Organizational Behaviour (UU-BBA-3012)

Final Assignment: 60 per cent of module marks

Instructions:

Final Assignment Brief & Guidelines

Assignment Scenario

For this assignment you need to read the Dell Integrative Case Study that follows after the
instructions and then proceed to answer all ten questions that follow. Please bear in mind that
your answers to the questions must be in the form of a report. Make sure that you read all of the
instructions very carefully before you proceed to write your report.

Your report must be comprised of the following sections:

 Cover page and table of contents.

 Introduction.
 Main body of the report (essay content, analysis and review of literature. All the elements that
are included in the report must be adequately analyzed and supported with material that is
properly cited, paraphrased and referenced from a wide variety of external sources).
 Conclusions (bring together your main points, address the main points as indicated above and
adequately summarize the findings of your assignment.

Marking criteria:

Element Weight %

Presentation (General Presentation and APA referencing) 10

Essay content 60

Essay structure and organization 20

Language clarity and accuracy 10

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 The following points should be noted for this part of the assessment:
 This is an individual assignment.
 The total number of words for this assignment should be 3000 words (+/- 10%) This does not
include the reference list and any appendices the report may include.
 The assignment should be your own work and properly referenced according to the
requirements of the APA Referencing system.
 Literature should be sourced from a variety of external sources such as textbooks and journal
articles. 
 The assignment must be submitted in a single word document using the corresponding link
found in the toggle titled “Final Assessment Point” and it will be automatically checked with
“Turnitin”.
 Accurate referencing of sources is crucial in this assignment. Please REFERENCE all sources
using the APA referencing system and make sure that you are familiar with this. 
 Please familiarize yourself with the regulations on late submission. 
 This assignment carries a weight of 60% of the final module grade.
 This assignment must be submitted on the due date (end of Week 4 - the last day of your
course period) by 11:59 pm (23:59 hours) VLE (UTC) time at the latest.
 Feedback will be available within 6 working days.

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 Dell Integrative Case Study: A Little Bit of Soul and a Lot of Success

In the Beginning

In the fall of 1983, a young man from Houston, named Michael, enrolled in the University of Texas
intending to major in pre-med as his parents had wished. While taking classes, he continued the business
he had begun in high school, upgrading personal computers for friends and teachers—this time out of his
dorm room. By the start of the second semester, he had made enough money to move himself (secretly)
and the business to a condo. By semester's end, he had rented office space, hired a few employees, and
officially launched the Dell Computer Corporation. University days were over, and a great American
business success story had begun. (1)

Ten years later at age 28, Michael Dell had become the youngest person to be CEO of a Fortune 500
company. During the 1990s, his startup had surpassed IBM to become the second largest computer
manufacturer in the world. And by the end of that decade Dell passed Compaq to claim the title as top
computer manufacturer and seller globally. In doing so, Dell achieved a seemingly impossible goal he had
set early on.

Michael Dell's success was due in part to his high intelligence, healthy ambition, and exceptional will to win.
He also surrounded himself with smart people and allowed them to manage important functions of the
company. He developed the strategic vision of being a global leader in personal computer markets by
staying close to the customers and selling direct. And, Dell worked closely with his managers to maintain
that critical focus. Dell saw mistakes as opportunities to improve, and the company is now known for
learning from its errors and not repeating them. (2)

During the first decade and a half of its life, Dell's mistakes were due to the usual growing pains—or rather,
the unusual explosive growth of the company. In the late 1980s, not long after the company had sold its
first shares of stock to the public, Dell got caught with excess inventory of memory components, violating a
company credo. The company also had to cancel an ambitious product development line because it offered
more technological sophistication than Dell's clients wanted to purchase. Both of those missteps were used
by management to refocus on their core values of having only the minimum required inventory and paying
close attention to the real needs of their customers. A couple years later Dell jumped into the booming
electronic retail market, selling its brand at Best Buy and CompUSA. Dell then jumped right back out
again—against the advice of all the business prophets—when it discovered that the company was not
making money from those sales. Once again, a drift from the company's central vision of selling direct had
harmed growth and profitability. (3)

Armed with the knowledge learned from these mistakes, the company was poised for greater success in
the new millennium. Michael Dell's original investment of $1,000 had grown into an industry-leading
corporation with more than $50 billion in sales in 21 years. Yet one serious crisis loomed, and it would test
all that management had learned.

