A report about e-waste on the Greenback website states that ;more than 4. Million [tons] of e-waste ended up in landfills in the United States in 2000. Toxic chemicals in electronics products can leach into the land over time or are released into the atmosphere, impacting nearby communities and the environment” (Greenback International, 2010, Para 2). One of the biggest contributors to toxic waste is computer manufacturers and of the many that exist, Dell Computers is one of the most successful.
Most Of the computers manufactured today rely heavily on plastics and chemicals that eventually emit toxins into the world’s soil and water. According o Mizzen, Charisma and Carroll, enterprise strategy is defined as “HOW the firm attempts to add value to its stakeholders in order to legitimate its existence and ensure its future” (1990, p. 333). Computer and electronics manufacturers are of necessity reconsidering the way they produce their goods, their impact on the consumers who buy the goods as well as the impact on the environment we all live, eat, and, breathe in.
To that end, Dell is no different, but they are investigating ways to improve their social and environmental responsibility while maintaining or even increasing their competitive edge in the field of computer electronics. The challenges, constraints and global impact on the health and economics of Dell consumers, workers and users make this organization a prime candidate tort a study on sustainable solutions.
The owners, directors and decision makers at Dell will have to simultaneously think strategically from an ethical standpoint as well as still find a way to maintain profitability and competitiveness in a fiercely competitive market. Executive Summary Dell Incorporated is the official name of Dell Computer Company. Founded by Michael Dell in the early cays, the firm has become a major player in the personal computer and technology industry. Although the firm has been a low- cost leader primarily through direct sales, it is currently second to rival firm HP in sales for the year 2009.
This paper will examine the factors which can and do influence, limit or possibly propel Dell into a company Which produces not just sustainable products, but a sustainable business model and set of strategies. Summary Focus In Part l, key stakeholders are identified along with a detailed examination of the corporate culture at Dell. A value analysis, including a General Force Matrix (external) and Porters 5 Forces Industry Matrix is undertaken in conjunction with SOOT and SCOT analysis.
For the purposes of the value chain analysis, Dell is compared to rival industry firms HP and Gateway,’Acre. The implications of this very detailed value analysis point to the need for Dell’s leaders to invest in research and development to maximize and extend their market share across the industry. Part II otters an examination to the strategy type employed at Dell. The company’s leaders take great pride in being the low-cost leaders and in fostering solid customer relationships.
The company also shows evidence of being considered as having an accommodative/broad enterprise strategy, where the adders and employees believe they must be able to answer to the public about how they conduct business and impact the environment, Relevant strategy moves and ways to align company goals with such strategies are examined along with an action plan analysis which suggests that Dell and its leaders must protect relationships with its supplier network, innovate and invest in research and development projects and maximize the capabilities Of the company workforce through training, buyouts of smaller competitors and strategic product line choices. In the last portion Of the paper, various complexity analysis tools are examined in relation to Dell and the computer/technology industry. The industry was examined in terms for the Fitness Landscape, Bid Analysis, Industry Evolution Modeling, and Life Cycle Analysis. Examining Dell in the context of multiple frameworks granted insights into key factors such as material inputs, resource depletion, byproducts, waste and disposal options and stakeholder versus societal obligations and responsibilities.
An analysis of the Sustainable Value Framework, including a detailed analysis of the sustainable value of Dell and its products and services rounds out the research. Key Take-sways One critical factor repeatedly presented itself throughout this research project and that is the absolute necessity for Dell to find a way to innovate in a sustainable manner. Having Chairman Michael Dell at the helm again is beneficial to the growth and cohesive vision to the tire, but Dell is losing ground to rivals such as HP in the areas of technological advances and sales, Another key take away is that Dell leaders must invest in the training and re-educating of employees and invest in the research and development of products in collaboration with the firms key suppliers in its network.
Critical to the success of Dell is this very formidable supplier network. As such, it is vitally important that Dell not only work to further reinforce relationships with their suppliers, but also examine back LIP plans, alternative supplier strategies and incentives to maintain their dominance in the area of product delivery. Integration of Concepts A variety of readings, concepts and methodologies were consulted for this paper. An examination Of organizational learning, strategic choice theories and complexity science analyses has more fully illustrated the challenges Dell and Other industry firms’ face in this fast-paced, technologically advanced global marketplace.
