Identify a changing plan at Dell Inc Essay Example

2: Dell market construction

Problems

From the mid-2000s, Dell has experienced a decline in growth and online presence. It had consistent growth until 2005 but saw a significant decrease starting from 2006. As shown in Figure 3, the company's profit in 2009 was USD 1433 million, which marked a decline of 42% compared to the previous year. Dell is currently ranked as the third-largest PC supplier in terms of units, trailing behind HP and Acer. These figures highlight issues that require management attention.

Figure 3: Dell net income from 2002 to 2009 (USD million)

The "Direct Model" played a crucial role in Dell's previous success (Darlin, 2007).

Dell was widely recognized by concerned students and imitated by various companies in different industries. They received orders directly from customers, built computers based on their requirements, and delivered them door-to-door. This allowed Dell to offer competitive prices by saving on distribution fees and inventory expenses. However, recent changes in the global market have led Dell to realize the need for adjusting its business model. Laptops are now more popular than desktops and gradually replacing them as the dominant choice. While customers prefer to see and touch a laptop before buying it, Dell can no longer rely on producing after receiving orders because laptops take longer to manufacture. As a result, Dell has had to make laptops in advance, causing them to lose their advantage in production cost (Darlin, 2007).

The company is encountering multiple significant issues, including a decline in leadership. When Rollins took on the position of CEO in 2004, employees became disenchanted with

the company's leadership, leading to negative outcomes. In order to revitalize the company, Michael Dell reappeared as CEO in 2007. However, there are further concerns regarding the company, such as accusations of neglecting quality control and customer service. These problems have greatly harmed the company's reputation recently.

The implementation of a call center in India has had negative consequences and led to significant client dissatisfaction. Furthermore, there have been numerous grievances about product defects, which have been extensively documented on blogs and websites (MacIver, 2008).

Strategic Change Programs

The programs for changing strategy will begin in 2010 and finish by the end of 2012. All company employees, guided by the CEO and senior managers, will participate in these programs. The impact of these changes is expected to differ across various locations and departments. The program details are as follows:

1. Expanding operations through all available channels: Despite the company's success with the Direct model, it is crucial to enhance collaboration with distributors and retailers.

The Partner Direct programme was introduced in 2008, resulting in a significant increase in the number of registered solution suppliers (Campbell, 2008). Despite this growth, the company has not maximized the potential of these indirect channels. In the same year, sales through indirect channels made up only 26% of the company's global sales, with most customers choosing to purchase PCs from retail and distributor channels (Rivkin, 2010). Additionally, many resellers still have concerns about partnering with the creator of the Direct Model.

To fully exploit the business model, it is crucial for Dell.com to be upgraded in order to accommodate the expected rise in online consumers in the next five or ten years. Additionally, Dell should expand its

operations outside of the United States and Europe, especially in high-growth regions like Asia. This will allow Dell to gain a larger market share. To address declining net margins, Dell needs to implement a rigorous cost-cutting program.

By strengthening and developing its indirect channels through strategies such as gaining reseller trust, hosting commitment showcasing conferences, offering attractive deals, and building long-term relationships with value-added resellers, Dell can achieve these goals effectively.The upgrade of Dell.com system is crucial for effectively utilizing this business model. Expanding operations in Asia and other high-growth potential markets, along with United States and Europe would help gain market share.To combat declining net margins,Dell should implement an intense cost-cutting program (source: www.dell.com).

In order to achieve operational efficiency, Dell needs to reduce operation costs by $4 billion by 2011 (Shah, 2009). The actions for this program include:

• Layoffs: The company will reduce workforce not only at headquarters but also at branches worldwide.
• Redesigning the company's structure: Public and large enterprise business units will be merged to simplify the structure, as operations in these areas are stable and nearly saturated (www.dell.com, 2011).
• Plants shutdown: Decrease factory capacity by closing plants, primarily in the USA and Europe, and relocate to Asian and South American countries to save costs.
• Using green packaging: The company will extensively use bamboo packaging, along with inflatable air bags, molded pulp, polythene shock absorbers made from recycled materials. It is expected that this initiative will save the company $8 million and 150,000 trees over the next four years (Dell Corporate Responsibility Summary Report, 2010).
• Outsourcing hardware manufacturing: Dell will increase its use of contract manufacturers and lease some plants to partners.

The text discusses the importance of

naming squads to not only respond to customer questions, comments, and complaints on its website but also to monitor and provide information on MySpace, Facebook, and various Dell-watching blogs and websites.