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 Crash

One year into the new century, the Internet bubble burst, and the stock market took a dive. With the global
slump in technology sales, especially bad in the United States, Dell Computers stopped growing. In 2001, its
stock price fell from $58 to approximately $16 a share. Most traumatic of all, the company had to
implement its first layoffs; 4,000 employees lost their jobs. Even those retained were stressed, not only
from the fear of future reductions, but also from the financial losses due to the sharp decline in value of
their stock holdings. A company proud of valuing its people now had a morale problem. Top leaders
conducted an anonymous internal survey and learned that 50% of their employees would be willing to
leave Dell for a comparable job at another company.

Kevin Rollins, then president and now CEO, along with Michael Dell, decided that a change in corporate
culture was necessary. The existing mindset was to be tough and win at all costs. The top-flight,
competitive, and financially driven employees of the growth years were not necessarily compatible with the
realities of the present. Rollins believed that in order to make Dell a place where people wanted to work
and stay, the company needed to find ways to motivate employees without the expectations of becoming
wealthy from stock price increases. After multiple meetings with managers and leaders within the
company, Rollins was able to articulate the primary values under which Dell would operate. He called them
“the Soul of Dell.” (4)

TABLE XX.1 Soul of Dell

Customers

We believe in creating loyal customers by providing a superior experience at a great value. We are
committed to direct relationships, providing the best products and services based on standards-based
technology, and outperforming the competition with value and a superior customer experience.

The Dell Team

We believe our continued success lies in teamwork and the opportunity each team member has to learn,
develop, and grow. We are committed to being a meritocracy, and to developing, retaining, and attracting
the best people, reflective of our worldwide marketplace.

Direct Relationships

We believe in being direct in all we do. We are committed to behaving ethically; responding to customer
needs in a timely and reasonable manner, fostering open communications and building effective
relationships with customers, partners, suppliers and each other; and operating without inefficient
hierarchy and bureaucracy.

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 Global Citizenship

We believe in participating responsibly in the global marketplace. We are committed to understanding and
respecting the laws, values, and cultures wherever we do business; profitably growing in all markets;
promoting a healthy business climate globally, and contributing positively in every community we call
home, both personally and organizationally.

Winning

We have a passion for winning in everything we do. We are committed to operational excellence, superior
customer experience, leading in the global markets we serve, being known as a great company and great
place to work, and providing superior shareholder value over time.

Source: www.1.us.dell.com

A Little Bit of Soul

Dell's vision statement declares that the company is committed to providing its customers “a superior
experience at a great value.” Management expects to do so through open communications and by building
effective relationships with customers and suppliers. Dell also emphasizes participating responsibly in the
global marketplace, that is, by respecting laws, values, and customs in places where it does business. In
addition, the company understands that continued success requires teamwork and the opportunity for
each team member to learn, develop, and grow. Dell's culture also emphasizes operating as a meritocracy
and attracting, retaining, and developing the best people in the worldwide marketplace. Finally, the core
values or “soul” of Dell include a “passion for winning in everything” that the company does. Dell managers
pledge to achieve operational excellence, to maintain superior customer service, and to be the leader in
global markets. Of course, any company can create an impressive vision statement. What it actually does
will define its character.

Training and Development

Andy Esparza, Vice President of Global HR Services, recognizes that while Dell has a unique and strong
business model, that model is only as good as the talent of the people acquired to make it work. Esparza
says that because the company emphasizes consistent improvement and continuous growth, it encourages
its employees to search for ways to extend and grow the company. As a result, people working for Dell are
challenged on a regular basis. However, their strong performances are also regularly recognized and
rewarded. Further, employees' skills and capabilities are developed on a continuous basis to meet those
challenges. In fact, the constant growth of the company has created many opportunities for Dell
employees, which in turn keeps the pressure on Dell to continuously develop employees' skills so that they
are prepared to take on the new jobs as they become available. To meet these needs, Dell has substantially
increased its investment in the development of people and its teams. It has invested more in formal
training, in on-the-job learning, and in mentoring and coaching people to learn and grow. The company also
invests significant time and effort in building leadership skills and high-quality teams.

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 Leadership and Teams

The company administers an employee attitude survey semiannually. Leaders and managers are expected
to use the results of the survey to hone their skills. They are required to establish goals for improvement,
which are then measured in the next survey. Leaders' and managers' rewards are tied not only to the
standard business outcomes but also to a measure of their teams' employee satisfaction and their own
contribution to the development of a positive culture. In fact, leaders are expected to discuss the results of
the survey with their employees and to explain how they intend to make changes that will enhance
employee satisfaction and productivity.

