Dell’s flat organization structure. There are fewer hierarchies in this organization and too many managers on a certain level, which need frequent communication to keep balance, and each manager has a large control span and under a heavy pressure. In flat organizations less mid-manager position supplied for employee. This will form the condition of few promotion opportunities for larger number of competitors. As the less promotion chance in Dell, many excellent employees turn in job-hopping. (Fang, 2004)
Natural deficits of direct mode. The direct mode benefits Dell, but this mode has it own limitation. It has natural deficits on the number of distributions. Dell have much few distribution channels, and do not have enough channels to access individual customer, but just focuses on large account. (Yu & sun, 2005) Figure 2 shows the main client of Dell. It can be seen that Dell’s 85% sale from enterprise and government department, but 15% from individual. Losing small customers is a loss to Dell.
Only if the support services of market places are in prefect conditions, the directal mode can be efficient (Chou, 2006) Actually, prefect basic facilities can only be met in several large cities (Zhang, 2006). Suppose that in an underdeveloped area where is characterised by bad transport and telecommunication system and far away from the manufactory. How does Dell’s direct mode work in such situation?
Direct mode just suitable for the necessities on the maturity life stage (Zhong, 2005). In some developing and lower developing country or place, computers are considered to be luxury. Hence, customers can not gain reliability unless they see the products practically. This situation may occur in particular place, such as china (You, 2005). Low quality of products. For purpose of reducing cost, Dell does it best to cut inputs. According to some sandal, Dell even chose the cheapest fittings for customers, which directly led to low quality of products (Xu, 2005) Even though it sets up a high quality post-buy service group for customers, this essentially is a inefficient approach, and may damage the brand reputation. (Wang, 2006)
According to Dell’s failure, here, some recommendations will be provided for operating more effectively in the next five years. Enhancing qualifications of managers Decision-making moves to the lower managerial levels in flat organization structure, which puts forward higher qualification requirement towards employees, besides, communication and interaction among lower level managers increases the efficiency of decision-making. For one thing, Dell should offer staff more opportunities of further study and training in order to strengthen individual technology knowledge. For another, creating more open communication environment in the firm is feasible. (Huang, 2006)
Adapting to Changing environment Because of the natural limitation of direct mode, Dell could only gain outstanding achievement in cities with perfect infrastructure. Practically, electronic product market of these cities are tend to saturation, on the contrary, lower developed cities, where Dell is absent, is booming in computer operations. Dell ought to modify its mode to adapt the changing market environment, and its operation more diversiform and flexible than before to access more customers. (Zhong, 2005) Dell’s direct mode performances insufficiently when it comes to lower developing area, identified culture and custom, if they can see the product actually, they would not buy. Dell should strengthen its supporting technologies to keep contact with these kinds of customers, made them know better about their products and confident about their products. (You, 2005)
All in all, when a company is strong enough locally, it is willing to take a global approach to pursue profit from the world market, but the entry mode is so complicated that every multinational enterprise is supposed to do a integrative research based on both internal organizational and the environmental of international business. Dell uses FDI mode to enter all its target market, and its mode usually involves a choice of acquiring a going concern through mergers and acquisitions, Dell’s success not just from the right entry decision, but also its effective and efficient operation concept, whatever, a strategy, which could best allocate resource and satisfy customers’ needs, will create profit for the company, looking at Dell Company, Focusing on customers and contribution to offer best consumption experience is the key of Dell’s success, however, Dell’s direct business model still has its deficit, and Dell should take a package of flexible measure to optimize its operation.
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