Micara Geeanpersadh 213548757 213548757@stu.ukzn.ac.

za

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Question 1

A business model is defined as the decisions that concern an organisations strategy which outline the
revenue drivers of a company and the potential a business has for growing over a period of time
(Applegate, Austin & Soule, 2009).

Dells business model utilised a direct business model which included a variety of extensions in order
to plan for evolution and potential growth. The Dell direct model was characterised by high velocity, low-
cost distribution, direct customer relationships, build-to-order, JIT manufacturing, and products and
services aimed at specific market segments. The direct model began by making direct sales to
customers via the telephone. This model later on exploited the emerging power of the web to allow
manufacturers to reach buyers directly and thereby compress the distribution channel. Dell operated as
an innovator in the build to order approach to manufacturing, by utilising this approach Dell was able
to deliver PCs which were designed to meet the specifications of customers. The components that are
required to build PCs are warehoused approximately 20 minutes away from Dells factory, this leads to
reducing the amount of time of production. This permits the implementation of a just-in-time (JIT)
manufacturing approach which reduces inventory costs (Singh, 2013).

Strategy: Describes the business opportunity and how the company plans to pursue it. Dell identified a
business opportunity in 1983 where he could assemble a PC at a cheaper cost, thus selling the PC to
customers at a discounted price. Dell utilised a Spartan approach which gave emphasis to simplicity,
efficiency and agility. A core business strategy was to provide support to customers. This was done by
providing support facilities such as on-site support and 24/7 telephone hotline. The strategic decision
made by Dell was to sell products directly to customers bypassing the use of retail channels.

Capabilities: Describe the resources required to carry out the strategy. These resources included the
setup of internal teams to provide marketing and sales support. Dell developed partnerships with
trusted partners who made use of JIT production where components are delivered from suppliers JIT
for manufacturing which in turn led to the elimination of using intermediaries and increasing the speed
that products are built allowing for shorter delivery times for customers.

Value: Describes the benefits delivered to all stakeholders. Dell leveraged consumer brand loyalty
among customers, therefore creating customer value by providing quality services. Value from the
utilisation of JIT and build-to-order manufacturing approaches, partnerships with suppliers are also
created. Dell also influences employee value by using commission based sales. The value created from
Micara Geeanpersadh 213548757 213548757@stu.ukzn.ac.za

customers, suppliers as well as employees all lead to the value and benefits delivered to all
stakeholders thus creating economic value and is critical to the functioning of the business.

The Strategic Alignment Model (SAM) founded by Henderson and Venkatraman aims to assess the
alignment between business and IT alignment across all components of a business model.

Dells Information Technology

1) Support Services (24/7 telephone hotline)

(1986) to provide assistance to customers.
The business strategy is to develop a positive
relationship with customers by providing them
with assistance and in the long run this vision is
to increase their customer base by providing
exceptional support services to customers. The
business capabilities include a team of people
who are knowledgeable and skilled in assisting customers. The IT strategy it to have the tools
required in order to assist customers. These tools include help functions and forums. The IT
capabilities include resources to create and provide support. These resources consist of a
communication medium which will allow team members to respond to customers requests.
2) Dell Internet Application (1996) - The use of the internet expands customer options for
purchasing. The business strategy is to increase revenue by reducing costs and making more
sales. Dells internet application can also provide support to customers which improves
customer relationships. The business capability is to acquire the right software and personnel to
build a secure website which meets the needs of all customers. The IT strategy is to provide
customers with a secure website which is useful for all customers. The IT capabilities is to
provide a website that is available 24/7. The website should meet the needs of customers by
providing features such as accurate tracking of products purchased and an option to download
additional drivers and software needed by the customer.
3) Web based order tracking system Which allowed the customer to track the order status of
their product from entry through manufacturing to shipping. The business strategy is to provide
information to customers which reduced the amount of telephonic calls received requesting
information about the order status. The business capability is to ensure that information is
always correct and personnel are always updating the tracking system. The IT strategy is to
develop a functional, secure tracking system. The IT capability is to maintain and update the
tracking system.
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4) Information sharing for both suppliers and customers The business strategy is to ensure
accuracy of orders by accurate information flow. The business capability is to form trusted
partnerships with suppliers and customers. The IT strategy is to provide real time
communication mediums to suppliers and customers. The IT capability is to develop the
required infrastructures such as utilising an ISP for communicating.
5) Customisation and Personalization of Products This process allows Dell to customise
products to meet the specifications of customers. For example, Dell Plus permits Dell to install
commercial and propriety software with regards to the needs of customers. The business
strategy is to meet the needs of customers. Which leads to increasing the customer base and
forming positive customer relationships. The business capability is to receive required
components from suppliers in a timely manner. The IT strategy is to manage hardware and
software components, integrate them to meet the needs to customers in a timely fashion. The IT
capability is to have a skilled and knowledgeable workforce in order to carry out the IT strategy.

According to the above processes Dells business and information technology is clearly aligned. Dell
requires the use of information technology in order to fulfil business capabilities and strategies.
Therefore, IT is essential to Dells business model. These processes provide tremendous economic
value to the company by providing exceptional service to customers and continuing to grow the
customer base.

