Dell Inc., Troubles at
CNet addresses computer maker Dell Inc. and it’s current problems in a recent article entitled What ails Dell? CNet seems to put much of the blame for Dell’s recent lacklustre stock and market share performance on, of all things, it’s hiring of management consultants from Bain & Company and from McKinsey & Company. The article suggests that having too many of these brainy types from expensive colleges hanging about in corner offices, causes the organization to lose touch with the needs and wants of the marketplace.
The practise of management consulting is generally viewed as an effective way to buy or rent expertise in some field. Dell, however, is widely regarded as already having best-of-breed methods in supply chain management, demand shaping, as well as their famous direct business model, which is their version of disintermediation. Throw in the fact that Dell is or was, until recently, the lowest-cost provider, it then becomes somewhat difficult to justify having hired those consultants, unless they brought some special knowledge or experience to the table. And since there are relatively few firms with outstanding supply chains, and even fewer in the volume computer field it’s difficult to imagine where such expertise might have been garnered. Nevertheless, it’s unlikely that these consultants, however egregious their performance, would have been able to bring Dell to it’s knees (figuratively speaking) in such as short time, and so an alternate explanation is probably in order.
Plunging PC prices and increased global competition and Dell’s customer-sat problems aside, it would appear that Hewlett-Packard has finally got it’s act together and reverse-engineered the supposedly inimitable Dell business model. HP now sells PCs marginally cheaper than Dell, they’ve clawed their way back to a 16.4% global market share of the PC business and their stock price has outperformed Dell for a year.
What ails Dell? - Cnet Perspective, May 25, 2006
