In 1984, at the age of 19, Michael Dell founded Dell Computer with a simple vision and business concept–that personal computers could be built to order and sold directly to customers. Michael Dell believed his approach to the PC business had two advantages: (1) bypassing distributors and retail dealers eliminated the markups of resellers and (2) building to order greatly reduced the costs and risks associated with carrying large stocks of parts, components, and finished goods. While the company sometimes struggled during the 1986-1993 period trying to refine its strategy, build an adequate infrastructure, and establish market credibility against better-known rivals, Dell’s strategy started to click into full gear in the late 1990s. Going into 2003, Dell’s sell-direct and build-to-order business model and strategy had provided the company with the most efficient procurement, manufacturing, and distribution capabilities in the global PC industry and given Dell a substantial cost and profit Continue reading
Business Strategies
Difference Between Strategic Planning and Management Control
Briefly, here are some ways in which the strategic planning process differs from the management control process. A strategic plan usually relates to some part of the organization lather than to the totality; the concept of a master planner who constantly helps all part of the organization at some coordinated optimum is a nice concept an unrealistic one. Strategic planning is essentially irregular problems, opportunities, and bright ideas do not arise according to some- set timetable; rather, they are dealt with whenever they happen to be; perceived. The appropriate analytical techniques depend on the nature of the problem being analyzed, and no over all approach (such as a mathematical model) has been developed that is of much help in analyzing all types of strategic, problems emphasis on a systematic approach is quite likely to stifle the essential element of creativity. In strategic planning, management, works, now on one problem, then Continue reading
Case Study: Merger Between US Airways and American Airlines
On December 9th, 2013 the two airlines, US Airways and American Airlines merged to form the American Airline Group that turn out to be the major airline in the world. This merger was structured by the enlarged competition that airlines are countenancing in the business at present. The merger offered a prospect for both airlines to make use of the benefits of an extensive network that would effect subsequent to merging as countered to when each one operates separately. One of the foremost circumstances that encircled the merger was the imminent insolvency of American Airlines. The company in 2011 had filed for bankruptcy even though it relapsed to profitability the same year in July. The merger would enhance admission to opportunities of business for both airlines, particularly American Airlines that would decrease its coverage to financial risks, which were the preliminary grounds for the corporation filing for bankruptcy. The merger Continue reading
Organizational Downsizing – Definition and Reasons
Organizational downsizing is the conscious use of permanent personnel reductions in an attempt to improve efficiency and/or effectiveness. Downsizing is being regarded by management as one of the preferred routes to turning around declining organizations, cutting cost and improving organizational performance most often as a cost-cutting measure. Main Reasons for Organizational Downsizing Corporate downsizing has been the biggest fallout of the troubled times, the world is witnessing. As we continue our efforts to fight the global downturn, downsizing has become a stark reality. There are a number of reasons why a company downsizes its employee base. Merging of two or more firms: When a certain firm combines its operations with another firm and operates as a single entity, in order to stay in profit or expand the market reach, it is called a merger. In case of a merger, certain positions become redundant. The same work is done by two Continue reading
Case Study: Wal-Marts Competitive Advantage
Wal-Mart’s competitive strategy is to dominate every sector where it does business. It measures success in terms of sales and dominance over competitors. Its strategy is to sell goods at low process, outsell competitors, and to expand. Generally, Wal-Mart does everything it can to win over competitors. A typical Wal-Mart model is to build more stores, make existing stores bigger, and to expand into other sectors of retail. Every step of the way, it strives to make money and dominate its competitors, to the point of putting some of them out of business. The corporate mission of Wal-Mart can be stated as follows: As Wal-Mart continues to grow into new areas and new mediums, our success will always be attributed to our culture. Whether you walk into a Wal-Mart store in your hometown or one across the country while you’re on vacation, you can always be assured you’re getting low prices and that genuine Continue reading
Why Firms Introduce New Products Into Markets?
Excess Capacity as a Reason for Expanding Product-line The presence of excess production capacity is, perhaps, the most important single factor leading to product-line diversification. Broadly conceived, excess capacity is said to exist when it would cost the multiple-product firm less to make and sell the new product than it would cost a new company set up to produce only that product. Excess capacity may occur for several reasons. It may be the result of an unduly over-optimistic estimated market for the firm’s products. In such a case, if anticipated level of demand is not forthcoming, the firm develops excess capacity. Excess capacity may be due to seasonal variations in demand also, the latter being a result of weather and custom, e.g., greeting cards, ice-cream, etc. Companies faced with seasonal demand for their products would certainly find it advisable to add to their product-line in off-season a new product to Continue reading