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    Dell Inc Business Analysis

    IntroductionComputer industry is one of the profitable industries today and, as predicted, in future. Dell Inc.

    operates on the computer market for many years gaining trustworthy reputation and customersloyalty. An industry with this kind of rapid change presents several challenges for personalcomputer and notebooks, namely production costs, intellectual property owners, and monopolies.Customers and technology are the primary driving factors of this industry.

    Company revenue for the past year totaled $43.5 billion. Dell, through its direct business model,designs, manufactures and customizes products and services to customer requirements, andoffers an extensive selection of software and peripherals (Case Study: Dell, 2005).For every company its organizational; structure plays a crucial role in development and marketperformance. In general, structure is the pattern of relationships among positions in theorganisation and among members of the organisation. The purpose of structure is the division

    of work among members of the organisation, and the co-ordination of their activities so they aredirected towards achieving the goals and objectives of the organisation. The structure definestasks and responsibilities, work roles and relationships, and channels of communication.Structure makes possible the application of the process of management and creates a frameworkof order and command through which the activities of the organisation can be planned,organised, directed and controlled.

    Levels of Dell Corporation

    Technical LevelDell Corporation is a layered organization which consists of technical, management andcommunity levels (Boone, Kurtz, 1992). The technical level is very important for DellCorporation because of the nature of tasks it performs. Technology is the primary driving factorin this arena. It is concerned with specific operations and discrete tasks, with the actual job ortasks to be done, and with performance of the technical function. Within Dell Corporationtechnical level includes the physical production of goods. Accept computer technologies,accessories for these types of products are the next major market in the electronics industry.Along with accessories, the demand for smart appliances for the home and office will alsogrow. More and more consumers will want their everyday appliances to be Internet-ready andable to think for themselves. These areas are where PC and notebooks can find and exploitopportunities. As any company Dell Corporation must look for new trends in businessdevelopment. Dell has 4,000 engineers and spends $600m each year on R&D (Dell Inc.Company profile, 2005).

    Administrative LevelAnother level of organizational structure is the Administrative level. In Dell Corporation it isconcerned with the co-ordination and integration of work at the technical level. Decisions at theadministrative level relate to the resources necessary for performance of the technical function,

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    and to the beneficiaries of the products or services provided. Administrative level is concernedwith those activities involved in recruiting of professional staff, training, and development withinthe organization and infrastructure, namely the systems of technology planning, finance, qualitycontrol, etc. which are crucially important to an organizations strategic capability in all primaryactivities (Dell Inc. Company profile, 2005; Dell Inc. Home Page, 2005).

    Decisions is concerned with mediating between the organisation and its external environment,such as the users of the organisations products or services, and the procurement of resources;and the administration of the internal affairs of the organisation including the control of the

    operations of the technical function.

    Institutional levelInstitutional level is concerned with broad objectives and the work of Dell Corporation as awhole. Decisions at this level is concerned with the selection of operations, and thedevelopment of the organisation in relation to external agencies and the wider socialenvironment. It provides a mediating link between the administrative level and technical level

    (Dell Inc. Company profile, 2005; Dell Inc. Home Page, 2005)..It should be mentioned that in Dell Corporation there is not a clear division betweendetermination of policy and decision making, co-ordination of activities and the actual executionof work. Most decisions are taken with reference to the execution of wider decisions, and mostexecution of work involves decision. Decisions taken at the institutional level determineobjectives for the managerial level, and decisions at the managerial level set objectives for thetechnical level. Dell Corporation performs effectively having clear objectives and goodcommunication.

    Formal relationships in Dell CorporationThe overall effectiveness of Dell Corporaiton is affected by structural design and by theindividuals filling the various positions within the structure. Management acknowledges theexistence of the informal organisation which arises from the interactions of people working inthe organization.