The concepts presented by Peter Sense (2007) provide applicable inspiration and a sense Of urgency, especially his admonition to focus on creating a new, regenerative set of processes and products in lieu of trying to “fix” the problems of the current wasteful systems fifths industry. The work of Stacey (2007) and Max Baseman (2006) on heuristics, judgmental biases and the motivations and fears behind a resistance to embrace change greatly inform the psyche behind the choices individuals and business leaders make. These factors in turn, greatly influence the strategy decisions and implementation options for leaders at Dell and other companies.
The conclusions drawn from the applied integration these key concepts provide a valuable roadman to change and sustainable success for Dell and all of its stakeholders, Stakeholder Identification and Value Analysis -Part Identifying the stakeholders for any organization is a critical step in the development and implementation of strategy, as well as the success of the organization. According to the Been. Com (2010) dictionary, a stakeholder is a person or organization with a vested interest in the successful operation of a company or organization. A stakeholder may be an employee, customer, supplier, partner, or even the local community within which an organization operates. In regard to Dell, the company leadership has identified and valued the interests of each of these persons or groups by establishing an active board Of directors to oversee and manage all aspect Of the firm. Enterprise Level Strata ewe In their article on social responsibility, Means, Charisma, and Carroll (1990) offer a classification of enterprise strategies for businesses. Of the various allocations, Dell seems to fit best with the Accommodative/Broad Enterprise Strategy, which the authors describe as a strategy that is ‘typical of those firms perceiving themselves as answerable to the society. At. Large for the way their operations are conducted” and fitting for firms that are “broad both in terms of the stakeholders they recognize and the benefits they provide” (p. 336).
Over the last several years, Dell leaders and managers have evidenced a commitment to stakeholder, corporate and environmental responsibility, with an eye toward long-range sustainability of this commitment being infused throughout the entire firm. Culture Type In researching the culture at Dell, is evident that the company’s leadership and employees are committed to innovation, excellence, and customer satisfaction, The global code of conduct has been named “Winning with Integrity’ and employees at every level along with the board of directors integrate that expectation of integrity into every facet of the company’s operations and business transactions.
From this position of integrity, Dell’s leadership, managers and employees foster a culture of innovation, industry and environmental responsibility and efficiency, which has engendered a loyal allowing amongst the company’s numerous clients and customers. In consideration of a value analysis for Dell stakeholders, the authors of the article Focusing on Value: Reconciling Corporate Social Responsibility, Sustainability and a Stakeholder Approach in a Network World (Wheeler, Collect & Freeman, 2003) Offer a set Of framing questions designed to gauge the efficacy, profitability of process and long-term sustainability of a firm’s value proposition (p. 14). If the leaders and stakeholders at Dell were to ask “Can the created value of our firm be sustained over time economically, socially and environmentally? The likely response would be yes and no.
The current dependence on plastics and fossil fuels to manufacture them Will doubtless fall prey to the socially conscious, green leaning global culture. Like others in the industry, the decision makers at Dell will need to rely on innovation and differentiation to circumvent the loss of revenues and profits as the industry moves toward less environmentally harmful manufacturing and recycling practices, Integrated Concepts from Readings In the Harvard Business Review primer Strategy (2008), the differences between strategy and a business model are underscored. The point is made that “every viable organization is built on a sound business model, but a business model isn’t a strategy, even though many people use the terms interchangeably ; (p. Xv, Para 2).
The point is further supported by Joan Magenta’s illustration of the two- part value chain, which she says supports all businesses: Part one includes all the activities associated with selling something: designing it, purchasing raw materials, manufacturing, and so on. Part two includes all activities associated with selling something: finding and reaching customers, transacting a sale, struggling the product or delivering the service (p. Xv, Para I). The decision makers at Dell have added or infused value at every stage of both parts of such a value chain. In some ways, Dell is part Off larger network; a major player in an industry of personal computer designs, manufacturing and accessories. Because of the intricate and dependent nature of the Dell supply chain, the firm’s leaders seem to have adopted parts of a systems theory approach. According to R.
