PART I: INTRODUCTION/BACKGROUND SUMMARY
My name is Natasha Mortimore and I have provided a detailed case analysis based upon “Dell, Inc. in 2006: Can Rivals Beat its Strategy?”
In 1984, Michael Dell formed a company now known as dell, Inc. with a strategy to sell build-to-order computers directly to its customers. Customers would have to phone, fax, or order their custom built computers which eliminated the expense of middlemen known as resellers. Between the years of 1986-1993, Dell had to refine its strategy in order to gain market-credibility against its rivals. Such rivals included IBM/Lenovo, Hewlett-Packard, and Gateway. By 2005, Dell, Inc. had acquired a 33.9% share of PC sales within its industry inside the United States with plants also located in Japan, China, and Brazil. It had also been named #1 in a survey in CIO Magazine for its impeccable customer service. Although Dell, Inc. has been remarkably successful in its marketing approach that aided in in rapid growth in market share, it had its share of short-comings. This was mostly due to its reactive approach to situations that were pertinent to its success and could have been minimized or eliminated with more thorough research. Dell had tapped into markets suffering losses and disadvantages due to its direct sales strategy and lack of research.
PART II: PROBLEM IDENTIFICATION
Although Dell was reputable and successful with parts of its direct sales strategy, it was affected by its reactive approach to the plan. Reactive planning is best defined as the process in which future action is a response to a situation that has already or is now occurring; similar to a reflex. (http://wiki.answers.com/Q/What_is_reactive_planning) This type of planning can hinder success because being unaware of specifics within a targeted market can cause negative responses from that audience. For instance, in the US, handshakes are short and firm which indicates self-confidence. A limp handshake from a man is often interpreted as a symbol of homosexuality, but in parts of Africa it is the way they are done and normally last for several minutes. That would be considered as possible sexual attraction in the US. This example was provided to give a better idea of how lack of research could result in intentions being misconstrued and failure in the business’s attempts. (http://www.analytictech.com/mb021/cultural.htm) In 1986, when the company was named PC Ltd., it experienced a hamper due to growing pains, i.e. a lack of money, resources, and people. (pg. C-91) It took two years to rebuild the company and to acquire a string sales force to serve its large customers, such as government agencies, which was a highly profitable market. Mid to late 1990s, Dell, Inc. found out that this particular market should have been divided into more specific categories. For instance, with governmental agencies, there were schools and students, etc. In 1998, Dell, Inc. decided to delve into China’s market, targeting large corporate accounts. Although Dell had achieved faster growth in China than in any other foreign market, it again had experienced a short-term disadvantage. Small business and individual buyers were disinclined to order such investments by phone or internet. They preferred the ability to touch and test the computers first. Although this was known within the company, Dell, Inc. decided not to modify its approach due to beliefs that overtime, the Chinese customers would “come around” and adapt to online purchases once they became more familiar with computers. Many years later, in 2005, about 6% of Dell’s sales in China were over the internet mostly due to over 100 million consumers having access to internet at home and work. This is another prime example of how Dell, Inc. was reactive to its strategy because nothing was done to modify their approach although sales suffered for years despite knowledge of the people’s reluctance. Even if Dell had done something...
Cited: "Answers.com - What Is Reactive Planning." WikiAnswers - The Q&A Wiki. Web. 03 Apr. 2011. .
Thompson, Arthur A., and John E. Gamble. "Case 5, Dell, Inc in 2006: Can Rivals Beat Its Strategy?" Crafting & Executing Strategy, The Quest for Competitive Advantage. 15th ed. New York: McGraw-Hill Irwin, 2007. C-89--115. Print.
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