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Dell strategy history
Dell computers case study
Dell strategy history
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Introduction
Performance measurement and control are very important for any organization either government or business to measure the success of the organization and it is one of the most difficult parts of strategic management (Wheelen & Hunger, 2012). According to Crosson & Needles (2014), Performance measures are “quantitative tools that gauge an organization’s performance in relation to a specific goal or an expected outcome” (p 302). Many studies have suggested that organizations need to use both financial and nonfinancial performance measures to assess their strategies and operations (Milost, 2013). The financial performance measures might include net earnings, return on investment (ROI), net income as a percentage of sales, the costs of poor quality as a percentage of sales and earnings per share (EPS) (Milost, 2013; Wheelen & Hunger, 2012). The nonfinancial performance measures might include number of customer complaints, customer satisfaction, job satisfaction, management control system (Milost, 2013), economic value added (EVA), market value added (MVA) and a balanced scorecard (Wheelen & Hunger, 2012). It is suggested that organizations use multiple performance measures of 20% of the factors that determine 80% of meaningful and reliable results (Wheelen & Hunger, 2012).
Dell’s Performance Measurement
Dell was started on a simple concept of made to order machines and delivered directly to customers without distributers or retailor stores. Due to strong competition in Computer business and “Rising sales coupled with rapidly falling net income caused Michael Dell to rethink his retirement and resume his role as CEO in January 2007” (case study, p 9-2). “Dell has made more than 10 acquisitions, cut about 10,000 jobs, and...
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... & Samuels, J. A. (2012). An Examination of the Effect of Positive and Negative Performance on the Relative Weighting of Strategically and Non-Strategically Linked Balanced Scorecard Measures. Behavioral Research in Accounting. Vol. 24 Issue 2, p133-151. 19p. 1 Diagram, 1 Chart. DOI: 10.2308/bria-50114. , Database: Business Source Premier.
Milost, F. (2013). Information Power of Non-Financial Performance Measures. International Journal of Business Management & Economic Research. Vol. 4 Issue 6, p823-828. 6p., Database: Business Source Premier.
Preimesberger, C. (2011). The world According To Dell: From Hardware to Software and Now to the Cloud. (cover story). eWeek. Vol. 28 Issue 15, p18-23. 5p. , Database: Academic Search Premier
Wheelen, T. L. & Hunger, J. D. (2012). Strategic management and business policy: Toward global sustainability (13th Ed.). Prentice Hall.
They can benefit from the tools where rapid identification and resolution of problems can only be the way to project profits within an organization. The effectiveness of the metrics is a measure of how well the output meets the needs of its customers and their expectations are met. Metrics is an important measure that monitors the effectiveness of an organizations operations process. References Barnard, W., De Feo, J. a.
Performance challenges are faced in the same manner on both types of organizations non-profit and for profit organization. However they might be measured in a different way due to the different types of mission they have set for themselves and the different outcome they might expect. There are different ways that a manager can measure the work performance of their employees, by what they produce, b...
The balanced scorecard has many advantages that companies can use. These advantages include an emphases on future organizational performance (capabilities, resources, and business processes), customer satisfaction, and organizational growth and profitable results. Applying the balance scorecard, management is able to follow specific objectives and are able to evaluate the relationships and their cause and effect. Those objectives are obtained from the strategy implementation from the balanced scorecard. It is important to note that all four persp...
In the mid 1980s, and into the 1990s, business leaders realized that a renewed focus on quality was required to continue to compete in an expanding global market. (NIST, 2010) Consequently, several strategic frameworks were developed for managing, and measuring organizational performance. Among them were the Malcomb Baldrige National Quality Award, which was created by and act of congress and signed into law by the President in 1987, and The Balanced Scorecard, which is a performance management tool that was born out of research conducted in the late 1980s and early 1990s by Robert S. Kaplan, and David P. Norton published in 1996 (Kaplan, 1996). Initially the renewed emphasis on quality management systems was a reaction to the LEAN approach
A Balanced Scorecard can be defined as a “performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy” (Wikipedia 2009, ¶ 1). Scents & Things will need to develop a balanced scorecard that will assist in meeting and help define the company’s values, mission, vision, and SWOT analysis. The balance scorecard is made up of four perspectives; financial, customer, learning and growing, and internal process. This paper will define each of the four perspectives objectives, performance measures, targets, and initiatives. The paper will also show how the perspectives relate to Scents & Things vision, mission, values, and SWOTT analysis.
