Hrm at Dell

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Table of content
1. Introduction………………………………………………………………………………….3 2. The business model………………………………………………………………………….3 3. The original business model and human resource management…………………………….4 4. The strategic transformation at Dell…………………………………………………………5 5. The effect of the strategy transformation on Dell’s HRM…………………………………..8 6. Major challenges in the future……………………………………………………………..10 7. Recommendations………………………………………………………………………….11 8. Conclusion…………………………………………………………………………………13 9. Appendix…………………………………………………………………………………...13 10. References………………………………………………………………………………...14

1. Introduction
In today’s business environment it becomes much more difficult to gain a competitive advantage over competitors, and even more important defend this advantage in the long-run. Especially in highly technological industries the permanent changing products and innovations exacerbate staying successful and competitive over time. Exactly in one of these industries, more precisely the personal computer industry, the well known computer company Dell stays in. Dell accomplished to stay competitive in this intense industry by implementing their unique business model of direct selling and offering a build-to-order service. However, to permute this complex business mode and maintain it as a competitive advantage is in very difficult. The main goal of the report is thereby to illustrate how the implementation of Dell’s business model is interlinked with the human resource department of the company and in which ways the model affects this department. This report will therefore first off all explain Dell’s original business model in general and furthermore link its success to the human resource department of the firm. Afterwards it will be pointed out which problems the company faces with its original model and why it might be tactically wise to change it partially. Finally it will be defined how the company’s human resource management is interlinked and affected with these changes and which challenges the department might face in the future. The report will as a conclusion make some suggestions how the company will be able to address those challenges.

2. The business model
One of the most important reasons why Dell was able to stay competitive in such a strong industry as the computer industry was their successful and differentiated business model. According to Noe, Hollenbeck, Gerhart and Wright (2008, p.66) a business model can be defined as: “a story of how well the firm will create value for customers and, more important, how it will do so profitable.” The two most important elements of Dell’s business model, which allow them not only to create maximum value for their customer, but also for the company itself, are direct selling and the built-to-order component. The company started already in 1985 with their first products to sell those directly to the customer and where therefore able to effectively maintain this strategy until today. When comparing the traditional distribution channel ( Appendix Figure 1 ) with Dell’s adjusted distribution channel ( Appendix Figure 2 ) it becomes clear that the company cuts out distributors and retailers and is therefore capable of reaching the final customer much faster and certainly more direct as their competitors. Through their unique distribution channel the company has not only a closer relationship to its customers, they are additionally able to define real demand for their products. At this stage the second component of the business model, the built-to-order component, comes in. Dell manufactures all its computers themselves having high quality suppliers delivering the necessary parts and raw materials to their plants. The manufacturing process itself is thereby a hybrid structure of lean and kaizen production, meaning that the company tries to keep the manufacturing process as easy and simple as possible while still encouraging continuous improvement of people, machines, materials and...
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