Introduction
Recently, there has been a surge in interest in the computerization of processes around the world, as more and more operations are not only moved online (where possible), but also automated (where such possibility exists). Dell Computers Inc., situated in the United States, is a major player in the computer business. At the height of the computer revolution in 1984, the multibillion-dollar corporation was started in a university dormitory room. The company began operations in the founder's dorm room on the University of Texas at Austin's Austin Campus. In this essay, the company will be delved into in greater detail and viewed through the lens of organizational theories in a bid to determine what management issues may arise, from the perspective of the theories, at the organization. The essay will also detail the limitations presented by the two theories chosen in relation to Dell Computers Inc., and the different perspectives that could be linked with the theories.
Dell Computers Inc.
Texas based technology company, Dell Computers Inc., has always been at the forefront of the technology revolution, churning out revolutionary American products. The company which operates in the Information and communication technology sector is headquartered in the Round Rock area of Texas, USA. Today, the firm operates in more than a hundred countries across the six continents, mainly supplying computer hardware such as personal computers, laptops, data storage systems, servers, printers and other peripheral devices to the market. The company also designs, develops, repairs and sells computers and computer devices to the global market in which it has a considerable market share, serving government agencies, private businesses, homes, and educational institutions. The company is a private entity that seeks to maximize returns for its owners by exploring the productivity of its more than 140,000 employees (as of 2016) according to Forbes.com (2017).
The choice of Dell Computers Inc.
The choice of Dell Computers Inc. is majorly informed by the fact that, as () notes, the company was able to gross US $ 73 million during its first year of operation, a very rare feat in the computer industry, and by extension the global marketplace. In its more than three decades of existence, Dell Computers has not only managed to become a globally recognized brand but has consistently featured among the Top 100 US Companies, earning revenues of some US $ 50.9 billion (Dell Inc., 2017). Dell Computers has also been able to carve a name for itself in the cut-throat computer systems industry where so many other firms have failed; a testament to the entrepreneurial acumen of the founder, Michael Dell, and the resilience of the company as a whole. That the company has been able, as Berman (2015, p. 89) notes, to compete against competitors such as Lenovo who rely on low cost pricing to gain a competitive advantage also makes Dell a natural choice for this essay.
Organizational Theory Frames
In the study of organizational theory a number of frames can be fronted. In regards to Dell Technologies, formerly Dell Computers Inc., the two theories to be assessed and used will be the dynamic capability theory and the contingency theory. These lenses have been chosen in relation to the assessment of Dell Technologies Inc. because of a number of reasons. For one, the dynamic capability theory is relevant in the case of Dell Technologies because the firm may have been able to, as Teece (2014) affirms, create and sustain for itself (since founding and operationalization) a competitive advantage through which it has consistently made profits. Further, the relevance of the dynamic capability theory in the case of Dell technologies draws from the fact that the lens recognizes that firms may (just as Dell Technologies might have done over the years) draw competitive advantage from technical fitness (internal competencies) and evolutionary fitness (external opportunities) to offer the firm competitive advantage. The dynamic capability lens also makes sense in this case as it notes that capabilities are firm specific behavior, such as those that Dell Technologies, like/unlike many other computer industry players, was able to put into play in order to survive/not survive the cutthroat competition.
On the contingency theory, the choice was informed by the fact that Dell Technologies’ operations may have always been contingent upon the prevailing situations in the industry and market. Van de Ven, Ganco & Hinings (2013) in reference to the contingency theory asserts that effective organizations (which Dell Technologies seems to be) often model their operations to fit the contingencies of the environment. Dell Technologies Inc., in light of the contingency theory, may have always taken steps to adopt to the appropriate levels of structural variables that guarantee it organizational success instead of relying on just one way to operationalize its activities in the face of different objectives.
Relevance of Each Lens
In relation to the relevance of the dynamic capability lens in the case of Dell Technologies, the position of Barreto (2010) on the theory will be sought. Drawing insights from the dynamic capabilities lens, the creation of entrepreneurial performance can be a powerful force in the creation and sustenance of competitive advantage by a firm, as has been the case with Dell Technologies in the thirty three years of its operations. The views expressed by Barreto (2010) is relevant in this case because as it goes to point out that the specific behaviors of firms (being unique to such firm) can generate performance and create value for the firm; as has been the case at Dell Technologies which has been able to use both its internal competencies and external opportunities to not only generate revenue but remain relevant in the dynamic industry. Miles (2012), in support of this argument points out that capabilities are the behaviors that are unique to a firm and that usually go towards conferring a competitive advantage to such firm. In essence, as Miles (2012) summarily states, dynamic capabilities of a firm enable such firm (in this case Dell Technologies, to manipulate its resource base for its own good, and to allow it operate more effectively.
