networking gear used by small businesses, launching its PowerConnect line of network switches in 2001” (One Dell Way).
Since the company has its competitive strength in its technological excellence the company decided to expand in the areas of corporate networking and consumer electronic products. “In 1990, Dell Computer Corporation tried selling its products indirectly through warehouse-clubs and computer-superstores, but met with little success, and the company re-focused on its more successful direct-to-consumer sales model” (Whatisthis. com) The business model of Dell is that the company manufactures and sells personal computers directly to the consumers.
Apart from selling the computers Dell is also selling solutions competing on all elements of product mix in a market which is highly price competitive. By manufacturing the products at low cost Dell strives to meet the challenge of the changes in the customer preferences with least loss of time. This enhances the business success of the company. To satisfy the customer demand the company has to remain in constant touch with the customers. This makes the company sell and service its products directly to the customers instead of through any distribution network.
This enhances the popularity of the products of the company as well as the sales volume. Hence it is advisable the company continues to sell its products directly to the customers. Comparing the business model of Dell with that of Apple it has been observed that Apple has not made any spectacular success as compared to Dell. Dell model accounts for a large proportion of the global PC sales. As such global PC market is very competitive with very thin margins.
Hence manufacturers like Dell who make low cost products and supply directly to the customers adapting to the changed requirements of the customers are sure to have a positive impact on their sales and revenue through the model being adopted by Dell. This has been proved over the time with the phenomenal increase in the sales and revenue of Dell. Dell is constantly endeavoring to stay with its customer-focused business model and strives to create values for its customers and investors. Hence there may not be any constraint on the part of the company to increase its sale volume by its direct selling business model.