Edward Freeman and John McCrea (2001), Systems theory emphasizes the external links that are part of every organization, Thus, organizations described s ‘open systems’ are part of a much larger network rather than as independent self-standing entities. Identification of hot the stakeholders and the interconnections between them is a critical step in this approach (p. 7). Clearly, the leaders and managers of Dell would consider the firm as a self-standing business, but the interconnectedness of Dell’s supplier network is key to the firer’5 success, Evidence and Implications The proliferation of computer usage and electronic device technologies has made it clear that Dell and other suppliers and firms in this industry will need to mind new and strategic ways to capitalize on the connections between all the stakeholders within the industry.
Innovations that meet a clear need or improve upon products already in use and demand will General Force Analysis: External – Remote Environment An analysis of the external, general forces that affect Dell computers is important to understand and prepare appropriate strategies for every operational function of the business. Such an analysis attempts to take into consideration those factors, Which the leaders Of a firm do not directly have control over. Note, however, that intuitive, informed and proactive leaders seek o influence this external environment whenever possible, to the benefit Of their business and their industry. General Force Matrix Analysis Pearce and Robinson (2003) list five categories Of forces in the external environment: economics, demographics/social/culture, government}legal/ military, physical environment, and technology. Others use the term business environment to describe this external set of forces.
According to Robin Wood (as cited by Vapid Sextillion, 2010) the business environment is “a set of political, economic, social and technological (PEST) forces that are largely outside the intro and influence of a business, and that can potentially have both a positive and a negative impact on the business. ” For most business leaders and stakeholders these forces play a major Mel in the success of the firm. Economics. The current global economic climate is precarious to say the least. It would follow then that most businesses are definitely in the corsairs of the current economic downturn, even if to varying degrees. According to the Economic Policy Institute (2010), “Since the start of the recession in December 2007, an estimated 8. 1 million jobs have been lose.
This reflects jobs lost in the Unites States alone. Further complicating matters and directly affecting a technology and electronics manufacturing company such as Dell is the outsourcing of jobs to countries such as India and China. In a report on American jobs lost to China alone, Dave Johnson (2010) points out that “since 2001 we have lost more tech jobs than manufacturing jobs! We lost 628,000 tech jobs -26 percent Of all jobs displaced by trade- between 2001 and 2008′. He goes on to detail how factors in China have a negative impact on the global economic picture in general, as well as the American economic picture in particular. These factors include labor rights. Runners manipulation, poor environmental policies and regulations, as well as policies which bar American companies from entering and gaining ground in Chinese markets. The dilemma of outsourcing is that many firms use it as a cost-reduction strategy, but in light of the current economy and jobs picture in the united States, this is becoming less and less favorable. In fact, in the case of America’s political-economic relationship with China, outsourcing may even prove to he detrimental to the economic environment tooth United States in general and the computer/tech industries in which Dell operates. Although there are signs that an economic recovery is underway, the reality is that it people do not have jobs or income, they cannot afford to be consumers of new products, such as the computers sold by Dell.
Many individual consumers as well as businesses which rely on computers for everyday operations are opting to delay new equipment purchases until their businesses have evidence of such a recovery and their leaders feel more secure in making such an investment. With continuing problems in multiple economic and jobs sectors, including housing, retail, instruction, manufacturing, transportation, warehousing and information (according to the Bureau of Labor Statistics, March 2010), the economy looks to be an external force which directly and indirectly affects Dell and the decisions of the firm’s leaders and stakeholders. Technology. In this tech- driven, technology dependent culture, no viable firm can exist Without being influenced and affected by technology.
