HOW SHOULD DELL RESPOND TO THE HP

CHALLENGE?

Dell Computers was founded by Michael Dell in his college dormitory room. It
quickly became one of the fastest growing businesses in history, an almost
unparalleled success story. By 2005 Dell had become the largest manufacturer of
PC’s, primarily focusing on the B2B market. This was achieved by creating a
“Direct” model that allowed companies to buy customized computers directly from
Dell, cutting out the margins previously captured by middlemen such as CDW.
The creation of Dell’s “Premier Pages” website made it easy for corporate
customers to easily place orders for large numbers of computers configured exactly
as they wanted. The direct model also allowed Dell be better manage its supply
chain, reducing both the inventory of components as well as finished products.

However, by 2007 HP had surpassed Dell in PC sales. After having tried to imitate
the Dell model, in 2005 HP hired Todd Bradley to turn the business around.
Instead of fighting Dell in internet and phone sales where Dell was strong, Mr.
Bradley decided to focus on its strength, retail stores, where Dell was completely
absent, and where individual customers, the fastest growing segment, made most
of their purchases. He noted that PCs “aren’t just a commodity that you run out and
buy on the internet. People are going to want to touch it and feel it and understand
how it connects.” He also began advertising campaigns using celebrities such as
hip-hop mogul Jay-Z to talk about how they used their HP laptops.

In talking with retailers, he found that they complained about late deliveries and
incomplete deliveries. So, he focused on fixing the logistical problems and
consolidated 30 manufacturing plants into 23. This enabled HP to reduce both the
time and cost of building PCs, and reducing late deliveries by 30%. HP’s margins
grew to 4.8% in the second quarter of 2007 from 3.6% a year earlier while Dell’s
fell to 6.5% from 6.7% a year earlier.

Finally, he built better relationships with the retailers. He pushed products such as
touch-screen PCs that would garner attention from customers. He also helped
retailers to design products exclusive to their stores, enabling them to differentiate
their products from competitors. He worked with them to be able to create
customized imprints. For instance, working with Best Buy, HP created a silver and
white laptop, softer colors aimed at female customers.
Thus, in 2007 Dell gave up its title as the largest producer of PCs. In addition, as
the consumer market continued to grow at a much faster rate than the corporate
market, Dell was ill-positioned to reverse this trend.

Questions:
1. What are the major competitive and strategic challenges Dell needs to deal
with if it is to regain a position of strength within the industry?

2. What can HR do to help Dell re-establishits position - as the leader in PCs?

Assume you just got on the elevator with Michael Dell and want to explain
how HR will aid him in regaining its pre-eminent position. What will you
tell him in the 1-2 minutes you have?

Satisfy customers’ needs

High quality

Giving the employees training programs which can be inside or outside the country

Building its standards depend on market standards

Alternative strategies
Corporate level
Target new markets

Target from different demographics, which will increase the purchasing.

Business level
Using new methods in advertising its new product collections before the competitors do.

Functional level
Expand its marketing strategy to increase the selling through online shopping by using internet.

Strategy Implementation
Dell Company implements its strategy in successful way that allows them to have competitive
advantages over their rivals since it established.
Source: Lawton, C. (June 4, 2007) How HP regained its lead over Dell. Wall Street
Journal http://online.wsj.com/article_print/SB118092117687623314

Many authors have noted that in today’s competitive market, organizations

must engage in strategic planning to survive and prosper.

Strategic management is a process, an approach to addressing the competitive

challenges an organization faces.

The second aspect of strategic management is the process of developing strategies

for achieving the company’s goals in light of its current environment.
Business organizations make choices about such things as how to scare off
competitors, how to keep competitors weaker, how to lower production costs, how
to raise revenues, what technology to implement, and how many and what types of
people to employ. Each of these decisions may present competitive challenges that
have to be considered. Strategic management is more than a collection of strategic
types. It is a process for analyzing a company’s competitive situation, developing
the company’s strategic goals, and devising a plan of action and allocation of
resources (human, organizational, and physical) that will increase the likelihood of
achieving those goals. This kind of strategic approach should be emphasized in
human resource management. HR managers should be trained to identify the
competitive issues the company faces with regard to human resources and think
strategically about how to respond.

