Companies face a lot of challenges in their attempt to keep the pace of competition in an ever-changing environment. Some of them manage to succeed while others struggle to make changes that are required to adapt to the prevalent rivalry. This paper will aim to discuss two technology- related companies: Dell and Google in order to assess the factors that make their businesses either succeed or fail at certain points. Dell is one of the companies whose business principles have failed. On the other hand, Google has continued to thrive as a result of maintaining and improving its business principles.
Dell was founded by Michael Dell in 1984. He held a simple idea that personal computers could be manufactured and sold directly to the consumers cutting out the middlemen. He believed that the approach had several advantages:
Dell Company struggled with this kind of supply chain management during its formative years after its inception. A lot of marketing strategic activities were required in order to overcome the forces of its competitors. It used both ‘sell-direct’ and ‘build-to-order’ approach in their marketing strategy (Dell, 2014). Most of the customers saw the method appealing especially in the mid 1990’s. This was the time when the global sale of personal computers had risen drastically.
This marketing strategy gave the company a significant profit margin as compared to other companies that manufactured huge volumes of products and kept their retailers and distributors with large inventories. In 1998, the company was enjoying a market share of 12% in the United States and 6% across the world just behind the IBM and the Compaq computers (Dell, 2014). There was also a significant rise in the level of gaining market share around the whole world.
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The major products that the company sold included workstations, servers, notebook computers and desktop PCs. They also marketed other products that were produced by other companies such as modems, memory cards, speakers, printers, storage devices, monitors, CD-ROM drives and networking cables among others. Products and services were sold in more than 140 countries in the world. Out of the total revenues that they got, desktop computers sales accounted for around 65%. Other products such as servers, notebook computers, workstations and others accounted for approximately 33% (Daily Mail, 2014).
Dell Company used to be one of the most well functioning companies in the early 2000’s. Its marketing model of reaching out to the customers, initiated by the founder himself, was recognized as one of its strongest points in the market. However, Dell did not invest enough in the research and development activities to encourage innovation that would support growth initiatives. The company deteriorated in the marketing of products and nearly lost the grip several years after early 2000. The management team has played a significant role in averting the total collapse of the company. Although the sales fell to insignificant percentages, the management has tried to keep the system moving by adopting renewed business plans and embracing changes in the environment (Singhal, 2013).
The company was still recognized as one of the greatest suppliers of the technology products even though its sales had declined significantly. The greatest challenge within the system is that it lacked the strategy of differentiated services and products. In the recent past, the company has made serious strides towards re-structuring their sales strategy and adopted viable sales channels. However, these sales strategies have been applied to selected geographic world regions. Most of the information technology buyers held the perception that Dell is one of the cheapest suppliers of technology products, an idea that the Company ought to use to strengthen the loyal customer base.
The disintermediation technique used by Dell assisted in several ways. For example, they could manufacture products only when they are needed. In addition, the bullwhip effect was avoided. Furthermore, the method was very effective in lowering the prices of the products, selling more and boosting the profit margins at the same time.
The greatest challenge that the company faced is that other companies offering the IT products came up with mobile devices that were capable of performing most of the functions that the personal computers could do. Dell Company did not respond to such kind of innovations (Singhal, 2013).
Companies such as Apple realized that technology was highly demanded with time and they introduced customizable software used in mobile phones (Singhal, 2013). This was after the sales of the PCs declined. This was a concept that the Dell Company had not capitalized on. Dell continued to customize on desktops, a commodity that had become a low profit one which hardly worked. One of the greatest opportunities that the company can seek is to find a merger or acquisition with another company such as Carl Icahn or Denali. This would be one of the methods that would catapult the functions and consequently the sales volume of the organization. Such measure are likely to give the company better profitability than previously.
According to Moore’s law, elimination of the inventory has great implications for an organization’s sale of products. For instance, the product might rapidly depreciate; something that had happened to the Dell Company. The depreciation was so rapid that in a period of 13 years, the decline was estimated to cost the company revenue worth $ 1.65 billion (Dell, 2014). It can therefore be estimated that over a half of the profits come from efficient supply chains.
The company used the technique of collecting money from the customers before paying the raw materials suppliers. The products were sold at a faster rate than the suppliers were paid. This means that the suppliers are the ones who finance the operations of the company, something that is very risky for any company. From another perspective, other companies in the United States used to outsource for finished goods and then they marketed them. Dell used the concept of manufacturing PCs as a competitive advantage. However, this did not work to their advantage maximally. They analyzed the customer buying patterns so that they could assist the suppliers in understanding the market demands. The method was estimated to be 75% accurate in improving the sales (Dell, 2014). Currently, the supply chain used by Dell cannot be called viable because computer technology has made it easier. In addition, the management team did not engage in innovative techniques sufficiently that would assist in dealing with other manufacturers who were trying hard to copy their products.