The Process of Change

Once all the strategies are established, it is essential to comprehend the nature of change and create an appropriate change process for Dell. The initial crucial aspect of this process is to identify how the company operates (Cameron & Green, 2009). Drawing upon Morgan's (1986) theory of organizational metaphors, Dell can be viewed as an entity in which different subsystems are interconnected and closely associated with the environment. There is a strong emphasis on adapting to the external world and meeting the needs of internal groups and individuals. From this perspective, various external factors such as the shift in the PC market from desktops to laptops and notebooks, intense competition, increasing customer demands, and other influences have necessitated a new revolution within the company.

The company must consider internal factors that stem from human and managerial behavior. It is crucial to communicate the need for change to all employees and provide psychological support to ensure success. However, it is expected that employees will resist this change because the process may seem intimidating and unfamiliar compared to the current system (Plunkett, Attner, & Allen, 2008). Management needs to empathize with employees' emotions in order to effectively help them adjust to the new strategies.

The passage curve, developed by Kubler-Ross (1969), is a useful tool to map how people respond in this situation. Initially, individuals may feel shocked and uncomfortable with the changes, and some may perceive it as a threat to their position. Once they

begin to engage in the changing world in stage 2, they will feel angry and confused. This can disrupt the company's operation and possibly lead to chaos.

The role of direction is crucial in each phase as it assists individuals in transitioning to the next phase expeditiously. In phase 3, individuals commence accepting and adapting to changes, which they subsequently incorporate in phase 4. Hence, both management and employees must possess full awareness of potential reactions to minimize adverse effects and adapt more effectively to change. Conversely, the change process necessitates a collective effort and support from all stakeholders. Consequently, the entire organization should be taken into consideration with comprehensive planning and preparation done beforehand. The subsequent step involves identifying the change agent accountable for leading the complete process.

The importance of the alteration agent's features cannot be understated as they will directly impact the change program (Henschel & Hildreth, 2007). According to Senge et al. (1999), the change process requires leadership guidance and emphasizes the need to create communities of independent leaders within the organization. Leadership is therefore essential in guiding people through the process and ensuring successful implementation of the change. Lack of leadership has been a major problem leading to ineffective operation in the company for many years, thus it is crucial to design a leadership development program and view leadership as a tool in designing an administration to influence employees' behavior (Spector, 2010). Wooten and James (2008) emphasize the necessity of leadership development to equip leaders with the right mindset and perceptions to implement management agenda and engage them in continuous crisis preparation process.

Therefore, leaders must have proper training and connect operational strategies

with the core values of the organization. They should also design effective interventions for the development of human resources and provide clear and accurate messages to stakeholders. In the company, leadership can be developed based on the Transformational leadership style theory by Bass, A., and Avolio (1990). This theory suggests that leaders can serve as role models and increase followers' esteem and respect for them. Leaders have the ability to understand the level to which followers' expectations can be raised and know how to motivate people, which is an indication of inspirational motivation.

Under the rational stimulation of leaders, invention and creativeness are encouraged to generate new ideas. Leaders also need to listen and understand the demands and potential developments of others, and interact accordingly through training, mentoring, and providing feedback. Additionally, the current trend in leadership development is focused on emotional intelligence (Clarke, 2010). Emotional intelligence enables leaders to understand and manage their own emotions, as well as understand others' emotions and maintain good relationships (Goleman, 1995). Michael Dell, with his power, influence, characteristics, and excellent foresight in business, is identified as the change agent for this program. The Eight-Step model of Kotter (1995) may be applicable in Dell's change process as it is suitable for large organizations undergoing transformational top-down changes.

This theoretical model has proven to be useful and successful for many companies (e.g. the Leading Bold Change workshop of MasterCard Worldwide). The entire process can be completed within 24 months.

Step One: Generate a Sense of Urgency

During this stage, the entire company needs to realize the urgency for change in order to create initial motivation and understanding about the current situation. Employees should be

aware of all the problems and that the company is on the brink of crisis. This can be accomplished not only by acknowledging current issues (e.g. consecutive declines in revenue growth figures), but also through honest and convincing discussions.

Meetings are conducted in all departments worldwide to share information and gather ideas. The company also seeks input and feedback from customers and external stakeholders through IdeaStorm, an online brainstorming session started in 2007 for communication with clients. The main goal of this step is to engage as many people as possible, at least 75% of the company's management as recommended by Kotter, and create a sense of urgency for change. This requires dedicating appropriate time and effort to ensure the success of the entire process. Step Two: Form a Strong Alliance As the change occurs on a large scale, it is important to form groups of capable individuals to manage it. As suggested, the company will focus on three major business areas (i.e.