Question 2

McFarlan recommended a strategic grid that permits the conception of the relationship between IT
strategy and business strategy and operations (SlideShare, 2016). The grid consists of six components.
These components include a vertical axis which relate to the impact strategies have on the
organisations IT initiatives on its processes. The horizontal axis relate to the impact strategies have on
the organisations future sustainable business advantages and the four quadrants which are factory,
strategic, support and turnaround.

Dells Information Technology Processes:

1) Support Services 24 hour hotline (1986) (15%) Placed in the support quadrant as

even though Dells support services are important in forming customer relationships it has a
lower impact on the success of a company. However, it is positioned closer to the Factory
quadrant as if there were no support services the customer base could significantly decline.
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2) Dell Internet Application (1996) (25%) This

is a significant process as it brings in revenue to the

company and has potential to increase the customer
base by offering a new platform to conduct sales
and support. Placed in the strategic quadrant as
sales and support provided by the internet
application has a high impact on operations and
strategy. If the electricity goes out Dell will not be able to access the internet application and
perform operations.
3) Web based order tracking system (20%) Placed in the strategic quadrant as it relates

to a high effect on operations as well as strategy. In this process customers are able to track
their orders and can immediately identify if they are correct or not therefore, it has a high impact
on operations and strategy.
4) Information sharing for both suppliers and customers (20%) Placed in the strategic

quadrant. This IT process has a high impact on operations as the flow of information between
customers and partners is an essential process in order to fulfil customer orders correctly. This
process also has a high impact on strategy as if orders are fulfilled correctly it leads to customer
loyalty and increasing the customer base.
5) Customisation and personalization of products (20%) Which allows Dell to meet the

needs of customers specifications. This process includes services such as Dell Plus. It is
positioned on the strategic quadrant as it has a high influence on operations as well as strategy.
By meeting customers needs effectively it impacts operations and strategy by offering unique
products compared to competitors.

According to the above processes it is evident that Dell lies in the strategic quadrant of McFlarans
strategic grid as Dell relies intensely on IT to sustain current business operations and to enable their
future transformation. Dells business model is formed around its strategy to provide direct sales to
customers and providing exceptional support services in the process. The use of the web is essential
platform to connect with customers and deliver services to customers. Because of the use of the web
Dell is highly reliant on IT with regards to their operations and strategies.

Question 3

Dell was referring to customer segmentation. Customer segmentation refers to the preparations
required to divide a customer base into smaller divisions such as groups or individuals that are similar
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with regards to age, gender, interests and spending habits. The use of segmentation leads to better
attention and focus. Dells customer segments were classified as relationship which were large
customers and transactional which were small customers such as businesses and consumers. Dells
relationship segment which comprised of large corporate customers were reluctant to purchase
products via the web. As the relationship segment of Dells customers has a significant impact on
Dells overall customer base it is still be necessary to utilise segmentation in order to keep customers.
By the use of dynamic websites Dell forgoes control of the preparation of customer segmentation.
However, dynamic websites can be utilised to respond to customer feedback on products purchased
and support services received, and interacting with customers in order to provide information that will
improve customer segmentation as well as improving marketing by determining what interests
customers. This is a vital effect as Dells customer segmentation is a diametrical outcome of its
business model. Therefore, segmentation is still necessary with dynamic websites.

Question 4
Even though the market for cloud computing is already dominated by Amazon, by utilising cloud
computing Dell can offer Software as a Service (SaaS), Infrastructure as a Service (IaaS) and Platform
as a Service (PaaS) to customers. By offering SaaS customers will be able to download the required
software and/or drivers straight of the cloud. This will result in increased customer service as customers
do not have to obtain the software from another source. This leads to anywhere access to applications
and content (Emc.com, 2017).

By offering customers IaaS they will be able to utilise cloud computing services such as storage,
networking and other elements such as security and tools which allows customers to access and
manage storage and network infrastructures. Therefore, customers can utilise IaaS instead of
purchasing required hardware. This also leads to improving customer service which in turn leads to
increasing the customer base. Enhanced security and protection of information assets especially
benefits customers who will utilise IaaS for their businesses. Furthermore, by offering PaaS, the users
can utilise the platform and can control how applications are used throughout their lifecycle. There is
rapid scalability to meet demand. PaaS permits centralizing IT operations which increases the rate of
productivity which leads to products being delivered more rapidly. Dells ongoing focal point is on
effortless and merging multi-cloud management with cloud broker services and providing support
during the solutions life cycle, irrespective of the cloud vendor (Cloudcomputing.com, 2017). Therefore,
cloud computing will have a positive impact on Dell.

References
Cloudcomputing.com. (2017). Demystifying the Cloud. [online] Available at:
Micara Geeanpersadh 213548757 213548757@stu.ukzn.ac.za

http://cloudcomputing.com/ [Accessed 5 May 2017].

Emc.com. (2017). Cloud Computing Services | Dell EMC Glossary. [online] Available at:
https://www.emc.com/corporate/glossary/cloud-computing-services.htm [Accessed 4 May 2017].
Singh (2013). Dell Case Study. [online] Slideshare.net. Available at:
https://www.slideshare.net/raminder90/dell-case-study-17273116 [Accessed 25 Apr. 2017].
SlideShare 2016, Mc farlan's strategic grid. [online] Slideshare.net. Available at:
https://www.slideshare.net/ManishChaurasia/mc-farlans-strategic-grid [Accessed 25 Apr. 2017].