Marketing Management
HBS case
Dell Computers (A): Field Service for Corporate Clients

2014/9/30 Members: MBA 張君熙 Troy60355023O MBA 蘇怡如 Claire 60355018O MBA 林歆芸 Cindy 60355013O MBA 黃小瑄 Susan 60355007O

Q1.What should be Dell’s positioning in the server market?
According to the case, we find out Dell’s characteristics and analyze with STP Model (Figure 1).

• The category of users：Business、Customer Segmentation • Users needs：Entry - Level、Midrange 、High-End server • Acceptance of price：Low、Moderate、High price

• Business Targeting • Entry - Level server • Low price

Positioning

• The direct distributor who provides Entry-Level servers to the companies with low prices and high-quality service after sales.

We can know Dell is good at entry-level server from exhibit 4～6 in the case.

Business clients comprise 90% of Dell’s customers. Because of Dell Direct and Inventory Control, Dell can provide low prices to its customers. Dell improves its first-time resolves to almost 90%.

↑Figure 1: Dell’s STP in the server market

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Q2. Whether Dell should create an in-house field service team to ensure service quality and maintain control of its customer relationships or outsource the field service to a third-party provider? Justify your suggestion.
First, we analyze the pros and cons of Dell’s outsourcing (Figure 2).

Pros
Centralizing sources on core operation

Cons
Being unable to control products’ quality

Saving considerable downtime

Losing customers

In accord with lean production standard

Having possibility of leaking customers’ important data by the third party

Cutting down training expense

↑Figure 2:The Pros and Cons of Dell’s outsourcing

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Next, we will discuss the environmental impact of the period (Figure3):

Dell value

Customer

Dell

Purchasing spare parts

Customer

Intermediary

Competitors

Produce and develop independently Reducing the cost of manufacturing and development (e.g., Wikinomics and transnational production)

Replaced by technology gradually (Shortening industry value chain)

↑Figure3:The environmental impact on Dell and its competitors With the rapid progress of technology, globalization and the internet rise, the cost of development and production reducing, the demand for intermediary declines and so on. These factors start to threaten Dell’s advantage of low price. We think Dell should use its profound understanding of customers as its competitive advantage. If Dell can do field service on its own, it not only avoids losing customers but master customers’ need and information immediately. Dell can use this information to do product forecasting or become business consultant in the future. As a result, we consider that Dell should not outsource Field Service.

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Q3. Would it make more sense to buy the larger equipment from one of Dell’s competitors instead?
According to the case, we speculate:  Kapoor’s company needs more specialized equipments to deal with the enterprise’ IT / IS development.  The larger equipment is expensive and important, so it is very urgent to buy it. We will discuss under two situations (Table 1): Plan A: Continue to use large equipments which are launched by Dell. (Outsource Field Service) Plan B: Do not use Dell’s and change the vendor. ↓Table1: Plan A vs. Plan B Advantages  Disadvantages Without it own Field Service supports, risks will increase when using the large equipments. Important corporate information maybe loses in a third-party relationship. The company is unable to meet the urgent needs of the equipments if it waits for Dell developing a dedicated team. Different vendors for service and product are too complicated. Price may not be the best. It takes money and time to use new system. Employees need retraining and adaptation. Reconstruction of data formats.

   Be familiar with the using way. Be able to get great prices under the long-term cooperation.

Plan A



  With professional Field Service, immediacy and flexibility can be possessed. Growing company will purchase more services and equipments. SO, other vendors’ services can satisfy them.

   

Plan B



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In our opinion:  Short term: Dell can’t provide Field Service to the companies which need to solve the problem quickly, but other companies can support. If we choose plan B, we need to pay more cost. But it will result in greater losses when the equipment cannot be repaired immediately. In addition, employee training can be carried out early or using simulation exercise systems which provide experience accumulation. Moreover, data systems can choose batch import rather than comprehensive intense reform. So, it can reduce friction when system conversion  Long-term: When the company is at the period of expansion, demand of large equipment will increase. It is a big problem that Dell is unable to provide Field Service. In contrast, there are many skillful firms in the market. They not only provide maintenance, but also knowledge which helps to choose the correct equipment when company is growing. Therefore, our conclusion is:

Selecting plan B (use other companies' equipments)
Because short-term deficiencies can be overcome and reduce the damage. And be able to meet the long-term development of enterprises

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