Dell's strengths were oriented around listening to the customers, responding to the customers, and delivering what the customer wanted. The direct relationship was first through telephone calls, then through face-to-face interactions, and now through the internet. It has enabled them to benefit from real-time input from real customers regarding products and future products they would like to see developed. The company also doesn't use reseller or retail channels because every computer is built-to-order, which allows less inventory. The direct model allows them to take the pulse of whatever market and provide the right technology for the right customers.
Speaking about the business model of Dell, it has ability to remain on the higher end of the scale for a particular time period. Dell has business model, which primarily focuses on direct selling line of attack. It in a straight line supplies the PCs to the regulars. It does not believe in intermediary, retailers for the business practices. Undeniably, this gives them an edge to serve customer well. Nevertheless, it understood the importance of retailers and start offering products on the premises of retailers, such as Wal-Mart, Sam’s Club and so on. Next, Dell administration is certain of the exclusive business of PCs. As time goes on, however, observing the
Tapinos, E., Dyson, R.G. & Meadows, M. (2005). The impact of performance measurement in strategic planning. International Journal of Productivity and Performance Management, 54(5/6), 370-384.
The balanced scorecard is a continuous, strategic analysis of the organisation from multiple perspectives commonly approached by analysing the four perspectives of financial, learning and growth, customer and internal business processes. A combination of financial and non-financial performance measures are used in this analysis. Financial information is measured in dollars or ratios of dollars and compares forecasts to actual results, whereas nonfinancial information, that cannot be measured in dollars, includes data on areas such as defect rates, throughput time and employee retention (Eldenburg et. al. 2014, p. 699). Interestingly, the Balance Scorecard MCS was developed to balance the undue emphasis of the financial performance focus of organisations, with non financial indicators, particularly in the western english speaking countries such as the United States of America and the United Kingdom (Otley 1994, p.
Dell Inc. is a privately owned multinational technological company, which develops, sells repairs and supports computers and relates products and services. Dell Computer has a fully Internet-enabled supply chains, which is constructed by the extranet to automate interactions with suppliers, service partners and customers .
Dell Inc. has realized that the most efficient path to the customer is through a direct relationship, with no intermediaries to add confusion and cost. With the power of their direct model and their team of talented people, they are able to provide to their customers high-quality, relevant technology, customized systems, superior service and support and products and services that are easy to buy and use.
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.
The Balanced Scorecard has emerged in recent years as a performance measurement system in various organizations. This paper will discuss the origin and concept of the balanced scorecard and how it was first implemented. We will then review the criticisms on the balanced scorecard methodology as well as analyse the strengths and weaknesses of this performance measurement tool.
Historically, personal computer companies produced most of the components for a computer which they assembled into their final products and distributed to resellers. The manufacturing of these components was vertically integrated into the organisation. Dell, as a small start-up, could not build this infrastructure. Instead, they developed a model where they developed relationships with organisations that could provide these components, allowing Dell to focus on selling and delivering computers. By selling directly to customers, initially through mail orders and later by using the internet, Dell avoided reseller mark-up. Dell also enabled customers to order customised computers, which Dell then assembled after receiving the order (Magretta, 1998, p.73-74). “Customers got exactly the computer they wanted and Dell saved money making the computers only when they were ordered” (Hill & Seggewiss, 2008)....
Therefore, having a clear vision and strategy for the business is the key to the success of the Balanced Scorecard (Haapasalo, Ingalsuo, & Lenkkeri, 2006). The popularity of BSC is related from the fact that it has demonstrated its effectiveness through different research designs and it also offers a clear prescription as to what should companies measure in order to get a balanced financial prospective. Furthermore, working with scorecards, managers are able to clarify and operationalize strategies as it performs an integrative function by bringing together disparate measures in a single report (Knott, 2006). Feedbacks for internal process and external outcomes are provided through this performance management approach, focusing on four perspectives which are: Financials, Customer Perspective, Internal-Business Processes, Learning and Growth (Kaplan & Norton, 1996). Balanced Scorecards also helps companies to explore and find causes and effect relationships between those four areas in order to continuously improve strategic results and performance. The terms “lead and lag indicators” are used to indicate that the