Current trends and forecasts which are Of great interest to companies such as Dell Offer great opportunity and great risk depending upon how they are implemented or ignored and at what moil Technology-based trends currently include cloud computing and the social web,’social media. Cloud computing is a subject of some confusion or uncertainty in terms of defining it. According to Informed. Com (2010), Some analysts and vendors define cloud computing narrowly as an updated version of utility computing: basically virtual servers available over the Internet. Others go very broad, arguing anything you consume outside the firewall is “in the cloud,” including conventional outsourcing (What cloud computing really means, Para 2), In an effort to create a more universal definition, Peter Meal and Tim
Grange (2009) tooth National Institute of Standards and Technology composed the following, work-in-progress definition, with the caveat that the definition will continue to evolve over time: Cloud computing sis pay-per-use model for enabling available, convenient, on-demand network access to a shared pool of configurable computing resources (e. G. , networks, servers, storage, applications, services) that can be rapidly provisioned and released with minimal management effort or service provider interaction (Definition of cloud computing, Para 1). Though cloud computing has been around for a few years, it is still relatively new impaired to other platforms. Innovation and consumer-driven needs make it a quickly evolving component Of the technology field and one Which is Of great interest to leaders of firms in this industry such as Dell. Social media and the social web is another technology-based trend With serious implications for firms within and outside fifths industry.
With the proliferation Of social media websites such as Faceable, Twitter, and Linked, many modern business leaders and managers are being faced with the choice of embracing or running from using these platforms to extend the reach oftener businesses. IT repressions and staunch social media advocate Hank Marquis offers a very useful explanation of the various terms related to social media, as he admonishes business leaders and IT professionals not to miss the boat on the relevance and import of this new technology: The social web is not just Twitter or Faceable or Linked. The social web is not a waste of time, and the social web is needed.
The term social web describes a real-time intimation ecosystem designed to produce real value fast, Social media is the information-?opinions, insights, experiences, and perspectives-?people create tort the purpose of haring with others, Social networking is the use of tools to create a community of people used to validate, filter and consume social media. The community validates and filters social media for a purpose, and that purpose is the creation of value (Marquis, 2003). Demographics / Social / Culture. The external force of the greater society, culture and demographics is a major consideration for business leaders in the computer and technology industries. According to a report on computer usage in the United States through the sass’s Bureau of Labor Statistics, 1999) “Between 1990 and 1997, the percentage of households wing computers increased from 15 percent to 35 percent.
During this time, the amount spent by the average household on computers and associated hardware more than tripled” (Para I). A more recent survey of computer ownership by Economist. Com (2008) found that in 2006, the United States ranked 6th in the world, With 76 percent Of the population owning at least one computer. Consumers around the world buy computers and other electronics and have integrated them almost seamlessly into their daily lives. Personal computer usage takes place at work, at home and anywhere in between through the use f various mobile devices and technologies. Overall, computer and technology usage has become an integral part of the social fabric and culture of Americans and citizens of all ages around the globe. Government / Legal / Military.
Doing business in the United States affords many businesses a whole host of opportunities as well as considerable costs, especially for firms that do business in multiple countries as well as firms whose products present security concerns for the governmental leaders in the places where the goods are sold and/or utilized, Security also comes into play in the delivery and transport of products long the supply and product delivery chain, as municipalities and governments must be vigilant not just for pirated products, but also for threats terrorism, drug trafficking and other national security concerns. Copyrights, patents and usage rights present various legal issues for computer industry manufacturers, while the military in the United States and abroad can prove to be a valuable and repeat customer for suppliers and producers in this industry. Physical Environment. Poor many businesses in the technology/electronics industry, the physical environment is as vast and varied as the global landscape. With the advent Of mobile technologies and handheld devices, computer and electronic device usage is not limited to any specific environment or geographic.
Manufacturers like Toshiba and Leno specialize in more rugged laptops and PC’s for use in a range of harsh environments such as the desert or a construction site, while the creation of mini. Laptop computers and the very popular phone offer unlimited environmental options for computer usage. Implications of General Forces Collectively, the implications of the general forces affecting the external environment are challenging but yet promising. The global economic crisis will antique to be a dominant factor bearing on all other general force components, but there are slow-dawning signs of economic improvement. Like all computer industry manufacturers, the leaders of Dell face a number of threats and opportunities tort sustainability and success in the future. Threats.