For example, many firms have developed integrated manufacturing systems such
as advanced manufacturing technology, just-in-time inventory control, and total
quality management in an effort to increase their competitive position. However,
these systems must be run by people. SHRM in these cases entails assessing the
employee skills required to run these systems and engaging in HRM practices,
such as selection and training, that develop these skills in employees.

Strategy implementation: This consists of structuring the organization,

allocating resources, ensuring that the firm has skilled employees in place,
and developing reward systems that align employee behavior with the
organization’s strategic goals.
The strategic choice really consists of answering questions about competition—that is, how the
firm will compete to achieve its mission and goals. These decisions consist of addressing the
issues of where to compete, how to compete, and with what to compete, which are described in

The strategy a company pursues dictates certain HR needs. For a company to have a good
strategy foundation, certain tasks must be accomplished in pursuit of the company’s goals,
individuals must possess certain skills to perform those tasks, and these individuals must be
motivated to perform their skills effectively.

HRM has primary responsibility for three of these five implementation

variables: task, people, and reward systems. In

addition, HRM can directly affect the two remaining variables: structure

and information and decision processes. First, for the strategy to be

successfully implemented, the tasks must be designed and grouped into jobs
in a way that is efficient and effective
Thus, with each change in strategy comes a change in the kinds of skills, employees, and
behaviors required to execute that strategy effectively.

Two generic strategies proposed by Porter: cost and differentiation

1. the “overall cost leadership” strategy focuses on becoming the lowest

cost producer in an industry
 2. The “differentiation” strategy, according to Porter, attempts to create
the impression that the company’s product or service is different from
that of others in the industry.

HRM NEEDS IN STRATEGIC TYPES

companies engaged in a cost strategy require employees to have a high

concern for quantity and a short-term focus, to be comfortable with
stability, and to be risk averse. These employees are expected to exhibit
role behaviors that are relatively repetitive and performed independently
or autonomously.

1. cost strategies, because of the focus on efficient production, tend to

specifically define the skills they require and invest in training
employees in these skill areas….
2. employees in companies with a differentiation strategy need to be
highly creative and cooperative; to have only a moderate concern for
quantity, a long-term focus, and a tolerance for ambiguity; and to be
risk takers….

Thus far we have presented the strategic management process as including a step-by-step
procedure by which HRM issues are raised prior to deciding on a strategy and then HRM
practices are developed to implement that strategy. However, human resources can
provide a strategic competitive advantage in two additional ways: through emergent
strategies and through enhancing competitiveness.

New competitor in PC industry

HR Practise
The computer manufacturer, in particular, Dell, would have to shift its longstanding direct sales
model in the face of the PC business’s increasing maturity. To stay competitive, Dell would have to
consider selling through retail channels such as local computer stores.

Dell could enjoy competitive advantage from customizing computers and selling them directly to
consumers, but notes that the market for such offerings has shrunk ( evidence trong case, liệt kê) ,
largely because customer needs and related supply chain costs have shifted in the mature PC
business. (list evidence )

To sustain advantage ( B2b market) they must align their chosen channels’ strengths with
product and market characteristics.

There are two potentially complementary routes by which Dell could go retail. The first, a hybrid
business model, combines direct and retail sales channels to serve both broad segments of the
computer market: those seeking standard models and those placing a premium on customization.
Using this approach, Dell would continue selling direct but also offer a selection of pre-
configured computer models through retail stores. The second model, most effective when
customization is valued, involves the retailer’s performing the final product configuration, thus
decreasing inventory costs—because supplies are maintained in component form—but
increasing assembly capacity costs. Chopra notes that this model has been used successfully in
India, where customization is valued and technicians inexpensive to employ.

