How Internal and External Factors Impact the Planning Function of Management within Dell

Introduction

This paper will discuss how internal and external factors impact the planning function of management within Dell Computer Corporation. These factors are rapid change, globalization, technology, e-business, innovation, diversity and ethics. All these factors have an affect on how the management at Dell plans for the future and reaches it’s ever changing goals. Rapid Change

Dell was doing very well in sales. Demand for computers was at an all time high. In order for Dell to keep up with the demand, they needed to build a bigger and better plant. Assembly line workers were given more responsibility and more components. This enabled them to build more machines individually. Instead of adding a bolt here and a chip there, workers in very small teams would build the complete machine following precise order guidelines and by using components stored in the carefully indicated racks in front of them.

In order to meet the demand for different machine options, Dell had to make a massive change in its continuous flow operation. They implemented a Pick-To Light system, which is an up-to-the-minute database that runs on an SCO Unix operating system platform and is tied to a stockroom system. By tying it to work-in-progress stockrooms, the order-level material checking system keeps track of which materials need replenishing and makes sure the racks are filled with the proper components. This would eliminate downtime due to lack of parts.

After undergoing this change and implementing this systems in the Metric 12 plant in Austin, Dell started carrying this approach to all of its manufacturing centers. Due to these changes, Dell has achieved what it set out to do. It has increased its manufacturing speed and throughput by 150 percent and raised the uptime of its manufacturing lines by more than 95 percent. Reducing the repetitiveness of assembly line jobs reduced employee turnover. Line workers now have more skills and less repetition in their daily work; within their small workgroups, they can build and complete machines individually. This gives the line workers a much greater sense of personal accomplishment, which keeps them happier with their jobs and results in decreased worker turnover.

Dell has continued to grow rapidly, almost 60 percent in fiscal 1998 to more than $12 billion, but no longer at the expense of liquidity or profitability. The new performance measurements have helped the company hone its direct-sales, build-to-order strategy, generating some $3.5 billion in cash since 1995, and became Wall Street's top performer for 1, 3, 5, and 10 years.

Dell is “the number one direct seller of computers in the United States.” (Rocks2000) This is largely because CEO Michael Dell realized early that the web was the way of the future for moving inventory and reaching the public. At first customers purchasing Dell computers online would have their purchase filled by “A 200-person procurement staff {that} would figure out the chips, screen and other parts they need . . .” (Rocks 2000) Ninety percent of purchases can now be done entirely online due to the restructuring of Dells procurement and manufacturing practices. Instead of manufacturing and procurement taking 30 hours it now takes a mere 15. This is due to the “just-in-time” (Rocks 2000) business practice that Dell has established between its factories and suppliers’. Because Dells suppliers’ have opened shop next door in order to keep up with demand, they have the capability of keeping on had only enough supplies for the next two hours of manufacturing. This allows both Dell and its many suppliers to reduce the inventory needed at any given time by 70 percent.

Dells methods for globalization have been derived from the same drive that pushed technological advances within the company. Premier Pages was established in 1997 and since has created “over 50,000 web pages for [customers from] startups to American Airlines.” (Rocks 2000) Dells largest asset to its rapid globalization is its direct model method, which is basically “marketing custom- built computers directly to the customer.” (Mi-hui 2003) Dell has found the most streamlined way to sell its product. By doing this it enables them to sell their computers and services in a more efficient manner for both the company and the customer. Their largest security by utilizing this business practice is the virtually deletion of inventory. “For example, at the peak of 1989’s rising economy, the company uncharacteristically accumulated an inventory of memory chips just as the technology changed and the market declined.” (Teresco) They make it so affordable for the customer, that unless you have the same business system as Dell, it would be difficult to compete with them and still offer the same services. “Summit Strategies has concluded that Dell Computer… and SAP are the clear leaders in providing language-compliant international Websites.” (SiteTrends 2002) Technology Dell has been on the forefront of e-business and it’s emerging technology. They have sold billions of computers over the years through its on-line direct supply business practice. Others subsequently realized the potential of e-business and also sought capital via the Internet.

In 2000 in Austin, Texas, Dell hosted a two-day e-business symposium that connected researchers directly with CEO’s and other senior leaders to address things going on in the business world. This was followed by Dell’s participation at the 56th Annual Convention of Asset-Based Financial Services Industry in New Orleans, in October 2000. The topic of e-business dominated the discussions and it was concluded that e-business provided an enormous potential for businesses. During the discussions, there were many senior business leaders that recognized these various potential and advantages. Chief among them were reduced costs, and an increased improvement towards bottom-line service. Shortly thereafter, Dell began to introduce hardware and software that would be dedicated to taking advantage of emerging technology and providing viable e-business venues for customers. In a World Sources article titled, “Focus on tools for e-commerce”, it was discussed that along with IBM, Microsoft, and Sun, Dell rolled out the Dell E Com package, which comprised an Internet facility, e-business solutions, and e-business consultancy services. Dell was an absolute runaway in the results achieved during a review in VARBusinesses Annual Report Card, which is an independent firm that was chartered to measure satisfaction among solution and technology providers. In it, they remarked that “Dell received the highest scores of the new clients (desktops and notebooks) category. Dell received high grades for ease of doing business. It’s loyalty rating was even higher than NEC’s.”

