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Executive Masters

 

July ? December Assignment 2

 

MI 311 Management Information Systems BOTSWANA COLLEGE OF DISTANCE AND OPEN LEARNING

 

In collaboration with

 

THE COMMONWEALTH OF LEARNING

 

Commonwealth Executive Masters in Business Administration

 

Commonwealth Executive Masters in Public Administration

 

MANAGEMENT INFORMATION SYSTEMS

 

ASSIGNMENT 2 Marks: 100 INSTRUCTIONS

 

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:

 

DELL COMPUTER

 

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.

 

DELL?S BUSINESS MODEL

 

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

 

making.?

 

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

 

them.

 

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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