Dell computer questions and answers

Chapter 12 Implementing Strategy in Companies That Compete in a Single Industry 8. What are the sources of your company’s distinctive competencies? Which functions are most important to it? How does your company design its structure, control, and culture to enhance its (a) efficiency, (b) quality, (c) innovativeness, and (d) responsiveness to customers? 9. How does it design its structure and control systems to strengthen its business model? For example, what steps does it take to further cross-functional integration? Does it have a functional, product, or matrix structure? 419 10. How does your company’s culture support its business model? Can you determine any ways in which its top management team influences its culture? 11. Based on this analysis, would you say your company is coordinating and motivating its people and subunits effectively? Why or why not? What changes (if any) would you make to the way your company’s structure operates? What use could it make of restructuring or reengineering? Strategy Implementation at Dell Computer Dell Computer was one of the fastest-growing companies of the 1990s, and its stock price increased at the rate of 100% per year, delighting its stockholders. Achieving this high return has been a constant challenge for Michael Dell. One of his biggest battles has been to manage and change Dell’s organizational structure, control systems, and culture as his company grows. Michael Dell was 19 in 1984, when he took $1,000 and spent it on the computer parts he assembled into PCs that he sold over the phone. Increasing demand for his PCs meant that within a few weeks, he needed to hire people to help him. Soon he found himself supervising three employees who worked together around a six-foot table to assemble computers while two more employees took orders over the phone.54 By 1993, Dell employed 4,500 workers and was hiring more than 100 new workers each week just to keep pace with the demand for the computers. When he found himself working 18-hour days managing the company, he realized that he could not lead the company single-handedly. The company’s growth had to be managed, and he knew that he had to recruit and hire strategic managers who had experience in managing different functional areas, such as marketing, finance, and manufacturing. He recruited executives from IBM and Compaq. With their help, he created a functional structure, one in which employees were grouped by their common skills or tasks they performed, such as sales or manufacturing, to organize the value chain activities necessary to deliver his PCs to customers. As a part of this organizing process, Dell’s structure also became taller, with more levels in the management hierarchy, to ensure that he and his managers had sufficient control over the different activities of his growing business. Michael Dell delegated authority to control Dell’s functional value chain activities to his managers, which gave him the time he needed to perform his entrepreneurial task of finding new opportunities for the company. Dell’s functional structure worked well and, under its new management team, the company’s growth continued to soar. Moreover, Dell’s new structure had given functional managers the control they needed to squeeze out costs, and Dell had become the lowestcost PC maker. Analysts also reported that Dell had developed a lean organizational culture, meaning that employees had developed norms and values that emphasized the importance of working hard to help each other find innovative new ways of making products to keep costs low and increase their reliability. Indeed, Dell rose to the top of the customer satisfaction rankings for PC makers because few customers 420 Part 4 Implementing Strategy complained about its products.