 Dell could join the centralized channel for wider variety and the retail channel to move popular
standardized PCs and other products.

https://insight.kellogg.northwestern.edu/article/a_new_channel_strategy_for_dell

1. Job analysis and design

Indentify the postions for online sales distribution, do job analysis to create job design.
The job design must linked to Dell’s strategy.

For new entrants to the distribution channels sales staff, in addition to allowed them to play the
expertise in established distribution channels, they also need to fit Dell’s quickly establish an
effective distribution channel

2. Employee Recruitment and Selection

Dell need to supplement and recruit employees for online sales positions through advertisement
and mass media communication channels
3. Employee Training and Development
Employee attitude may affect the productivity quality, and morale; collegiality, cooperation, and
cohesion; employee development; and retention, as well as turnover of the company.
Dell need training for direct sales person to understand the concept of multi-channel marketing.
 Dell should undergo their employees into attitude/character training and development program.
 Improves morale of the employees.
 Increase efficiency and productivity.
Reduce cases regarding employee’s misconduct.
Promote safe and sound workplace

4. Performance Management
Performance of the workforce in an organization is directly related to the success of the business
venture. The contribution of the employees towards the reputation of the company, quality of
products or services delivered and the market share of the business is extremely important.
Performance management systems can be used to reinforce employee behavior towards specific
goals and objectives identified by the company. The scope and objectives of defining a
performance management system is closely linked to the needs of the business and desired
outcome. A favorable organizational environment triggers the employees to go that extra mile and
use their initiative to improve performance rather than simply achieving set targets.
“Managers can unlock an individual’s ability and willingness to perform at high levels in many
ways – for instance, by translating long-term goals into step by step plans, clearly stating
expectations and holding people accountable” (Holbeche, 2005). Many employees within the
workforce want to give their best to the work they are allocated and they want to be given a
chance to prove their capabilities. The employees also want their performance to assessed in a fair
manner and seek adequate rewards and financial compensation in return for the extra efforts
placed on the job. The organization can assist the employees in delivering quality work by
providing them with adequate support, resources, and training opportunities.

5. Pay Structure, Incentives and Benefits

6. Labor and Employee Relations

A high level of pay and/or benefits relative to that of competitors can ensure
that the company attracts and retains high-quality employees. by tying pay to
performance, the company can elicit specific activities and levels of
performance from employees.
HR conducts different employee welfare activities for more connections

Since employee is very important asset of the company, they should focus on improving their
employee behaviour by let them undergo attitude/character training and development training
program in order to increase the working efficiency or morale of the employees so that their
productivity is stepped up and the cost of production brought down and the quality of production
improved. In this way company create a safe and sound workspace for their employee and attract
qualified applicants.
Dell Inc. should make a discipline policy that easily understand by the employee in order for them
easily adopt it. This will make easy to HR manager on disciplining the employees and employees will
orderly behave and more importantly will help to assist employees in changing their performance,
attendance, or behaviour.

Ensure positive environment

Foster teamwork
Keep up with the intense competition in the industry
Focus on technological advancement for better product innovation

It is the responsibility of the HRM department to find and know the problems of employees and
then to solve them. By this way they can retain low employ turnover, attract new employees and
also improve of the employ development

Dell pays market-related salaries and offers a range of standard big-company benefits as a means
of attracting top performers into its business and to motivate its current employees. Listening to
what employees have to say, how they feel about their jobs, supervisors, tools and resources,
assessing their satisfaction are very important for Dell. In this context, an online Human
Resource feedback form is provided to its employees to allow them to give anonymous feedback
about the working environment. They can also rate their managers, company culture and benefits
through a climate survey which is carried out twice a year. To give assurance to its employees
that they are being treated fairly and that HR policies are being applied consistently throughout
the company, Dell has a formal code of conduct that emphasises high ethical standards in every
area of the company’s business, from interaction with customers, competitors, government and
other stakeholders, through to employee privacy, environmental standards, and managing
potential conflicts of interest.