DescribingDell`s approach to cultivating relationships with customers andvendor partners, Malhotra noted that it was through its allianceswith partners such as EMC that Dell was able to leverage theirresearch on product innovation while using its resources andconcentrating on perfecting the linkages with customers as well assuppliers. What aspect of Dell`s efforts to increase relationshipcapital with suppliers and customers had the greatest positiveeffects on organizational performance? Why?
Giventhe changes which have occurred in the 21stcentury that have tilted the balance towards the information-basedeconomy, customers have become a crucial resource that provides thedata to the organization (Magretta, 2013). Suppliers and customersinteract with the organization using different channels.Organizations, then, strive to control and manage the channel and thestrategic activities within the organization to develop activitiesfor each of the channels. In this light, complex relationshipmanagement becomes the hallmark for the new way of addressing variousaspects in the global economy. The IT architecture is vital in thisnew mode of conducting affairs (Magretta, 2013).
Increasingrelationship capital with customer and suppliers through a directmodel has conferred immense benefits to Dell. First, Dell has beenable to deal with the internal suppliers in a smooth way because aplatform where sharing and exchange of information has been madepossible (Magretta, 2013). Dell has been able to share designdatabases and techniques with suppliers, which has speeded the timeto market. His has also created a lot of value that has been sharedby both the suppliers and buyers.
Malhotrastresses the important role of suppliers and customers play in thenew economy and the significance of initiating ways of getting closerto both players (Malhotra, 2005). The new market is driven byinformation and has become increasingly intricate. With the unceasingdemand for robust systems, an organization needs to generate ITarchitecture that are intimate with customers and suppliers. Dell hasbeen able to sell directly to customers and create products that meettheir expectation (Fisher, 2015). This has been achieved through theremoval of reseller’s markup, risks and costs connected tomaintaining large inventory of final products. The strategy that hascome to be known as direct business model, has given Dell Corporationa substantial cost advantage (Magretta, 2013).
Anexcellent rapport with clients has allowed Dell to leverage therelationship with both customers and suppliers. Technology has beenused to blur traditional boundaries in the value chain amongmanufacturers, suppliers and customers (Magretta, 2013). The keyelements in Dell’s model are focus on customers, supplierscollaboration, mass customization, and manufacturing at the righttime (Fisher, 2015). Virtual integration exploits economic benefitsfrom two dissimilar business models. It provides advantage of afirmly synchronized supply chain that conventionally emanate fromvertical integration. At one fell swoop, it benefits from the focusand specialization that fuel virtual organizations (Fisher, 2015). It is evident that virtual integration will become one of the mostimportant organizational model in the new economy sailing in theinformation age.
Fisher,M.L. (2015). Inside Dell Computer Corporation: Managing WorkingCapital. PwcStrategy Business, Issue 10.
Magretta,J. (2013).The Power of Virtual Integration: An Interview with DellComputer’s Michael Dell. HarvardBusiness Review.
Malhotra,Y. (2005).Integrating knowledge management technologies inorganizational business processes: getting real time enterprises todeliver real business performance. Journalof Knowledge Management Volume 9 Number 1 2005 pp. 7-28