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Executive Masters July - December Assignment 2 MI 311

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Executive Masters


July ? December Assignment 2




In collaboration with




Commonwealth Executive Masters in Business Administration


Commonwealth Executive Masters in Public Administration






a) This assignment on material covered in this course module


b) Answer ALL questions in this Assignment


c) This assignment contributes 20% towards final grading for this course


d) This is an individual assignment. No duplication of work will be tolerated. Any


plagiarism or collusion may result in disciplinary action


e) Your assignment will be assessed on the factual answer provided based on your


reading and analysis from various references related to this course. In addition, you


should demonstrate a sound knowledge of the topics covered and adhere to the proper


referencing technique


f) Ensure that your work must be referenced in APA style © BOCODOL 2016 Page 1 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems Read the following case study and then answer Questions 1 - 5 which follow:




Michael Dell founded Dell in 1984 while he was still a college student at the University of


Texas in Austin. From the beginning, Dell sold directly to the final customer and built PCs to


users? specifications. This basic business model has not changed over the years, although it


has been modified and refined as the company has grown. Dell started with telephone sales


of upgraded IBM compatible PCs, and then shifted to assembling and marketing its own


brand of PCs in 1985. It provided customers with a 24-hour hotline for complaints and


guaranteed 24- to 48-hour shipment of replacement parts. As its customer base grew, Dell


also implemented a direct toll-free technical support line. In 1990, Dell shifted course when it


began selling through retail outlets such as CompUSA, Circuit City, and Price Club.


Revenues grew rapidly, but problems arose in managing what had become a billion-dollar


company, and Dell experienced its first quarterly loss in 1993 (Dell, 1999). In 1994, Dell


concluded that even though it was successful selling through retail channels, it was not


making money doing so. Dell decided to withdraw from the retail market and return to its


roots as a direct seller, a move that not only helped the company?s profitability but also


enabled it to put all of its efforts into executing the direct model. Dell also brought in a new


chief operating officer, Mort Topfer from Motorola. Topfer led Dell?s efforts to refine its


internal operations and tighten its integration with suppliers and business partners. Dell has


focused on improving service and support to its large business customers by installing


custom software, keeping track of customers? PC inventory, allowing individual business


users to order PCs directly rather than having to go through a central purchasing office,


leasing computers, and allowing electronic payment via the Internet. As put by Michael Dell,


?We are becoming the PC outsourcing company, not just the PC supplier? (Heidrick &


Struggles, 1997). © BOCODOL 2016 Page 2 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems The company also revamped its design, manufacturing, procurement, and logistics processes


to reduce costs, and speed up the entire supply chain. Finally, it expanded its markets


internationally and developed successful notebook and server product lines. The result has


been an extraordinary run of growth in revenues, profits, and market value for the company.


Sales reached $18.2 billion in 1998, with profits of $1.46 billion, and Dell?s share of the


worldwide PC market grew from 3% in 1995 to 9.2% in the first quarter of 1999. Dell?s


stock price grew by over 40 times from 1994 to 1999, and the company?s market


capitalization topped $100 billion. Dell?s success has garnered the admiration of Wall Street


and made it a favourite subject of the business press, which has offered a variety of


explanations for that success. Michael Dell himself has weighed in with a 1999 book titled


Direct from Dell: Strategies That Revolutionized an Industry. Most of these explanations


have focused on the advantages of Dell?s business model, yet the analyses fail to explain how


Dell executes that model and particularly how it uses IT as a key competitive tool to do so.


The remainder of this article uses a case study approach to look more closely at exactly what


constitutes the Dell model, how the company continues to improve its operations, and how it


uses IT to refine and extend the direct model.


The case study utilized literature review, buttressed by interviews with key Dell executives,


interviews with selected Dell customers and suppliers, and plant visits. Such an approach


runs the risk of being caught up in the optimistic views of the business press and Dell itself


(or himself), but we sought to maintain healthy skepticism about what we heard and read.


