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Free Dell Plans to Sell Factories in Effort to Cut Costs Essay Sample

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Background

Dell, Inc. was formed in 1894, as a technology company that provides a wide range of technology products, including desktops PCs, network servers, storage systems, software, printers and peripherals. The company also offers services to clients and enterprises, such as infrastructure technology and support, consultancy and applications, business process services and training. It functions in four global business areas namely large enterprise, public, medium and small business and consumer (Scheck, 2008).

Challenges

Dell has been facing a number of problems in the recent past. The company’s challenges result from the various innovations it has developed in the past. By marketing directly, offering customized computers at friendly prices and fast delivery, the company has managed to stay a step ahead from its competitors for a long time. As the cost of computing fell, the company was able to lower prices and maintain an advantage over its competitors. Unfortunately, the company’s rivals managed to attack and narrow price gaps.  Competitors have managed to match Dell’s prices, improve their marketing strategies and raised the standards of their services. Some rival companies have even reduced their workforce and taken after Dell on low end machines. Retailers have also reduced prices, relying on services for profits. Fluctuating global prices have also challenged the company greatly in the recent past (Scheck, 2008).

The model of selling directly via the phones and the internet has also worked against the company in the recent past. This is because this model results to decisions that seem to be designed to put the needs of a customer last. For instance, the company’s customer care service centers are staffed with less than 500 workers. This makes their centers to be frequently overwhelmed. Dell has also encountered frequent recall of its product, but the company doesn’t hesitate to recall immediately after recognizing the problem. In addition, many call center care providers are trained to handle one type of problem. Thus, it is common to place a call with a certain problem and have it transferred at least once in search of a technician with the right expertise. This has resulted to a steep decline of the companies ranking due to customer dissatisfaction (Scheck, 2008).

The company has received complaints for desktops and notebooks that are average overall and substandard in some areas, such as phone support hold time. By sending out its service for technicians to fix these problems, the company has been spending more, thus reducing its revenues. Dell has also been too focused on perfecting its existing models instead of adapting it to a changing environment.

It is also possible to have a faulty replacement of a bad appliance despite the company’s claims that its warrantee allows it to replace defective products. This leads to increased costs considering the time spent on diagnosis and software installation. Customers are also not contents with Dell’s warrantee policy. When you buy a computer from Dell, you only get Dell’s warrantee which could be as short as one year. Their warrantee invalidates the manufacturers warrantee and substitutes it with Dell’s warrantee. This further tarnishes the company’s reputation (Scheck, 2008).

Strengths

The very simple premise of building and selling computers directly to customers remains the company’s basic foundation. This is considered the company’s greatest asset and by doing this, the company is able to address the specific needs of its customers and develop the best computing solutions to meet those needs. By selling its products directly through phone and the internet, the company is able to reduce the costs of marketing and logistic problems. This springs up from eliminating distributors, retailers, shipping and storage. It also reduces the costs of retaining and tracking inventories. This direct model enables the company to interact with customers directly, thus providing them with fast delivery and friendly priced products (Scheck, 2008).

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