Dell case Paper
down the time it takes from ordering that the customer gets the computer to themselves , they have revolutionized the way how the PC market sales are made . The major competitors such as HP and 18M, are trying to predetermine based on market studies what customers want , and then produces computers for stock, while Dell lets customers decide what components they want in their computer. Customers ordering via the telephone or , increasingly , via the Internet.
In doing so, avoid Dell intermediaries becomes more cost carriers. Where competitors more trying to focus n creating services around the product , thereby creating value for the customer , trust Dell more on the customer already has the implementation knowledge required to do a proper , active purchasing choice . In order to have a control system that meets the requirements for speed and flexibility , Dell has focused on reducing the number of intermediaries ( ” touches” ) in the production of computers.
The main way to do this is by outsourcing all production of components , and instead the focus solely on the reassembly of the roduct . This meant that Dell went more toward being a service company than a generation . To decisions taken in the control system will also maintain the requirements of speed is possible for managers far down the systems to make decisions without involving managers from the top ( depending on how important the decision is ) . This allows the organization becomes very flexible to change, and that Dell avoids slow bureaucracy.
By making use of most of the economic data that is continuously easured , and are always available for sales representatives and managers , the organization can measure its effectiveness in real time. This is Dell ‘s so-called scorecard , which includes for example Return On Invested Capital , average selling price , etc. The fact that you use the same type of control data throughout the organization makes the entire organization can implement strategies that proved to be positive in some small part .
That decision-making is decentralized , and that economic control data is always vailable , allows a Dell different parts of the organization becomes investment centers. Both of the goals is the goal you are trying to reach by creating investment centers , namely that the information required to make the right decisions is available and that each business units performance is measured. Key data is visible especially the difference between Dell and its competitors in return on equity , cost of goods sold and inventory turnover .
All these differences are based on Dell management of production and storage, or rather the lack of storage, omputers. Dell’s input based on direct demand when the customer places his order , wnlle competltors are trying to estimate tne customer’s needs . Inls means that Dell basically has no storage of the products , allowing the stock turnover is much higher than the competition. Dell does not tie up capital in inventory management also makes it get a higher return on capital employed. However , Dell has higher production costs than competitors , then they choose to outsource it and thus get an additional cost .