To establish the relevance of the contingency theory, the views of both Miles (2012) and Lam (2014) will be attached. On his part, Lam (2014) notes that the contingency theory calls for the tailoring of responses (in terms of a firm’s organizational structure) along the lines of the presenting challenges or stimuli. In such manner therefore, the contingency lens of organizational structure theory allows firms (in this case, Dell Technologies) to address and manage risks. Contingency theory, as indicated by the view of Lam (2014), also gives firms the freedom to tailor and apply the relevant approaches to risks facing the operation of such firm. Affirming these views as regards the contingency theory, Miles (2012) points out that organizational structure is often contingent on the situations prevailing, and that effective organizations (which by all indications, Dell Technologies is) fit the contingencies of the environment in which they operate. The contingency theory, in the eye of Miles (2012) also calls organizations to adopt appropriate levels of structural variables (not maximum level) in order to guarantee success, a fact that can be applicable in the case of Dell Technologies as demonstrated herein.
Management Issues
From the two lenses available, certain management and organizational issues are visible with respect to Dell Technologies. For one, from the lens of the dynamic capability theory, it is clear that Dell Technologies has been facing difficulties in its attempt to use its firm-specific strengths to confer advantage upon its operations. This is depicted in the inability of the technology giant, to move its operational base from personal computers to business computers, systems and servers as its competitors, mainly Hewlett-Packard (HP) and International Business Machines (IBM) have done (Benner, 2013). Still from the viewpoint of the dynamic capability theory, Dell Technologies has been struggling to have a foothold in the two main markets in which it operates, the PC market which contributes the largest share of its revenues, and the corporate computers and systems market, in which it is yet to make as big an impact as Oracle or IBM or HP, Benner (2013) alleges. From the foregoing, it is clear that Dell Technologies has not been able to ride on its technical fitness or evolutionary fitness, as Miles (2012) advises.
In contradiction with the premises of the dynamic capability theory, Dell Technologies has clearly failed to use its internal strengths and take advantage of its external opportunities to create and sustain for itself a competitive advantage. The firm has not been able to match, as Balakrishnan (2015) notes, the shifting tastes of computer users (in favor of cloud technology which companies like Microsoft Corporation and Amazon.com Inc have taken better advantage of) or to stay on top of the rising costs of components used in its products. As a result, the company has not been able to create and sustain a competitive advantage for its operations.
In essence, through the lens of the contingency theory, Dell Technologies has not been able to adapt to the environment in which it operates, and has not been able to fully take advantage of the shifts in consumer tastes and preferences, therefore failing to, as Miles (2012) puts it, fit the contingencies of the environment. In this manner, the company has been able to lag behind its competition (and peers) in the cloud computing sector or the shift from personal to big business (as opposed to government and small business) computer systems; systems which Bullertsa & Envory (2014) insist represent the future of computing. Dell Technologies has, going by the information on its website and comparing 2014 and 2016, been on a hiring fest, increasing the number of its workforce (from about 108,000 to 140,000 in under 4 years) instead of focusing on lean production that stresses the use of fewer but more productive employees. In this manner, the firm has failed to increase the value for its owners in short run (given the US $ 1.7 billion loss) as Lam (2014) alludes of the contingency theory.
Concerning Dell Technologies, a case can be argued (with the backing of the contingency theory) that the firm has yet to adopt the appropriate levels of structural variables to guarantee its success, especially in the face of its merger with the data storage company EMC which has been touted to be the largest-ever technology mergers, as Balakrishnan (2015) points out. Dell Technologies has largely failed to use its sheer size to dominate any one of the markets in which it operates.
Limitations of the Theories
Each of the theories floated here-above in relation to Dell technologies has certain limitations that may bring its positions to question. Concerning the Dell Technologies Company, as viewed under the lens of the contingency theory, the main assumptions of the theory hold that the company as well as the market in which it operates, are static and that once the firm achieves its desirable fit it will be in equilibrium. This premise is false as the industry keeps changing, swayed by a myriad of factors among them improvement of the existing (and emergence of new) technologies and shifts in consumer preferences. In this respect, the contingency theory is brought into question as it fails to take into account organizational change and adaptation.
Among the challenges facing the dynamic capability theory, as Drnevich & Kriauciunas (2011) observe is the fact that the theory may bring about negative impacts on firm performance especially if the environment in which the firm operates is static. In the case of Dell Technologies, as viewed through the lens of the dynamic capability theory, it may be possible (as per the theory) that the firm might not be able to replicate any success it achieves in one dynamic environment in another environment; this brings to question the dynamic capability theory.