    Line relationshipsIn line relationships, authority flows vertically down through the structure, for example from themanaging director to managers, section leaders, supervisors and other staff. In Dell Corporationthere is a direct relationship between superior and subordinate, with each subordinateresponsible to only one person. Line relationships are associated with functional or departmentaldivision of work and organisational control. Line managers have authority and responsibilityfor all matters and activities within their own department (appendix 1).

    Staff relationshipsIn Dell Corporation staff relationships arise from the appointment of personal assistants to seniormembers of staff. Persons in a staff position have no direct authority in their own right but act asan extension of their superior and exercise only representative authority. Normally there is no

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    direct relationship between the personal assistant and other staff except where delegatedauthority and responsibility has been given for some specific activity. In practice, personalassistants often do have some influence over other staff, especially those in the same departmentsor grouping. This may be partially because of the close relationship between the personalassistant and the superior, and partially dependent upon the knowledge and experience of the

    assistant, and the strength of the assistants own personality (Appendix 2).

    Functional relationshipsFunctional relationships apply to the relationship between people in specialist or advisorypositions, and line managers and their subordinates. In Dell, the specialists offers a commonservice throughout all departments of the organisation, but has no direct authority over those whomake use of the service. For example, in Dell the personnel manager has no authority over staffin other departmentsthis is the responsibility of the line manager. But as the position and roleof the personnel manager would have been sanctioned by top management other staff might beexpected to accept the advice which is given (Dell Inc. Home Page. 2005). The personnel

    manager, however, could be assigned some direct, executive authority for certain specifiedresponsibilities (Appendix 2).

    Lateral relationshipsLateral relationships exist between individuals in different departments or sections, especiallyindividuals on the same level. These lateral relationships are based on contact and consultationand are necessary to maintain coordination and effective organisational performance. Lateralrelationships may be specified formally but in practice they depend upon the co-operation ofstaff and in effect are a type of informal relationship. Our structure is pretty conventional. There

    is one big difference. Our primary organisation is by customer type, not product. A lot ofcompanies in our industry are organised by product, resulting in different sales teams forcescrawling over the same accounts, creating conflicts(Bell, 2002). The determination of policy

    and decision-making, the execution of work, and the exercise of authority and responsibility arecarried out by different people at varying levels of seniority throughout the organisationstructure. It is possible to look at Dell Corporation in terms of interrelated levels in thehierarchical structure.

    Groups Organization In Dell

    General OverviewIn Dell Corporation, groups are formed as a consequence of the pattern of organisation structureand arrangements for the division of work, for example the grouping together of commonactivities into sections. Groups result from the nature of technology employed and the way inwhich work is carried out, for example the bringing together of a number of people to carry out asequence of operations on an assembly line. Groups also develop when a number of people ofthe same level or status within the organisation see themselves as a group, for exampledepartmental heads of an industrial organisation, or chief officers of a local authority.

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    At the beginning of 1990s, the need was to improve customer service in a company that had beena traditional functional hierarchy, with poor communication across the business and little controlover sourcing and supply of materials for its large range of products. A new approach has beenimplemented (Dell, 1994). Cross-Functional Teams include people representing variousfunctional areas that are required to achieve an agreed upon, specific objective. They are needed

    because problems do not completely reside within one department, nor do solutions. Cross-functional teams are required to provide solutions where all elements are considered. In DellCorporation teams are cross-functionally organized in order to bring together the properknowledge and skills to effectively achieve process change and improvement.In Dell Corporation groups are planned and created by management as part of the formalorganisation structure. But groups will also arise from social processes and the informalorganisation. The informal organisation arises from the interaction of people working within theorganisation and the development of groups with their own relationships and norms ofbehaviour, irrespective of those defined within the formal structure. This leads to a majordistinction between formal and informal groups.Groups plays an important role in development and marketing strategies of Dell Corporation. For