Among the threats facing this industry are security and privacy issues with newer technologies such as cloud computing and social media usage. The relative speed of innovation poses somewhat of a threat, as the possibility of a sea- change inducing product coming to market could undermine establish industry outworks, supply chains and customer Eases. Ultimately, if measured and properly assessed, the threats to this industry could be mitigated and perhaps even turned into further opportunities for firms like Dell and all of its stakeholders. Opportunities. Some of the greatest opportunities for Dell’s future growth are found in the area of technology.
At Dell, the firm’s leaders have been on the forefront Of advancements in the field and they list the company as a trusted cloud provider and partner to other well established industry firms such Microsoft and Citric. According to the company website, “Dell Offers cloud revise that simplify the management of your IT environment so you can get up and running quickly, With low deployment costs, fewer hassles and less time spent on non-strategic tasks” (Dell, AAA). Porters Five Forces Industry Analysis: External – Industry Environment Michael Porter’s Five Forces model of analyzing competition within an industry is a very useful tool for business leaders and stakeholders alike to assess possible avenues for growth and new ventures.
Porter offers the following five factors as forces affecting and influencing industry competition: harriers to entry, nominative rivalry, availability of substitutes, bargaining power to suppliers and bargaining power of buyers, According to porter (as cited in Strategy, 2005), accurate and current knowledge of these forces is required in order to “stake out a position that is less vulnerable to attack from head-to-head opponents, whether established or new, and less vulnerable to erosion from the direction of buyers, suppliers and substitute goods” (p. 14). Give Forces Matrix Analysis Just how easy is it to start up, maintain and make a computer industry business successful? How can an upstart company compete against the established outworks and relationships of industry leading firms? Each individual business owner, leader and/or manager must Carve Out his or her own roadman for sustainable success. Porters Five Forces provides a utilitarian legend or key for that roadman. Barriers to Entry.
The computer manufacturing and electronics industries present a few considerable barriers to entry, not the least of which is cost. According to an analysis Of Porter’s Five Forces: Barriers to entry are unique industry characteristics that define the industry. Barriers reduce the rate of entry of new firms, thus maintaining a level of profits for those already in the industry. From a strategic perspective, barriers can be created or exploited to enhance a firm’s competitive advantage (Quickens. Com, 2010). Major costs include manufacturing equipment and operating facilities, regulatory fees, and taxes. These can be categorized as capital and regulatory fee barriers.
Other considerations include name recognition or brand identity and cost advantages held by other, longer established or recognizable and trusted firms. For example, the owners of a new computer manufacturing firm may he at a considerable disadvantage tort distribution or even marketing and advertising as compared to ajar industry firms such as Dell or Gateway, For their part, leaders ofВ»veil established brands and firms could opt to try to block newcomers from getting established by manipulating their prices or marketing strategies, Lowering prices, offering discounts or even monopolizing ad space in print and especially on the web creates the effect of drowning out smaller or newer competitors who do not have the resources or finances to keep pace.
In terms of overall threats to entry into this industry, the ranking would be best categorized as low to medium. If smaller firms were to consolidate resources to create a more remediable organization, it might make it easier to break into this high cost field. Substitutes. From the early sass’s, through sass and early sass’s, the Coca Cola Company (2009) had a series Of slogans which touted the company’s signature beverage as “The Real Thing’. Although the company has experienced a healthy competition With Other companies such as main rival Pepsi, it has been the threat of substitutes from other beverage types that has been most significant. Sports and energy drinks, fruit juices, and especially bottled water have exploded upon the marketplace.
Beverage industry firm leaders have, of necessity, had to expand their product offerings while trying to maintain the viability of their major carbonated beverage brands, In a lesson on Porters Five Forces, one source explains and gives examples of the areas in which substitutes can be a threat to a business: Where there is product for product substitution, such as email for fax Where there is substitution of need, such as less need for dentists with use of better toothpastes Where there is generic substitution, such as video suppliers competing with travel companies for your dollars (Tenderheartedness. Com, 010) In the computer and electronics industries, technology has produced such synergistic products and platforms that many consumers have ceased using (and paying for) land-based, home phone service, opting instead for using their cell phones or even Poop services to make local and long distance calls for less or even through some free promotions. Bargaining power of Suppliers. Dictionary. Com (2010) defines leverage as “power or ability to act or to influence people, events, decisions, etc. ; sway”.