The text emphasizes the importance of collaboration among different entities, including public and big endeavors, small and average houses, and consumers. In order to facilitate this collaboration, three alteration direction squads are formed, led by the alteration agent, Michael Dell. These squads consist of individuals with diverse backgrounds in terms of job location, position, ability, and political power. They cover various departments such as sales, service, manufacturing, marketing, finance, IT, and operation. Senior directors hold meetings to identify parties with suitable features and influence in areas requiring change. The next step involves creating a clear and desirable vision that can be followed by people. This vision should be concise, understandable to stakeholders, and applicable.

The alteration agent needs to invest time in gathering information and ideas from stakeholders in order to develop this vision.

Measure Four: Communication of the Vision
This measure focuses on effectively communicating the vision to stakeholders in order to impact as many people as possible and make the vision a reality. Communication should not be limited to formal meetings, but should also occur in day-to-day work activities and be posted on the company's internal website through open, heartfelt messages that aim to gain understanding and buy-in. It is important for managers and team leaders to serve as role models, inspiring their subordinates and addressing any concerns they may have. Encouraging a feedback-oriented culture will help team leaders better interact with members and generate useful ideas for change (Khan, 2009).

The desired outcome of this action is a noticeable change in employees' behavior and their efforts to achieve new advantages. Measure Five: Enable individuals to embrace the vision. According to Kotter, empowering action should be seen as eliminating obstacles to change and promoting optimism in the transition. Any hindrances that hinder progress towards the vision must be regularly identified and eliminated. The main impediments to this program may arise from employee layoffs and the consolidation of the two business units. Therefore, the Human Resource department needs appropriate plans to address these issues.

Self-assurance requires increasing and rewarding those who contribute to the change effort. It is also important to revise the organizational structure, job roles, and management style to ensure unity in the entire system. Step Six: Establish Short-term Wins In addition to long-term goals, setting short-term targets can bring many benefits. Critics are silenced, energy is boosted, and employees,

with a sense of early victory and accomplishment, will be highly motivated and more dedicated to the change process. Therefore, it is necessary to have achievable goals and tasks that can be completed in early stages, and reward successful individuals who meet these targets. Step Seven: Consolidate Improvements After achieving each short-term win, the change leaders need to examine best practices as well as any failures to ensure continuous efforts are made towards reaching the final vision.

Peoples should always be informed about the importance, ultimate goals, and concept of continuous improvement. Ideas can be revitalized by introducing new resources, involving change agents, and integrating new employees into the existing team. The desired outcome of this stage is for employees to remain motivated and committed to the process of change. Measure Eight: adopt new approaches. Ultimately, change should become an integral part of the company's core and embedded in daily work.

In order to improve existing procedures, the management should reassess the process and establish guidelines for best practices. In this case, it would be beneficial to use the Mckinsey's 7S Framework to conduct a post-change analysis. This model serves as a checklist for implementing change and highlights how changes in one aspect of the organization can affect others. Additionally, during this stage, key members of the team should be publicly recognized for their contributions and all stakeholders should be informed of the successful implementation of the changes.

When hiring and training new staff, it is important to communicate the values of the change in a practical manner. This can be done by showing visuals and delivering speeches about personal experiences with the change, rather than providing traditional

manuals. Furthermore, an organizational structure that encourages innovative approaches to work should be created, and opportunities to replace outdated changes with new ones should be encouraged to improve overall business efficiency.

• Clarke, N. ( 2010 ) , Emotional Intelligence and Its Relationship to Transformational Leadership and Key Project Manager Competences, Project Management Journal, Vol. 41, No. 2, 5-20
• Darlin, D. ( 2007 ) , Dell 's Founder Is Rethinking Direct Sales, The New York Times, 28 April.
• Dell Expands Dell Services, Consolidates Public and Large Enterprise Business Units. ( 2011 ) hypertext transfer protocol: //content.dell.com/uk/en/corp/d/secure/2011-01-13-invrel-pressrelease.aspx
• Goleman, D. ( 1995 ) . Emotional intelligence. New York: Bantam
• Khan, V. ( 2009 ) , A Look at Kotter 's 8-Step Change Model, Bright Hub [ Online ] , Available at: hypertext transfer protocol: //www.brighthub.com/office/projectmanagement/articles/53142.aspx
• MacIver, K.

(2008), Dell's radical rebuild, Information Age [Online], 09 October, Available at: hypertext transfer protocol: //www.information-age.com/channels/data-centre-and-it-infrastructure/company-analysis/650686/dells-radical-rebuild.thtml

• Plunkett, W. R., Attner, R. F., Allen, G. S.

, (2008). Management: Meeting and Exceeding Customer Expectations (9th ed.). Mason, OH: Thomson South-Western

, Keliner, A., Roberts, C., Ross, R., Roth, G., and Smith, B.

(1999), The dance of alteration, Nicholas Brealey, London.

of Change