Essay: Global Business Current Business Events and Their

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Global Business

Current Business Events and Their Implications on Australian Business

Two recent events and their analysis have implications on Australian government and businesses operating here and internationally. The first is the continual struggles to get an IBM payroll and financial management system to operate correctly as part of Queensland Health's payroll system. In the article Contract Signed Before Payroll System Proven to Work (Paull, 2013) the author illustrates how difficult it is for an enterprise-wide healthcare it system to be implemented with accuracy and precision. The second article Dell Sparks Bidding War as New Offers Emerge (Sydney Morning Herald, 2013) illustrates how difficult privatization of publically-held multinational corporations can be.

Implications for Australian Government, Business and Global Business

The recent article titled Contract Signed Before Payroll System Proven to Work (Paull, 2013) provides insights into how difficult this problem continues to be, and how much time and financial resources are being wasted in attempting to find a resolution. There are a wealth of lessons learned from Australian government and businesses, with reverberating effects throughout international business. At the center of the Queensland Health's payroll system challenges is the lack of effective strategic it planning and an effective change management strategy that can also be audited for performance. Both of these elements of strategic it planning that encompass the broader objectives of the organization coupled with an effective change management strategy are essential for any it systems' success (Fickenscher, Bakerman, 2011). Clearly the need for effective change management is essential for any it project to succeed, and when there is process and system integration prevalent in the design, change management becomes essential (Ball, 2000). The second article, Dell Sparks Bidding War as New Offers Emerge (Sydney Morning Herald, 2013) discusses the strategies CEO and Founder Michael Dell is relying on to sell his company to private investors. The situation has major implications for the Australian government, as the Dell case will set a precedence in international business with regard to the sale of a multinational corporation. This case will also show the power of (by, 2013). The privatization aspects of Dell are already re-ordering aspects of Australian business strategy with manufacturers considering how they can rely on comparable strategies to gain greater freedom of financing and operations, removed from the pressures of pleasing shareholders and reporting all significant financial events (by, 2013).

Both the article Contract Signed Before Payroll System Proven to Work and Dell Sparks Bidding War as New Offers Emerge illustrate how the expectations of government stakeholders need to be taken into account for any enterprise-wide strategy to be successful. The first article shows what happens when the needs of stakeholders is ignored and often confused within the context of a system structure. The lack of change management planning integrated to business process management (BPM) and business process re-engineering (BPR) is critically important for any global it strategy to succeed (Fickenscher, Bakerman, 2011). IBM's failure at Queensland Health underscores how critical it is to take into account the needs and requirements of government stakeholders. The lack of insight into these requirements led to the creation of a system that is practically unusable with any degree of reliability today (Paull, 2013). The failure of this system also shows what happens when a change management strategy has not been put into place as a unifying, or galvanizing element across the entire enterprise (Fickenscher, Bakerman, 2011). Queensland Health becomes iconic in this story from the standpoint of what happens when an it strategy goes completely wrong and does not take into account the needs of the government and business stakeholders. Implications for global business include less trust in it, and locally, it causes chaotic financial transactions with the healthcare facility. All of this disrupts transactions, trading and trust, three core components of a growing economy.

The second article illustrates the contrarian aspects of keeping government stakeholders involved as Dell strives to keep the communication lines open with the United States Securities and Exchange (SEC) and other government entities who have a great deal of influence and control over the transaction (by, 2013). In the article Dell Sparks Bidding War as New Offers Emerge (Sydney Morning Herald, 2013) it is apparent that CEO and Founder Michael Dell is striving to excel at stakeholder management while also looking to get the best possible price for his company. By doing this he is ensuring the transaction will be approved and he will gain the freedom necessary to grow the business into a more services-oriented business model. His company's exceptional expertise in supply chain (Kapuscinski, Zhang, Carbonneau, et.al., 2004) and the continual investment in collaborative systems (Walters, Rainbird, 2007) is world-recognized. The lessons learned for global businesses in general and Australian businesses specifically is that stakeholder management delivers exceptional Return on Investment (ROI) when done well. Dell is also showing that all of these factors can be orchestrated to ensure consistency across government and business sectors through the use of effective stakeholder management.

Analysis of Articles Using Business Concepts and Theories

Both articles provide a glimpse into how organizations can either choose to stay cognizant of their industries, defining how they set and achieve customer expectations, or how they can let them languish and be ignored. The latter decision leads to chaos, confusion and market failure. Dell has chosen to stay cognizant of and influence the forces impacting their business model and its transformation from a public to private company (Sydney Morning Herald, 2013). They have also worked to brief suppliers, created barriers to market entrants by not making any sweeping changes to their many existing product or services strategies, and briefed their largest enterprise customers on the transition. Dell has even devised a strategy for dealing with the rise of substitute products or services, creating a series of low-end PCs that run the Microsoft Windows 8 operating system (by, 2013). What Dell is doing is following the framework of Porter's Five Forces That Shape Industry Competition model (Porter, 2008) shown in Figure 1.

Figure 1: Porter's Five Forces Model

Source: (Porter, 2008)

An analysis of the Dell supply chain (Gunasekaran, Ngai, 2005), build-to-order product strategies (Gunasekaran, Ngai, 2009), and approach to inventory management (Kapuscinski, Zhang, Carbonneau, et.al., 2004) have been used in conjunction with information gather from Dell's filings with the U.S. Securities and Exchange Commission to create a specific Five Forces Model for the PC industry, shown in Figure 2. This analysis indicates that the PC industry is growing through rapid consolidation and the effects of low-cost production are not only driving down prices and profitability, the entire nature of competition in the industry is also changing quickly. Entirely new form factors are emerging and driving down the barriers to entry for competitors in adjacent markets as well. All of these factors taken together are leading to much greater levels of competitive rivalry in the market. Figure 2 shows the Five Forces Model applied to the PC industry on the following page.

Figure 2:

Applying the Five Forces to the PC Industry Shows Why Dell is Going Private

Sources:

(Gunasekaran, Ngai, 2005)

(Gunasekaran, Ngai, 2005)

(Holweg, Pil, 2001)

(Holweg, Pil, 2001)

(Porter, 2008)

(Walters, Rainbird, 2007) & Dell Investor Relations

What is immediately apparent from the analysis is that R&D costs are shifting from the traditional form factor of PCs to tablets and smart phones, and manufacturing is quickly moving to China for these devices. This analysis also shows that Dell is already facing an entirely new series of market entrants including those from the traditional smartphone industry including Ericsson, Nokia, Google and their Android operating system on tablets and smartphones and Microsoft itself. This is seen in the new market entrants area of the five forces model. Another aspect of this analysis which isn't good news for Dell is the increasing bargaining power of suppliers. This continues to force consolidation into the market. What is most uncontrollable for Dell yet most important for their success is the bargaining power of buyers. And this shift or transition of behavior is happening so rapidly today that Dell must go private to finance the re-architecting of their business model to keep growing as a business (Sydney Morning Herald, 2013). As the five forces analysis indicates, this is going to be difficult to accomplish given the massive amount of change occurring in their industry today. For Dell, they will need to create a more effective series of services based on their build-to-order manufacturing expertise (Gunasekaran, Ngai, 2009) and depth of insight in managing supply chain models to more effectively fulfill customized product and service requests (Holweg, Pil, 2001). These are the essence of the future of Dell, and the Five Forces Model analysis indicates how challenging it would be to just stay in a product-centric business model over time; clearly the analysis shows they must become a services business.

For IBM, there is a comparable series of challenges in orchestrating their services strategies to manage the implementation of a complex healthcare financial system at Queensland Health.… [END OF PREVIEW]

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