    instance, in 2001, industry experts expected growth to be under 6 %. Dell Computer isaggressively cutting prices in a bid to boost share. With profit margins collapsing, competitorsare struggling to adjust. The price war has claimed one victim already; in mid-2001, key rivalCompaq agreed to be acquired by Hewlett-Packard. Dell is legendary for its lean operatingphilosophy. With a build-to-order strategy at the heart of its business model, Dells sales staffmaintains close ties with the companys customers. This gives Dell a great deal of flexibility

    when making pricing decisions (McWilliams, 2001).This example shows that Dell is strongly influenced by resources outside the organisation whichare an integral part of the chain of activities between the product or service design, throughproduction and marketing to the use of the product or service by consumers. In this case,detailed resource planning and deployment are important ingredients in the successfulimplementation of projects.According to theoretical concepts (Boone, Kurtz, 1992), the administrative level unable to planand supervise the execution of work of the technical function without the knowledge, expertise,practical know-how and enthusiasm of people who are closest to the actual tasks to beundertaken. For this reason, people operating at the technical level make known to higher levelsthe practical difficulties and operational problems concerning their work. It is the duty of themanagerial level to take appropriate action on this information, and to consult with people at thecommunity or institutional level. Bradley Keup, a systems engineer at Dell says, Company

    balked at the physical and personnel expansion that would be needed to meet the increasingorders. Brick and mortar are expensive. So are added personnel. Instead of adding facilities and

    people, the company took a less-expensive route: it redesigned its products to make them easierand faster to assemble and to service (Dell Builds a Framework for Success. 2005).

    Main Types of GroupsAccording to structural pattern, it is possible to single out three main types of the working groupsin Dell Corporation:Team groupsthese are fairly autonomous groups with broad terms of reference and limitedsupervision. The team designates the positions to be filled and the allocation of members, and

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    instigate changes as necessary. Examples are problem-solving groups, research teams,maintenance crews.Task groupsjobs are defined clearly and individuals assigned to specificpositions. The group has some flexibility over methods of work and the pace of work, butotherwise limited discretion. Examples could include many administrative or clerical workers.

    Technological groupsmembers have very limited autonomy to deter mine or change theoperational activities. The pace of work is also likely to be controlled. Content and method ofwork are specified and individuals assigned to specific jobs. There is little scope for individualdiscretion, and often limited opportunities for interaction among members. An example isassembly-line operations (Bateman, Snell, 2004).Groups provide security, social satisfaction for members, support individual needs and promotecommunication, formally or informally (e.g. through the grapevine). They also are liable to showall the problems found in our consideration of committees. So it can be seen that a study ofgroup concepts is important for studying aspects of communication, motivation and leadership(Griffith, et al, 2000). According to Michael Dell, CEO of Dell Computer Corporation, The

    winners in the next few decades will be the companies with the most empowered work forces.

    The goal of empowerment suggests three of the larger issues that designers must nowEmpowered individuals and teams expect more control over how they work (Siebert, 2005).

    Informal groupsInformal groups exist in Dell Corporation, but this is internal information of the company andavailable sources do not provide information about this sphere of employees relations.Nevertheless, it is possible to predict, according theoretical interpretation of this phenomenon(Hatch, 2004), that the membership of informal groups can cut across the formal structure. Theymay comprise individuals from different parts of the organisation and from different levels of theorganisation, both vertically and diagonally, as well as from the same horizontal level. Aninformal group could also be the same as the formal group, or it might comprise a part only ofthe formal group

    Formal structureThe functions of the formal structure and the activities and defined relationships within it, existindependently of the members of the organisation who carry out the work. However,personalities are an important part of the working of the organisation. In practice, the actualoperation of Dell Corporation and success in meeting its objectives depends upon the behaviourof people who work within the structure and who give shape and personality to the framework.The distribution of tasks, the definition of authority and responsibility, and the relationshipbetween members of the organisation can be established on a personal and informal basis. Butwith increasing size there is greater need for a carefully designed and purposeful form oforganisation. There is need for a formal structure. There is also need for a continual review ofstructure to ensure that it is the most appropriate form for the particular organisation, and inkeeping with its growth and development (Appendix 1).Within the formal structure of an organisation work is divided among its members and differentjobs related to each other. The division of work and the grouping together of people should,wherever possible, be organised by reference to some common characteristic which forms a

