MD- MBA 12-0150 Is Too Much Control Hurting Dell?
Important Facts (IF)
(1) Dell’s customer satisfaction ratings have fallen and complaints are up. This is followed by a profit margin of 3.8% and a 9% drop in expected sales growth. (2) Some believe that there is too much controlling for Dell. (3) Giving importance on price, the company lacks innovation. Main Problem (MP)
What kind of control system would maintain Dell’s advantages on cost and quality but also cater to customer service and innovation? Objectives
To analyze the advantages and disadvantages of the current Dell control systems; to identify operation controls mentioned in the case and suggest; and to suggest how Dell can make its control system more effective Answers to Questions, Analysis, Alternatives
Because of Dell’s “value- priced” business model, it has been using a tight control system focused on reducing cost. This has been working in their advantage by driving them to efficiency. Because of this, Dell has been monarch in swift production of PCs with less downtime (in 2005, 40% faster with 30% less down times). They are also able to deliver the goods faster to their customers. Moreover, in their conquest for minimized costs, they turn to an excellent quality control that eases training, speeds assembly, and reduces errors by 30%. Defects are also detected in 4 minutes rather than 60 due to faster feedback to the operator. However, despite these advantages, their tight control system allows little room for excellent customer service. While products reach customers fast, these same customers have to wait for hours on the phone before they can communicate to Dell’s support staff. Furthermore, in their preference for price, Dell spends very little on research and development such that innovation is becoming but a minor concern. They have been manufacturing inexpensive, commodity-like products that do not cater to buyers’ new...