History

• Michael Dell founded the company as PC’s Limited in 1984 • The company changed its name to Dell Computers in 1988• Dell believed in the idea of selling personal computers directly

to customers• In 1895 Dell introduced the Turbo PC• By 1993, Dell employed over 4,500 workers and was hiring

over 100 new workers each week just to keep pace with the demand for the computers

• In 1999 Dell took over Compaq to become the largest seller of personal computers in the United States with over 25 million in revenues

Implementing Strategy Through Organizational Design

o Organizational Structure• Functional - grouped by common expertise and experience. • Advantages include use of same equipment within groups, more specialized

and productive at what they do, close monitoring, and greater control for management over organizational activities.

o Control System• Personal - How the behavior of a person is shaped through face-to-face

interactions in the pursuit of a company’s goals. • For Dell, the fact that they are grouped together with similar tasks ensures

that learning will occur and competencies will be developed.• Output - system in which strategic managers forecast performance and goals.• Very flexible in that divisional managers are given considerable autonomy so

long as they meet their goals.o Organizational Culture

o Norms, beliefs, and attitudes that are shared between people and groups in an organization, controlling the way they interact with each other and stakeholders. Dell’s includes increasing reliability and keeping costs low.

Implementing Cost Leadership and Differentiation

o Cost Leadership - to become the lowest-cost producer in the industry, which involves reducing costs across all functions in the organization.• Dell became a cost leader by their ability to manage the supply chain,

thus they were able to sell at a lower price. Their low cost structure drove rivals out of the market.

o Differentiation: Designing structures around the source of distinctive competencies, the differentiated qualities of the product, and the customer groups they serve.• To compete with HP and Apple, Dell invested resources to improve

the look and design. To make up for the incurred costs, they would charge a higher price for their PCs.

• Recently Dell has chosen to use AMD chips reducing their cost incurred to the powerful supplier Intel previously used by Dell.

Responsiveness to Customers / Restructuring and Reengineering

o Market structure: focuses on the ability to meet the needs of distinct and important sets of customer or different customer groups.

o Dell has had to fight to stay on the value creation frontier and has done so by increasing the level of its customer service.• In 1995 Dell moved to change his company and created separate

divisions, each geared to the needs of a different group of customers: a consumer division, a business division, government division, etc.

• In 2006 Dell pumped back over 250 million into improved customer service and brought the corporate customer service department back from India to the United States to protect its dominating position in the PC market segment.