Dell continues to increase the e-business services they offer through the availability of e-business applications, server and storage solutions, database, messaging, systems management, and as a provider for overall business solutions to give companies the capability of competing in the global marketplace. Ethics According to the English Oxford Dictionary (2003), ethics is “the science of morals; the department of study concerned with the principles of human duty.” Business ethics is the science of morals within businesses. It is the study of how directors, officers and employees perform their jobs using fair and just principles within their work environment. These ethics apply to all businesses large and small, private or public, national or international.

The nature of business is to be competitive. Within the competitive arena the business can wield its sword to conquer the competition and emerge victorious. However, there are unwritten rules to which these competitors must adhere. The rules are fair and equitable to both parties and are considered standard business practice. I should use this term in the past tense, as over recent years what was once considered standard business ethics have given way to a new and ruthless ways of conducting business. For many companies, gone are the days when what was good for the employees and for the surrounding community has given way to the bottom dollar line. Gone also are the days of respect for ones word and the reputation of ones company. In its place are deceit, lies and fraud.

Now this is not to say that all companies follow this new doctrine. Michael Dell of Dell Computers in Austin views ethics the old fashion way. A company is only as good as its employees, its reputation and its word. In an interview by Newsweek’s Richard Ernsberger (2002), Michael Dell was asked what he thought of the 2002 corporate scandals. His answer was, “Surprise, disappointment and a bit of depression. It’s very surprising to see the magnitude and depth of financial creativity, if I can call it that. I probably feel like most people feel – disgusted.” Dell has summed up what most people feel about corporate America today.

Once reputable companies like Martha Stewart, Enron and World Com, have taken a huge hit to their reputations and their pocketbooks. People are now insistent that these companies and the people responsible must take the fall for their sins. No longer can these individuals hide behind their corporate veils and get away with their assault on the American public. Although, companies like Martha Stewarts may survive, others such as Anderson Accounting will fold after decades of faithful service.

Quality companies like Dell are instituting new programs to elevate their work force ethics. They are “ . . .seeking to build a corporate ‘culture of ethical responsibility,’ that “ . . .has been encouraging employees to call an ethics hotline or contact a company ombudsman if they suspect any integrity lapses.” (“Dell elevates work force eithics,” 2002) They have introduced two new concepts to their employees. One is called “winning culture”, which was instituted to improve diversity and business processes. A second concept, “soul of Dell” works to have employees achieve a feeling of personal responsibility for their actions including working to improve all aspects of the company’s performance. It now only takes one single ethical infraction for immediate dismissal from the company. Diversity

“Companies with exemplary reputations are typically led by chief executives who champion diversity’s cause.” (Ernsberger, 2002). Dell Computers is one of these companies. Dell, lead by their founder Michael Dell, continues to push his company into new and growing markets. The once thriving personal pc giant is now delving into the software, broadband, and point-of-sale markets among others. In his quest for product diversity comes global diversity.

Per their website (www.dell.com), Dell has a “global diversity” which includes diversity in management, recruiting and education. Their Diversity Mission states the following, “Our diversity mission is to understand, value, manage and enhance our collective diversity in order to create and sustain a winning culture that ensures our business success and the opportunity for personal success by our employees.” (www.dell.com) This overall diversity in all aspects of the business from education to suppliers and recruiting to globalization is what makes Del such a premier company.

Conclusion

As we have seen through out this paper internal and external factors play a major role in how management achieve its goals. Whether it is diversifying the company the company to increase profits or emerging into new technology, a company is influenced by many factors. How these factors are allowed to influence the business show the intelligence and strength of management.

References

David Rocks (September 18, 2000). Dell's Second Web Revolution. Business Week, New York; Iss. 3699; pg. 62
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Ernsberger, Richard jr. (2002. Thriving, Not Just Surviving, 140(7),64. Retrieved January 13, 2002 from EBSCO database.
Kim Mi-hui (Jan 11, 2003). World's top exporters' secrets to success; Unique attitude to… Korea H Retrieved January 14, 2003, from http://www.industryweek.com/iwinprint/bestplants/bp_profiles.asp?Input=119
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Oxford English Dictionary (Second Edition). (1989) England: Oxford University Press
SiteTrends Q2 2002: Going Global, published by Summit Strategies' Vendor E-Business
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