Organization Problems That Dell Computer Had Term Paper

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Dell Computer Organization Problems

Dell Computer Organizational Problems

There are a few big names in computing everyone seems to know: Apple, IBM, Dell. And many people are also aware that all of them have had problems from time to time, in one area of their business or another. Apple had trouble in virtually all of its business functions for a while after one of the founders left. In fact, the introduction of the iMac is arguably the thing that saved the company. IBM is a behemoth, and much of its income is derived from corporate business, not selling to consumers. Dell, on the other hand, serves primarily consumers. According to the Financial Times, desktop computer systems accounted for 53% of revenues in 2003, with notebook computers accounting for 27% and enterprise systems for 20%. While corporations may certainly be supplying their personnel with desktops and laptops bought from Dell, the use of those items might still be said to be consumer-oriented. Its well-known products include Dimension™, OptiPlex™, and SmartStep ™ desktops, and Latitude™, and Inspiron ™ notebook computers. A vertically integrated company, it offers not only the boxes themselves, but support and even financing for consumers; it offers consulting, custom hardware and software integration for it corporate customers. Dell also employed a unique marketing plan; unlike most brands of computer that can be easily purchased through such mega-retailers as CompacUSA or Best Buys, as well as smaller computer shops, Dell products must be purchased online. Support services are online, or by shipping. So, minus a sales staff to help convince consumers that Dell is the product to buy, Dell could rely only on its advertising and its reputation. On the latter of those two, it has suffered some serious challenges in recent years. First, there were a number of articles about problems with consumer support. But more recently, two problems that would be unseen by many consumers, but which are apparently highly important to many others, arose. Worst of all, they are central to the reputation of the company, and in one case, they were central to the way in which the company produced its products. These two issues were farming out reconditioning chores to prisoners, and farming out customer service chores to India.

While these issues might at first not seem to be sociological problems, viewing them in light of today's consumer climate reveals that they are. Many people are aware that, at some point in recent history, people changed from being "human beings" to "human doings." In other words, people identified with and were identified by what they did -- their job, their volunteer works and so on. It would be fair to contend that these days, people have become "human buyings," identified with their collection of 'stuff.' But in a relatively environmentally and humanistically aware age (this might bear support, but would be another paper, so we will just claim it for argument's sake), many "human buyings" and what they buy are greatly affected by the conduct of a company regarding how it produces its product. In light of the recent and some say continuing labor problem in this country -- that is, too few jobs -- many are also sensitive to the issue of sending white-collar jobs to foreign nations where English is spoken well and where the pay rates are dismal.

In July, 2003, Dell Computer announced that it would "no longer rely on prisons to supply workers for its computer recycling program," according to a report in The New York Times on the Web. (Flynn, July 2003) The world's largest seller of PCs, according to the report, had canceled its contract with Unicor, a branch of the Federal Bureau of Prisons that uses those prisoners for electronics recycling and other similar industrial contract jobs.

Dell took this decision a scant week after a California environmental group criticized Dell's reliance on prison labor, citing the fat that prisoners are not covered by the Fair Labor Standards Act, and therefore were paid far less than the minimum wage, as little as 20 cent sot $1.26 an hour. (Flynn, July 2002) (This, too, suggests an additional investigation; while the prisoners are getting paid so little, the fact that doing computer work must beat other forms of 'forced labor' they could be forced to do as prisoners by a country mile.) But that wasn't the only problem; the report also noted that Unicor was not properly disposing of its toxic wastes. (Flynn, July 2003)

While that wasn't Dell itself doing the dumping, it was getting splashed with the results. And in fact, a Dell spokesman said it wasn't the report that Dell's action, and he did argue that the prisoners benefited from the work. He admitted, though, that they had heard from a number of customers. (Flynn, July 2003)

The same writer took on Dell's decision to bring some call center back to the U.S. from India. Flynn wrote:

Dell's recent decision to direct some customer service calls to help desks in the United States, rather than to its call center in Bangalore, India, shows how companies with customer support operations overseas are having to tread a fine line with their clients, some of whom are still surprised to talk to technicians on a different continent.

Business customers were the impetus to this change: some of the company's most coveted business customers complained that Indian technical support was unable to handle complex problems. Most technical questions from home computer users are much simpler and more straightforward, and no great expertise is needed to answer them. Still, although the corporate business makes up a smaller percentage of Dell's business, if it leaves, it doesn't leave one computer at a time, but in banks of them. And, while the Dell spokesman didn't mention it, "Analysts say that along with skill considerations, some companies may be worried about criticism from labor groups and some customers who object to sending jobs overseas," (Flynn, December 2003) which brings this home to the consumer, also.

II. Literature Review

Bad apples?

While there is no sense comparing apples and oranges, or in this case, apples (not Apples) and Dell Computer, some information developed in a study called "Will consumers pay a premium for eco-labeled apples?" sheds some light on the possibly societal norms and expectations and consumer behavior Dell might have been reacting to when it took its actions regarding both prisoners and foreigners. (Louriero et al., 2002) The study assessed mean willingness to pay (WTP) for eco-labeled apples. The conclusion the researchers reached was that females with children and strong environmental and food safety concerns were more likely to pay a premium for eco-labeled apples. The average household income of the group was between $50,000 and $70,O001 for the 1999 fiscal year, and their average education included some years of college, probably putting them on a par with a good deal of the Dell market population. However, how much more they were willing to pay was modest, only about one-twentieth more than the original price. Still, the fact that consumers of apples were aware of and willing to pay for the 'green' product is suggestive for companies such as Dell. One could ask, if consumers were willing to pay more for an essential item, like food, would they be willing to pay more for a non-essential item, like a computer? But that also begs two questions: are computers essential or non-essential these days, and are buyers of computers anything like buyers of apples? Is this a marketing problem, or a sociological shift? The additional studies noted below point to the likelihood that it is a sociological shift, and one companies must be aware of as they serve the needs of "human buyings." In fact, even the apple study points in this direction. Farmers and other producers are responding to consumer concerns about pesticides by creating new marketing opportunities for products grown with environmentally sound practices. These environmentally friendly products have unobservable quality attributes, which make them fundamentally different from products whose quality is observed or that can be determined after consumption, and are thus classified as being credence goods." (Louriero et al., 2002) This is an interesting concept for Dell. Removing the prisoners and the foreigners from the product doesn't' give it an observably better quality, or does it? In the case of prisoners, no. In the case of foreigners, yes. No matter how well an Indian speaks English, the most aware consumers will note that they are being served by an off-shore call center, so brining the work back to the polyglot of American accents would certainly have a pronounced observable effect at least for the group of computer consumers with excellent ears for accents.

In addition, the apple study researchers cite another study that concluded that families with member suffering from chronic disease and families with higher incomes are more likely to pay a premium for hydroponically grown vegetables. (Louriero et al., 2002) Again, this has impact for Dell if one assumes…

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