Differences in Perspectives
Other stakeholders may hold divergent views in so far as the issues with Dell Technologies, as viewed through the two lenses here-above are concerned. Such perspectives may hold that Dell Technologies has been able to adapt to its operational environment and hence has satisfactorily taken into account the positions advanced by the dynamic capability theory which calls for the employment of firm-specific strengths in a bid to stay above the competition. In this regard, such examples as the company’s merger with EMC or acquisition of several other small players may have been in tandem with the theory’s advances. Such perspectives may also hold that Dell, since its inception has been able to create and sustain for itself a competitive advantage through which it has consistently made profits, as the dynamic capability theory supposes of companies.
With regard to the contingency theory, divergent perspectives may advance the position that the operations of Dell Technologies have been contingent upon the prevailing market/industry situation, as seen in the shift from just manufacture of computers systems and computer peripherals to the design, manufacture and repair of such; in line with the changing times in the industry. In this manner, such views would avow that Dell Technologies has often model its operations to fit the contingencies of the market and industry environment.
Personal Knowledge & Capability
To address the differences in the perspectives outlined herein, certain capabilities and personal knowledge may be required. For starters, it would be necessary to impart the knowledge of organizational structures and systems upon such dissenters. This would provide them with the capability to assess, in light of the two lenses delves into here above, the management issues at Dell Technologies. The knowledge would also enable them shift their thinking and depart from the view that Dell Technologies has been able to adapt to its operational environment and hence succeeds in the industry. Additionally, through the imparting of knowledge upon the dissenters, it will become clear to them that while Dell Technologies has been able to survive in the cut throat industry, it has not wholly taken advantage of its firm specific strengths as the dynamic capability theory calls for. It is possible that through the capability to discern competitive advantages, the dissenters will be able to recant their divergent views for they will clearly realize that either Dell Technologies has not taken, or may not have seen the need to take, advantage of such competencies and hence is not in a leadership position in the markets and industries where it operates.
Conclusion
Dell Technologies is, by all standards and indications, a tech industry giant. The company when viewed through the lens of the dynamic capabilities theory and the contingency is seen to have a number of issues and challenges in its organizational structure and operations. The contingency lens depicts the fact that Dell Technologies has not adequately been able to adapt to the environment in which it operates in order to take advantage of the shifts in consumer tastes and preferences. Managers can, from this example, take note of the importance of exploring firm-specific competencies and advantages in order to stay above the competition and in a leadership position in the industries that they operate. The case of Dell Technologies, as viewed from the two lenses may also highlight to managers (and budding managers) the need to change with shifts in the industry; by employing the firm’s dynamic capabilities.
References
Balakrishnan, A., 2015. Four challenges for the Dell-EMC deal. CNBC.com [Online] Retrieved September 20, 2017 from https://www.cnbc.com/2015/10/12/four-challenges-for-the-dell-emc-deal.html
Barreto, I., 2010. Dynamic capabilities: A Review of Past Research and an Agenda for the Future. Journal of Management, 36(1), pp.256-280.
Benner, K., 2013. Michael Dell’s Dilemma: Dell's earnings and stock price are up. But is its CEO making the bold moves needed to compete with IBM and Apple? Fortune.com [Online] Retrieved September 20, 2017 from http://fortune.com/2011/06/13/michael-dells-dilemma/
Berman, B. (2015). How to Compete Effectively Against Low Cost Competitors. Business Horizons, 58(1), 87 - 97.
Bullertsa, J.F., & Envory, P.M., 2014. End of the PC Era: The Place of PCs in Today’s Smartphone & Tablet World. Journal of Technology & Development, 9(1), pp. 143 - 161.
Dell Inc. (2017). About Us. [Online] Available at: https://www.dell.com/company/corporate/about-us.html [Accessed 20 Sep. 2017].
Drnevich, P.L., & Kriauciunas, A.P., 2011. Clarifying the Conditions and Limits of the Contributions of Ordinary and Dynamic Capabilities to Relative Firm Performance. Strategic Management Journal, 32 (1), pp. 254-279
Forbes.com, 2017. Dell on the Forbes America's Best Employer List. [Online] Available at: https://www.forbes.com/companies/dell/ [Accessed 20 Sep. 2017].
Lam, J., 2014. Enterprise Risk Management: From Incentives to Controls. Hoboken, NJ: John Wiley & Sons.
Teece, D.J., 2014. The Foundations of Enterprise Performance: Dynamic and Ordinary Capabilities in an (Economic) Theory of Firms. The Academy of Management Perspectives, 28(4), pp.328-352.
Van de Ven, A.H., Ganco, M. and Hinings, C.B., 2013. Returning to the Frontier of Contingency Theory of Organizational and Institutional Designs. Academy of Management Annals, 7(1), pp.393-440.