Esparza believes that Dell's team-based culture and nonhierarchical organizational structure are attractive
to employees. People see, he contends, that job titles are largely unimportant and that they are judged on
their knowledge and contributions to team and organizational performance.
Esparza describes Dell as a boundaryless organization. The company uses many cross-functional teams,
especially in the global environment in which it operates.

Because of this culture, the emphasis on employee satisfaction and productivity, and the use of merit-
based rewards, Dell has been able to attract the top talent in the labour market. And Esparza believes that
the firm's human capital, building of employee skills, and the strong motivation engendered by the culture
are the primary reasons for Dell's continued phenomenal growth. He suggests that Dell's entrepreneurial
spirit attracts people who desire to work in an energetic, high-growth environment. (5)

Reinforcing Structures

Dick Hunter, Vice President, Americas Manufacturing at Dell, notes that the results-oriented culture does
more than bring in productive people. He says it builds an organization with a sense of responsibility and
accountability. For example, he receives a report on the current production in all of his plants every two
hours. The current CEO, Kevin Rollins, and Chairman of the Board, Michael Dell, receive production and
selling reports at the end of each day. If the men at the top identify an anomaly in Hunter's area of
responsibility from one of those reports, they contact him directly and ask for an explanation. Rollins and
Dell also conduct an operations review with him once every quarter. In these sessions, approximately 20
percent of the time is directed at previous performance, but the rest is focused on dealing with any current
important problems and/or looking to the future. Hunter and Michael Dell visit a different factory every
quarter, walking around many of the job sites and talking to the employees. That kind of active hands-on
leadership makes for a high-touch environment throughout the company.

Communication

Hunter reports that all leaders and managers are expected to hold town hall meetings with their team
members/employees to discuss the unit's activities and projects and obtain employee feedback. These are
similar to the sessions examining the employee attitude survey results described earlier. In the
manufacturing sector, Dell also has a quality control program designed to align the approaches and
viewpoints of all managers in all North and South American units. Team leaders hold meetings at the start
of each shift for about 15 minutes to address the day's key issues.

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 Company leaders are expected to have one-on-one meetings with each employee at least once a month. In
fact, Dell limits the number of people who report to any one supervisor specifically to ensure the
opportunity for these one-on-one meetings. These 12 annual meetings for each employee promote
communication and build effective relationships between leaders and team members. Hunter believes
these approaches allow everyone in the organization to feel they have a shared ownership of the company
because they have a shared responsibility. Because Dell is a low-cost provider, everyone in the organization
understands that they all “own” the costs as well as the productivity. Therefore, all employees are expected
to continuously search for better ways to manufacture, to solve problems, and to reduce costs.

Hunter says that all leaders are expected to receive at least a 75 percent positive response on the employee
attitude survey. If they do not meet that standard, they must take action to improve. On the other hand,
those who receive a 90 percent or greater positive response are recognized formally in meetings, are well
rewarded, and are encouraged to conduct training programs to explain to their peer leaders how they did
it.

Dell has an open door policy, which is referred to as “one-on-one.” Any employee can meet with any leader
in the company if he or she desires. Obviously, this is not the chaos of meetings-on-demand; reasonable
requests and scheduling responses apply to both parties. V. P. Hunter says that he conducts three to four of
these one-on-one meetings with employees (at their request) on a daily basis. And he has almost 8,000
people in his area of responsibility.

Another interesting approach used at Dell is “Answer First.” Here, leaders and professionals are encouraged
to present a particular problem and their “answer” before explaining how their solution resolves the
situation. If everyone agrees with the answer up front, the meeting is over. Hunter claims that some
“Answer First” meetings last no more than 10 minutes because of the approach, thereby saving all
participants a lot of time—and, no doubt, raising morale for busy people. This may be frustrating, however,
for presenters dying to explain why their “answer” is the best. Yet, others at the meeting might well request
elaboration. Thus, the presenter always has to be prepared with the data and a logical explanation to
support the answer offered. (6)

Entrepreneurial Spirit

In support of Andy Esparza's assertion of Dell's entrepreneurial culture, Dick Hunter explains that their
people are encouraged to take measured risks. In fact, he often oversees several projects outside of his
normal manufacturing responsibilities. In many cases, people develop pilot projects to test their ideas in
practice. If their suggestions work, they are usually implemented on a broader basis. If they don't, well, it's
back to the drawing board with little lost and no penalties for trying.

