Engineering the Value system

Executive Summary: Value chain has immense potential in terms of raising competitiveness of a business. This assumption will be justified through example of the Dell Corporation. This report is based on analysis of the existing literature on the topic and especially sources referring to the just-in-time production framework and mass customisation principles. The major goal of this work consists in exploring and identifying the need for change, its impact on refinement of strategic options, and assessment of positive and negative factors within a specific strategy. The first part of the report provides background information on the current state of Dell’s value chain. The second part contains a set of scenarios for improvement of the value chain and their impact on competitive advantage of the company. The final part summarizes advantages and risks characteristic of particular scenarios.Introduction:In 1984, Michael Dell founded a company named Dell Computer Corporation. The company’s creator began his career by fixing and enhancing IBM Machines while he was studying at the University of Texas, because it was a source of additional income for him. The initial investment equalled to one thousand dollars. Since then, Dell has grown considerably and has become a world renowned company achieving many successes along the way. Nowadays, its staff consists of more that 50 000 employees. Moreover, net revenues are estimated to be around 50 billion dollars. One of the major pre-conditions for the company’s success has been a thorough understanding of what the customer wants and expects. However, as the new century began, the Dell Company was not able to preserve that understanding, which inevitably resulted in the growing customer dissatisfaction and subsequent depreciation of its market position. Dell’s Value Chain:The concept of value chain was introduced in 1985 by Michael Porter. It gained immediate popularity. The concept was rooted in the idea that the main predictor of revenue growth was optimization of the value chain, because the latter was a generator of “total value delivered by an organization” (Antoniou, Levitt & Schreihans 2011). A value chain in that context was a set of activities that linked supply with demand within a separate organization. An enhancement of any component of the value chain (operations, marketing, logistics, sales, etc.) could generate revenues. The new notion also implied distinguishing between primary tasks and secondary or support tasks. The latter referred to human resources management, technology, development of infrastructure, etc. Control of activities related to the value chain allowed decision-makers to reassess and revise various operational processes in order to improve effectiveness, efficiency, and competitiveness. From the time of foundation and up until the late 1990s, Dell was an immensely successful company and one of the industry’s leaders. It should be noted that one of the keys to that success lied in effective realization of the planning function, especially in the primary tasks domain (logistics). The value chain system of the Dell Company is represented below.The Value Chain at Dell (http://www.dell.com)Logistics:Initially, the Dell Corporation concentrated on inbound logistics. It resulted in an absence …