Dell has adapted to the modern marketing approach and is moving away from concentrating on outsourcing production. The company has also found out that abandoning the direct model of selling their products might cost them a lot. They are now selling their products to distributors and retailers in China and Wal-Mart (Dell, 2014). Another strategy is that they try to be highly responsive to the needs and demands of their customers. They use technology to gather information from the customers; and the use of web 2.0 can illustrate it. Customers are also given a chance to assist in the improvement of products through a forum referred to as idea storm. This gives the customers a chance to become co-creators with the company, something that has helped the company to rise up again. The company has also tried to differentiate its products. For example, they design laptops which use contemporary graphics. Venturing in the smartphone industry has also boosted their image.
One of the most notable plans of the company is included in their ‘2020 Legacy of Good Plans’. There is a strategic roadmap that can assist the company in achieving the company’s objectives and its sustainability. In addition, the plans set out by the company aim to take up both social and environmental responsibility. They anticipate creating favorable customer outcomes (Dell, 2014). This grand plan outlines all the goals, reviewed objectives, long-term strategy, solutions, people and the processes that will assist the company. From this plan, they can measure the extent to which the adapted technology effectively assists the customers and the general world. As part of its cooperate social responsibilities, the company will have embarked on measures designed to provide employment to three million youths in underserved communities by the year 2020 (Dell, 2014).
The company changed its status from being public to private entity. This will help the company to develop while trying to adhere to the regulations attached to the publicly owned companies. The management team has the freewill to vet and do away with the non-performing staff. Another important factor that has been considered within the new structure is a need to create research and development resources (Daily Mail, 2014). The company uses a reward system towards the employees offering them flexible working hours. Although there are minimal financial rewards, the flexibility of working hours provided by the company motivates them sufficiently.
Even when large companies such as HP and IBM sold their produce through retailers and distributors, Dell had already adopted a different marketing concept. Their products were sold directly to their consumers, thus cutting out on the middlemen. The Dell Company did so well that other companies tried to keep up with its unimaginable sales pace. As mobile devices made by companies such as Apple offered services similar to those offered by PCs, Dell’s sales declined affecting its progress. To deal with the challenge, Dell decided to produce mini-laptops and other modernized products such as smartphone and has made several great strides to retrieve its lost hope after changing its strategy. It is expected the company will have achieved a lot by 2020.
The Google Company, also referred to as Google Inc., has been rated as one of the top 5 companies in the whole world. It is an online search engine founded by Larry Page and Sergey Brin to revolutionize the way information is handled online. Google’s business venture is related to activities such as advertising, social networking, e-mailing and video sharing among others (Tsai, Lin, & Su, 2011). Due to its superior organizational behavior and sensitivity towards employees and the environment, there are reciprocal returns concerning its profitability. The major revenue that Google gets comes from advertising applications such as Adwords. Using this application, many advertisers are able to advertize their products and services.
Google leads the world market in the category of search engines and advertising business with over 53% of the global market share (He, 2013). Several techniques assist the company in gaining the upper hand over its competitors:
The policies of the Human Resource department are clearly designed to support the highly productive employees. There is a lot of research that is normally carried out within the organization to ensure that the system can withstand upcoming technological challenges. The research and development division, which acts in its own capacity helps to keep Google ahead of its rivals. Specialization and division of labor, which are highly evident within the organizations system, have many advantages. One of the greatest advantages is that different departments can engage in the development of the system in specialized areas which makes them highly effective. By engaging in areas where each employee fits in, they can fully exploit their potential in the designated tasks. The speed and accuracy of the search engine has played a great role in attracting more consumers.
Google has tried to engage in diversification of its products on top of increasing its market share worldwide. Such companies as YouTube, Upstartle and Pyra labs are some of the acquisitions of Google and they are important sources of business strength for the company (Tsai et.al, 2011). Diversification of the products offered has also been evident as the company tried to venture into mobile technology and other online business activities. The company gets revenue from its products, and also takes care of the consumers. The search engine gives users an optimized experience.
Although the company has been engaged in some unethical business practices such as the fraud against Yahoo, it has been able to address the issues well and the management has been able to take full responsibility and address such matters amicably.