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    logical link between the activities involved. It is necessary to maintain a balance between anemphasis on subject matter or function at higher levels of the organisation, and specialisationand concern for staff at the operational level. Work can be divided, and activities linked together,in a variety of different ways.The division of work among members of the organisation and the coordination of their

    activities is at the essence of structure. According to Mintzberg (cited Bateman and Snell 2004) itis possible to single out the following layers of structure which serve as co-ordinatingmechanisms for the work of the organisation: mutual adjustment; direct supervision;standardization of work processes and output; and standardisation of worker skills.Dell Corporation makes possible the training and testing of future top management In addition totheir training, future managers should be tested before they reach the top. They should be givenautonomy in positions of actual managerial responsibility while still young enough to benefitfrom the new experience. They should also have the opportunity of at least observing theoperation of the business as a whole, and not be narrowed by too long an experience in theposition of a functional specialist.Staff relationships has a great influence on the decision making process. Persons in a staff

    position have no direct authority in their own right but act as an extension of their superior andexercise only representative authority. In Manor Hotel there is no direct relationship betweenthe personal assistant and other staff except where delegated authority and responsibility hasbeen given for some specific activity. This may be partially because of the close relationshipbetween the personal assistant and the superior, and partially dependent upon the knowledge andexperience of the assistant, and the strength of the assistants own personality (Boone, Kurtz,

    1992).

    ConclusionDifferent services are provided by area or geographical boundaries according to particular needsor demands, the convenience of consumers, or for ease of administration. The improvement incommunications, particularly telecommunications, tends, however, to reduce the importance oflocation. For example, administrative staff may no longer need to be located within the mainproduction unit. The allocation of duties and responsibilities is according to experience, or wherea particular technical skill or special qualification is required the correct design of structurewhich is of most significance in determining organisational performance. Good organizationstructure does not by itself produce good performance. But a poor organization structure makesgood performance impossible, no matter how good the individual managers may be.

    References1. Bell, P. Leaders. Available at:http://www.ebfonline.com/main_feat/view_top/view_top.asp?id=5772. Boone, L.E., Kurtz, D.L., Management, 2nd Edition, McGraw-Hill, New York, 1992.3. Bateman T.S, Snell S. A. Management: the New Competitive landscape. 6th edn., McGawHill Irwin, 2004.4. Dell Builds a Framework for Success. 2005. Available at:http://www.dfma.com/news/dell.htm5. Dell, M.S. Making the right choices for the new consumerManaging Service Quality, #4, 1994, pp. 22-25.

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    6. Dell Inc. Home Page. 2005.7. Dell Inc. Company profile. Available at: http://biz.yahoo.com/ic/13/13193.html8. Dell: Case study. Available at:9. Hatch, M.J. Organization Theory Modern, Symbolic, and Postmodern Perspectives. OxfordUniv. Press.

    10. Griffith, D. A., Hu, M. Y. and Ryans, J. K. Jr. Process standardization acrossintra- and intercultural relationships. International Business Studies, 2000, 31, pp. 303-24.11. McWilliams, G. Lean Machine: How Dell Fine-Tunes its PC Pricing to gain Edge in a SlowMarket, The Wall Street Journal. June 8, 2001. p.A1.12. Siebert, F. Reflecting social interaction in the design of group workspaces Available at:www.steelcase.com/na/knowledgedesign.aspx?f=10251&c=10228

    Appendixes

    1. Division of work in Dell Incr.

    2. Formal organizational relationships (Functional and Staff relationships

    3. Line Organization of Dell Corporation

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