Some of the data in the case relies directly on Dell as a source, and we made every effort to


check and confirm it with other sources. Other data come from analyses of the PC industry


and of Dell?s strategy and performance by IDC, McKinsey, Dataquest, Forrester Research,


and Hoover?s Company Profiles, or public documents such as annual reports and audited 10K reports filed by Dell. Descriptions of Dell?s IT practices and organization were provided


by Dell IT executives (current and former). Finally, because Dell is sometimes a source for


independent news stories, we evaluated all stories in terms of what we knew from industry


studies, our interviews, and our personal knowledge of the PC industry?having studied the © BOCODOL 2016 Page 3 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems industry in the United States and the Asia-Pacific region for the last 8 years (Dedrick &


Kraemer,1998b) It is difficult to attribute specific performance results to specific IT


initiatives in any company, and this case is no exception. We have reported as accurately and


objectively as possible how Dell uses IT, what benefits it reports, and what problems it has


experienced. We also acknowledge that it is difficult to isolate the specific effects of IT from


Dell?s business model or its execution. However, we have tried to develop concrete examples


that show logical linkages with IT that permit attributing some results to IT.




Other than its unsuccessful venture into the retail channel, Dell has stayed faithful to its


original business model, which combines direct sales and build-to-order production. This


business model is simple in concept, but is quite complex in execution. While other PC


makers rely on resellers, retailers, and other agents to carry much of the burden of marketing


and sales, Dell has to reach out to customers largely through its own efforts. And while other


PC makers can run high-volume assembly lines to achieve economies of scale, Dell must fill


each order to meet customer specifications, a process that puts heavy demands on shop floor


employees, suppliers, logistical systems, and information systems. It has taken Dell 15 years


to achieve its present skill in making the direct model work, a point driven home by Michael


Dell himself and by the difficulties other firms have had in trying to imitate parts of the


model. A closer look at the direct sales and build-to-order processes helps illustrate how Dell


makes them work individually and in concert with each other.


Direct Customer Relationships


Dell?s use of the direct approach reportedly provides it with nearly a 6% cost advantage


compared to indirect sellers (Kirkpatrick, 1997). It also provides Dell with detailed


knowledge about its customers. Vendors that sell through resellers and retailers often don?t


know who their final customers are, so they must rely on secondary market research to


identify their own customer base. The direct approach also allows Dell to identify customer


trends early so it can respond with the desired products before its competitors can. The direct © BOCODOL 2016 Page 4 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems approach allows Dell to build a relationship, which makes it quick and easy for customers to


do business with Dell. IT staff at Boeing report that Dell has adapted its IT systems, user


interfaces, and procurement processes to Boeing?s, making it easy for Boeing employees to


buy Dell computers because they can use a familiar process. Dell uses EDI for processing


orders directly into its order management system because Boeing is required to operate that


way (rather than using the Internet) as a federal government/Department of Defence


contractor, and because Boeing staff are familiar with EDI. Dell also has incorporated its


product information into Boeing?s in-house procurement catalogue, again adjusting to


Boeing?s way of doing business. As a result, Dell is able to capture new and replacement PC


business because it is easy to do business with Dell and contracting with another vendor


would involve switching costs. The drawback of direct sales is that Dell lacks the extensive


reach of the channel, which has thousands of large and small firms providing sales,


marketing, service, and support to customers of all sizes in all markets. To overcome this


problem, Dell has segmented the market by size and focused much of its own marketing


efforts on large customers who could be reached directly by Dell?s sales force.


Only after establishing a strong brand name with larger customers and developing the online


infrastructure to reach new customers at a low marginal cost, has Dell seriously targeted the


widely diffused small business and consumer markets. Dell also sells to resellers and


integrators in some cases and works with distributors to offer non-Dell products such as


software and peripherals. For example, Dell is reported to be the second largest reseller of


Hewlett-Packard printers (Schick, 1999). This flexibility helps Dell expand its marketing


reach while maintaining its direct sales strategy for the bulk of its business.