In the formative years, employees complained that the company used to pay them low wages. With poor remuneration, however, any company is likely to face challenges because employees, who form the backbone in productive activities, will not be highly motivated. Motivating employees in terms of their salaries affects the productivity and retention capacity. A Glassdoor survey showed that the company’s employees were satisfied with the new salaries they got. When the employees were asked to rate their satisfaction level on a scale from 1 to 5 and the average rating was calculated, the score was 4.4 (Roof, 2014).
Google uses a unique marketing style that attracts most of the consumers. Millions of sales are done through the use of Adwords. The experience in the use of the system attracts potential users. The system of advertisement and performance keeps on changing to be in line with the immediate economic and political demands.
The Google Company has been known for its astonishing management practices. The employees within the system are highly regarded so ideas flow from bottom-up. The employees are allowed to test many ideas and forward them to be tested if they can be implemented. This creates room for invention and innovation. One of the secrets behind successful implementation of developed ideas is teamwork. Individuals are allowed to come together and discuss invented ideas as they test their workability. This gives the employees room for bringing new ideas in. In addition to this freedom of researching and testing, many channels are created for the employees to give and discuss their ideas. Some of them include the cafes, direct e-mailing the management teams, Google moderator, weekly meetings, Google Universal Ticketing System, wide range of surveys and internal innovation reviews among others (He, 2013).
The employees are normally treated with a lot of dignity. The most performing managers are recognized as role models and as best teachers in the following years. Those that perform averagely are coached and supported in preparation for the next working period. This works to increase the workers’ morale since none of them is victimized when something goes wrong. Furthermore, the mode of dressing is not emphasized within the system. The system holds that employees can still deliver without wearing suits.
Total Quality Management system is used, according to which the employees can sometimes be allowed to work from any place they feel comfortable (Tsai et.al, 2011). They are allowed to interact freely with their seniors, asking questions and discussing issues that matter a lot to the business development. Human beings in working environment like to be treated as rational beings. The kind of an atmosphere where all the employee’s efforts are recognized will encourage them to come up with new ideas in an attempt to contribute to the growth of the business.
Google operates in chaos. The intention of any given business is to bring a product that will minimize human efforts and bring positive changes in their lives. The mission of the organization has been outlined as organizing world’s information and making it accessible to everyone. Mission statement is an important facet of business because it guides activities undertaken towards the realization of the set goal. It brings harmony to all the employees and creates an atmosphere of togetherness as all the employees work towards the realization of the objective. Mission statements are strong elements that invite teamwork when ideas are extremely challenging.
One of the most important concepts that Google management team uses in its successful missions is the culture of listening to the employees and the consumers’ views regarding the development of their products. The Google Company believes that ideas are likely to come from anywhere and can be used for the betterment of the current state of affairs.
The company’s business plans are usually developed after analyzing the information derived from the employees, the researchers and the financial statements from preceding fiscal periods. The plans of the organization are either short term or long term. The flexibility offered within the system allows the organization to collect a lot of ideas from diverse sources and then filter them to the required level. Although the implementation of business ideas is seen as the process of taking risks, nothing is left to chances in the organization. There is scrutiny of ideas starting from the employee working teams to the top management. Because of the target the company has kept to provide value for their products and services; though its plans and methods of executing developed concepts keep on changing (Teece, 2010). This allows for both diversity and flexibility of accommodating incoming ideas.
The company management team ensures that all the employees have important information and resources all the time so that they can focus their efforts on creativity employing invention and innovation (Tsai et.al, 2011). Google has been on the forefront to focus on the human capital and retention of its employees. For instance, there was a period when the employees complained of being paid low wages. Afterwards, Google reviewed the payment policies and the employees seemed to be comfortable with the salaries offered (Roof, 2014).
Google has a very strong brand targeting information technology. Its position in the market allows it to be highly innovative while offering products and services. This increases the sales which add value to the company. Because it concentrates on online business transactions, it stands a better chance to gain more consumers. The brand has also played a significant role in creating a loyal customer base (PR Newswire, 2010). This is one of the reasons that makes it an effective competitor in the venture. The employees are given ample opportunities that they can utilize to contribute to the attainment of the desired objectives. In addition, there is availability of space to allow for more chances that let them contribute to expansion and growth of the company.
Google has been able to flourish in its activities amidst great competition from its rivals. Some of the factors that can be attributed to its success are incorporating plans and investing enough resources in ideas and their implementation. The employees are allowed to work in a dynamic environment and their ideas are highly appreciated. The system has been set to adapt to changing trends, a concept that makes the company one of the best in technology market. Different departments set up to work on diverse issues in the system contributes to its success. The division of labor makes the system run efficiently. Its ability to respond to ethical and corporate social responsibility makes it possible to thrive.
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