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Executive Masters July - December Assignment 2 MI 311
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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
f) Ensure that your work must be referenced in APA style © BOCODOL 2016 Page 1 of 9 Executive Masters
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
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
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
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
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
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
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,
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
MI 311 Management Information Systems END OF ASSIGNMENT © BOCODOL 2016 Page 9 of 9
This question was answered on: Feb 21, 2020
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