Dell for Many Organizations, Their Term Paper

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[. . .] Each of the three regions has its own regional headquarters and own assembly plants and own supply network. Other regional headquarters are that of Bracknell, U.K. For EMEA, Hong Kong for Asia-Pacific and Kawasaki for Japan. (Dell Computer: Organization of a Global Production Network)

Dell's business activities are separately organized for each region based on different customer segments of the area and generally have three categories: relationship customers; home and small business which are at times known as transaction customers; and public sector like government and educational customers. The figures for employees and sales are available for 2000 and the worldwide employment at that time was 40,000 and recorded sales were $25.3 billion. Of this, in the Americas, including both North and South American continents, the employment was 27,200 and sales were $17.9 billion. In the Asia-Pacific region the employment was 3,200 and sales were $1.8 billion. For Europe, Middle East and Africa, the employment was 9,000 and sales were $5.6 billion. Apart from this, Dell had subsidiaries in 16 countries which are not taken into calculations here.

Dell does not manufacture the components or sub-assemblies, but generally does the final assembly for all products. The exception is notebook computers which are manufactured by Taiwanese manufacturers - Quanta and Compal. The organization of manufacturing is by region and there are plants in Austin and Nashville for North America; Eldorado do Sul in Brazil for Brazil and South America; Penang in Malaysia for the Asia Pacific region; Xiamen in China for China and Japan and Limerick in Ireland for Europe, Middle East and Africa. Employment in an area is directly related to sales there. The Americas earn 72% of revenues and have 68% of employees, European region has 20% of sales and 22% of employment and Asia pacific has 8% of sales and 10% of employment. The lower employment ratio to sales in Americas is probably due to the large size of the market and the similarities in the nature of the market. (Dell Computer: Organization of a Global Production Network)

The choice of the location of the plants are based on three factors - market considerations, labor and infrastructure and government incentives received for the plant. This can be seen in that Texas is central for United States. Malaysia is central in the Asia Pacific region and Ireland though not central is part of the European Union and thus provides easy access to the European countries. Brazil and china plants are needed as the tariffs and taxes there would make imported PC prices uncompetitive. Texas and Tennessee are cheaper than Silicon Valley; Malaysia is cheaper than Singapore, though there are cheaper countries around it; Ireland is cheaper than many other countries, but Eastern European countries are cheaper and it is likely that Dell plant will move there.

One of major areas where Dell is involved in the international markets is now clear and that is production. Here they avoid existing industry clusters and prefer to locate their production facilities in areas where the labor markets are not so difficult. This is the reason why it avoided industry clusters in Sao Paulo of Brazil and Shenzhen in China. The location of the plants in Penang and Limerick were decided before these areas had developed into IT industry clusters. Even their operations do not have any reliance on access to research universities or areas where high concentration of specialized engineering talent is available. The aim for this is to avoid the high costs that are also associated with such areas. The organization does not feel that it is essential for them to be situated in an area very near the suppliers' manufacturing facilities. (Dell Computer: Organization of a Global Production Network)

Unlike other PC manufacturers, Dell does delegate the final assembly of the products to suppliers. It gets from other suppliers subassemblies, like motherboards and bare-bones PCs, and gets only nearly complete assembly of notebook PCs, and does only limited final configuration in its own assembly plants. Only in the year 2001, Dell outsourced production of a standard, non-configurable PC known as the SmartStep to Taiwan's Mitac, which is the manufacturer of the product in its plants in China. In Europe, Dell's Ireland plants get their supplies from Asia and from local plants. Many of these suppliers came to Ireland at Dell insisted that they do so. After opening the first Limerick plant, Dell gave their Irish suppliers only eight months to prove they could meet Dell's demands. When local suppliers could not match up to the requirement, Dell brought in outside suppliers.

The companies which came from outside Ireland purchased some Irish companies, consolidated others and generally took over the entire business of supplies. Most the suppliers who came were already established in the PC industry. They included names like Fullerton which is a Scottish company from Glenthes and is an established supplier for Dell and IBM; Lightening Beech and that is a United States company supplying sheet metal; Trend Tec is a company that supplies metal and plastics in U.S. serving both Dell and Compaq; and APW which bought two Irish companies for the purpose and supplies chassis, plastics and metal. There are also contract manufacturers from UK or Ireland who were supplying Dell earlier and they continue. They are like Jabil which supplies PCBA from Scotland, SMS from Wales and SCI from Ireland. Only one supplier from the area, Keytech met up to the requirement of Dell and they are making cases, chassis and subassemblies. (Dell Computer: Organization of a Global Production Network)

Thus it is clear that Dell has got a fixed policy of meeting specifications and use suitable suppliers for the purpose. At the same time, it would be wrong to think that Dell is not interested in cost reductions and there is extensive usage of them for sales and technical support. Their method is to organize call centers for major customer segments and have different call centers for relationship and transactional customers. The call centers are localized so that the telecommunication and language considerations are best met, but this is not a policy and in some cases, this may not be observed. (Dell Computer: Organization of a Global Production Network) Though most of the component suppliers are Asian, their production involves local suppliers to the best of their capability.

It is clear that Dell has a unique direct business model as its products are manufactured according to customer requirements. Dell is committed to using this model so that technology could be afforded and are accessible to people and institutions throughout the world. This is expected to help them take advantage of the tremendous economic and social benefits of more pervasive technology. To ensure this Dell is trying to reach out to customers around the world, through its customer direct model so as to bring affordable technology to new and emerging markets which did not have this technology earlier; increasing its global employment to be able to tap diverse ideas and skills, increase its understanding of global customer requirements, and to bring technology jobs to that of the developing economies; and develop a global supplier network to enhance the performance and decrease the cost of its systems. This is a commitment by Dell and the commitment it informs to the world at large on the Internet. (Building technology that builds communities)

The battles between companies for markets continue and the latest is the battle brewing up between Lenovo and Dell in China. Lenovo is trying to expand outside its home market of China and for this purpose has agreed to be taken over by IBM, while Dell is trying to beat Lenovo in China. Though Dell had entered China in 1998, there was trouble for it to increase its sales as it was using the term of direct sales which is the main selling reason for the company. That was translated to 'zhi xiao' in Chinese, a term that generally describes illegal pyramid marketing schemes. This caused a lot of difficulties for Dell to sell and now the sales representatives use a different term 'zhi xian ding gou' which means direct orders. (Dell vs. Lenovo in China) Thus communication is always a problem especially when the language is not so familiar.

Conclusion:

Dell's way of functioning by means of direct delivery gives value to its customers. And this also comes from the distinct company values which is 'The Soul of Dell'. This brings about the company's responsibilities to its employees and it is this responsibility that makes the company to treat all its employees with equal amount of dignity and with equal respect and this provides opportunities and facilities for all the employees to be able to succeed; to the community which is prevalent around and Dell strives to initiate to be a good neighbor and also to be a responsible community and that of an environmental organization. Further as a result of its… [END OF PREVIEW]

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