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Technology and Strategy: Dell

April 6th, 2008

Sinds het begin van mijn nieuwe opleiding (Management of Technology aan TuDelft) heb ik weinig geschreven over de studie. Dit kwam niet omdat het niet leuk of leerzaam is, het tegenover gestelde zelfs! Het is erg interessant en leerzaam maar ook erg druk. Tevens zijn niet alle vakken noemenswaardig voor op de website.

Maar nu heb ik afgelopen periode het vak Technology & Strategy gevolgd. Voor dit vak moet je een bedrijf uit kiezen (ik heb gekozen voor Dell Inc.) en vanuit verschillende perspectieven analyseren. Het is zeer interessant vak en je leert het bedrijf echt van binnen en van buiten kennen.

Om aan te geven wat mijn onderzoek heeft geresulteerd heb ik hieronder de samenvatting van mijn eindverslag toegevoegd. Mochten er mensen zijn die het gehele verslag willen lezen laat dan even een berichtje achter.

Samenvatting:
This report analyses the strategy of Dell Inc. and is divided into 8 modules. Module 0 is an introduction to Dell and this core activities, company structure, market and portfolio developments. To analyse Dell further I use the industry perspective, indicating that all change are induced by the industry. The first module zooms in at the value system and value chain. Analysis shows that Dell has a strong position in the changing value system taking in account the main payers naming; suppliers, retail shops and consumers. The value chain is stable and focused on efficiency.

Module 2 analyses Dell’s company evolution. In the evolution grid is Dell on the business axis on mass individualized and on the value creation axis between efficiency and differentiation. Analysing what main business functions what kind in which phase of the evolution is showed that Dell is with marketing,
supply chain and information on mass individualized and only with the organization itself in the industrial heterogeneous phase. So there is a good coherence between the evolution phase and the business functions.

In module 3 Dell’s operational value creation is analyzed. To draw better conclusions the results are compared with a competitor (Hewlett-Packard). Looking at the operational success criteria (net profit, growth and earnings per share) are both companies successful. Analysing general performance indicators like return on equity, return on assets and the income statement indicates some differences between the companies. Dell has a higher ROE and ROA indicating Dell is more efficient compared to HP.
This difference also is shown in the differentiation – efficiency analysis of the operational cash flow development. In the performance – volume analysis are both companies more on volume than on performance. From the analysis stability of the companies’ strategy I concluded both companies are stable. They did not have major changes in their strategy. However it is clear that HP is much more volatile compared to Dell. The organization of Dell’s organization of innovation and evolution of R&D is analysed in module 4. This analysis shows that Dell is using the interactive innovation model for incremental product and service innovations and is mainly focused on innovating the way of doing business. This resulted into the direct business model and it build-to-order system.

Module 5 analyses the company’s knowledge management. By calculating the difference between the market value and book value it is shown that the gap is closing and thus the value of the knowledge decreasing. This also concurs with the stable but downwards sloping knowledge productivity. This fall can be addressed to the drive for efficiency.

In module 6 the coherence between the prior modules is discussed. In the case of Dell this leaded to an incoherence between the modules. Also the links between the modules are discussed and why there is no match. The only strong link is between knowledge productivity and operational value creation.

The last module is an advice to create more coherence between the modules. My advice is to change the innovation method towards and innovation system approach and innovating together with related industries and companies from the value system. This will result in a more differentiated operational value creation. The low knowledge productivity is not a negative sign because Dell is driving for efficiency and this could imply low knowledge productivity.

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Tags: Management of Technology, MoT, strategie, Technology and Strategy, TuDelft