Global Centralization of IT


The need to balance control and flexibility in the organization has been evident in the


evolution of Dell?s information technology systems. In the early 1990s, IT was so


decentralized that management lacked even the basic information needed to make decisions


and run the company. There were a data center and some common applications, but most of © BOCODOL 2016 Page 5 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems the applications had been developed independently in various user departments. This extreme


IT fragmentation was at odds with Dell?s organizational structure, which was centralized


globally on a functional basis, with sales, manufacturing, service, and other functions all


reporting directly to Austin. The company?s growth was outpacing the ability of IT to


provide information needed to manage the business. To bring some order to its IT house, the


CIO moved quickly to implement an information system, called Information to Run the


Business, or IRB, as a first step in giving Dell?s managers some basic indicators such as


product quality, financial performance, and product margins. The CIO then developed a


three-phase plan for evolving IT in the company. Phase one was to stabilize the current


environment by installing common hardware and operating systems, and software and tools


to manage it. The new infrastructure was composed of Tandem and Sun servers, with the


overall network controlled by Tivoli network management software. Phase two was an


interim upgrade aimed at building capabilities, including DellNet, a virtual private data


network owned and operated globally by AT&T; new data centres in Austin, Ireland, and


Penang, Malaysia; and upgraded staff skills to operate in the new environments.


Phase three was the development of next-generation applications that would achieve tighter


integration of data to allow better integration of business functions. At the core of this


process was the decision to adopt an enterprise system?SAP/R3?as a means of developing


a unified application environment throughout the company. The attraction of SAP is that it


offers a full suite of tightly integrated applications, including finance, human relations, sales


and marketing, manufacturing and distribution, and customer service and support. Dell was


hoping to bring its disparate IT functions together into one seamless system through SAP.


The SAP implementation was dubbed the Genesis Project, and involved a 140-member staff


pulled together from corporate and regional information systems units. The team had gone as


far as implementing the SAP human resources component when a change in business


strategy caused a reconsideration of the whole project. © BOCODOL 2016 Page 6 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems QUESTIONS


QUESTION 1 [20 Marks] Dell?s use of the direct approach reportedly provided the company with a cost advantage. It


also provided Dell with detailed knowledge about its customers.


Discuss the role of customer relationship management (CRM) systems, the phases in CRM,


its benefits and the challenges with reference to Dell.


QUESTION 2 [20 Marks] With reference to the case study above discuss a business-impacting and business-aligning


approach to Dells Information Systems strategy.


QUESTION 3 [20 Marks] ?Internetworking is the practice of connecting a computer network with other networks


through the use of gateways that provide a common method of routing information packets


between the networks. The resulting system of interconnected networks is called an


internetwork, or simply an internet.?


Many applications of telecommunications can be classified as inter-enterprise networks.


Discuss the reasons as to why many organisations such as Dell use internetworking.


QUESTION 4 [20 Marks] ?Major changes and expansion are taking place in traditional MIS, DSS, and EIS tools for


providing the information and modeling that managers need to support their decision




Discuss these changes and how it has affected Dells decision-making processes. © BOCODOL 2016 Page 7 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems QUESTION 5 [20 Marks] Dell computers used next generation technologies to promote better integration of the


company?s data. With reference to the case study, formulate a comparison between the uses


of such technologies, within your organisation to that used by Dell. ASSIGNMENT GUIDELINES


a) Word limit: Each question: approximately 1200 words


b) Text - Font: Arial or Times New Roman (12), Spacing: one and half lines


c) References - At least 8 recent sources of reference (textbooks, journals, press reports,


internet, etc.).


d) Ensure that readings are not merely reproduced in the assignment without original


critical comments and views.


e) A Bibliography in strict alphabetical order correctly written out.


f) Appropriate referencing of material using the correct method of referencing.


g) Cohesive and logical arguments reflecting original thinking.


h) You MUST use theory/literature to support your discussion/observation and opinions.


Do not merely extract information from the Case Study. Students will be penalised up to 10% for poor referencing.


a) It is imperative that students proofread and edit their assignments prior to submitting




b) Assignments must be free from errors and of a professional standard. © BOCODOL 2016 Page 8 of 9 Executive Masters


July-December Assignment


MI 311 Management Information Systems END OF ASSIGNMENT © BOCODOL 2016 Page 9 of 9


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