As such, leverage within an industry can be very powerful and very lucrative for the business leaders Who wield it. Objectifications. Com (2010) suggests that the bargaining power of suppliers is the resulting advantage when certain scenarios are in place, including: When there is a concentration Of suppliers When too few goods are sought by too many buyers When the goods Of a supplier are unique or highly differentiated With few or no substitutes When suppliers are forward integrated, and/or When high costs are involved in switching from one supplier to another Many different types of suppliers exist in the computer manufacturing industry.
From plastic moulds, memory chips and disk drives to LCD screen components and miniature light bulbs the opportunities for suppliers to bargain or leverage their power are numerous. The suppliers that offer specialized products or multiple products used in the manufacturing process have more bargaining power and that is only compounded when a supplier takes the further step of forward integration or control or ownership of the distribution channels for the products they produce tort buyers. The impact to supplier bargaining power is very high and can be multiplied or managed depending upon where and how often within the supply chain the suppliers can exercise that leverage. Bargaining power of Buyers.
On the opposite spectrum from supplier bargaining power is the bargaining power of buyers. These buyers do not just represent the end user consumer who purchases a PC laptop computer, or other computer accessory, but represent the buyers all along the entire supply chain from concept and research and development to manufacturing, customization, packaging, transportation, sales, and delivery and in some cases, after the sale customer service. Their overall buying power as a group is considered to be high, and likely just higher than that of the suppliers, who have a good bit of sway ever prices and supply logistics, but need buyers to Stay in business.
Powerful buyers purchase a majority or large portion of a suppliers (or group of suppliers) products. They are also usually a minority group With major financial leverage, including the ability to buy or take over a supplier or another competing buyers firm. Conversely, buyers with weak positions or little bargaining power are likely part of a large pool or flooded segment of buyers who do not have the individual financial capital to switch to alternate producers and are even vulnerable to lever suppliers and other stronger buyers acquiring their firms in a bid to increase their buying power, supplier power or both. Competitive Rivalry. Most business leaders would agree that healthy competition can spur growth, innovation and profits.
When competition becomes contentious and rivalry erupts, then analysis of market share, diversity of industry players and other factors must be utilized to measure the intensity of the rivalry. According to Quickens. Com (2010), Wit is clear that market stability and changes in supply and demand affect rivalry, Cyclical demand tends to create cutthroat competition. If a major competitor such as HP or even an innovative competitor such as Apple were to significantly lower prices on its MAC laptops and PC’s the rivalry in the industry would heat up dramatically. Currently Apple is not as much Of a concern as HP or Gateway/Acre because it operates on a different platform and Apple’s leadership appears more concerned with driving innovation than in competing directly against Dell for PC and laptop sales.
That said, the current of popularity surrounding Apple products like the Pod and Pad are evidence that Apple is generating a rivalry on a different Stage. Overall, the competitive rivalry within this industry is very high. Were Apple to find a way to translate the popularity of its I-product line into a progressive and sought-after desktop PC or laptop line, it would likely heat the rivalry that much more and quite possibly push Dell and other PC market share leaders to more aggressively pursue innovation. Implications of Five Forces An examination of the Five Force as relates to the computer manufacturing industry highlights areas of concern and opportunity.
The threat of substitutes and buyer bargaining power, especially from emerging players such as China moms as a possible problem industry leaders must work to stay ahead of, On the other hand, China and other economically developing nations present as fertile ground for new consumers, supplier and buyer markets, as well as profit generators. Threats. This industry must rely on innovation to survive into the future, As such, it is incumbent upon industry leaders to mitigate threats to entry wherever possible, when such threats block out innovation, new ideas and access to niche, smaller or specialized While the threat of substitutes is real, more savvy consumers will hold manufacturers accountable for producing