Encouraging creative solutions is one aspect of how Dell translates its “soul” into business reality through
sound people policies. Table XX.2 summarizes the company's approach to managing human capital.

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 TABLE XX.2 Dell's Approaches to Managing Human Capital

1. Positive Corporate Culture

2. Maintain a meritocracy

3. Be a highly desirable place to work

4. Be sensitive to employees needs

5. Promote entrepreneurial spirit

6. Team Based Actions

7. Make all employees team members

8. Maintain a nonhierarchical structure

9. Base status on skill and experience not title

10. Give everyone ownership of problems and successes

11. Performance Orientation

12. Make winning highly important

13. Emphasize achieving business goals

14. Monitor performance/be data driven

15. Maintain a strong emphasis on efficiency (e.g., Answer First)

16. Valuable Leadership

17. Use attitude surveys to improve leadership

18. Maintain positive employee attitudes

19. Do substantial leadership training (formal programs and on-the-job)

20. Successful Communications

21. Hold town hall meetings with employees

22. Require one-on-one meetings with each employee once a month

23. Maintain an open door policy

24. Establish strong relationships with customers and suppliers

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 … Will See You Through

When a company has quality people-management capabilities, it can respond effectively to crises.
Consider: Because Dell's “just-in-time” manufacturing model holds no inventories, it is fast and flexible. Yet,
this policy places Dell in peril of supply disruptions. In fact, in 2002 a lockout among several of its part
makers and supply partners generated serious problems. Dell responded quickly. It dispatched what was
referred to as a “tiger team” of logistics specialists to several ports, where they worked with Dell's network
of suppliers to develop a contingency plan. They implemented the plan by chartering 18 Boeing 747s from
several airlines to carry the parts from the manufacturers to Dell plants. (One 747 can carry enough parts to
manufacture thousands of personal computers.) Dell also had people in every major harbour to ensure that
its parts were the last to be loaded on each cargo ship so that they would be the first to be unloaded when
the ships reached their destinations. A 10-day supply blackout was overcome by this tremendous effort,
and not one customer order was delayed.

In 1993, Dell carried 20-25 days inventory in its warehouses. By 2004, it had no warehouses. Nonetheless,
the company assembled nearly 80,000 computers each day. Speed is crucial in this type of operation, as
well as a very well-honed relationship with suppliers. (7)

The positive organizational culture created at Dell emphasizes rewarding performance and winning by
attracting, retaining, and developing the best human talent in the industry. Dell continues to be
entrepreneurial, highly productive, and able to achieve significant growth. In 1997, the company had
approximately 11,000 employees and $10 million in annual sales. In 2005, Dell exceeded $50 billion in
annual sales and had 57,000 employees. Interestingly, 55 percent of those employees were in global
operations outside of the United States. In 2005, Dell Computer Corporation was named by Fortune
Magazine as “America's Most Admired Company”.

Since 1982, Michael Dell's college dorm startup has grown from a curious industry phenomenon into one of
the most prominent and respected corporations in the world. It was able to reenergize and refocus after
the high-tech bubble burst because it never lost its soul. Dell managers and business experts attribute this
remarkable resilience to a number of factors, namely its approach to tasks, leadership focused on ensuring
that the company has the top talent in the industry, and a highly motivated and positive workforce.
Critically, at Dell the strategy of the firm and its human capital management are in alignment. That harmony
has led to incredible and sustained success. (8)

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 Footnotes

1. P. Ng., P. Lovelock & A.F. Sarhoomand. 2003. Dell: Selling directly, globally. In M.A. Hitt, R.D. Ireland
& R.E. Hoskisson (Eds.) Strategic Management: Competitiveness and Globalization (Cincinnati:
South-Western), pp. C. 153-C. 170. For a complete rendering of the first 15 years of the company,
see Michael Dell's own book, Direct from Dell: Strategies that Revolutionized an Industry (New York:
Harper Business) 1999.

2. Pletz.J. 2004. Michael Dell's view from the top. Austin American
Statesman, http://nl.newsbank.com, May 2 .

3. Direct from Dell, op. cit.

4. Pomeroy.A. 2005. Agent of change. HR Magazine, www.shrm.org/hrmagazine, May; B. Stone. 2004.

At Dell, he's no second fiddle. MSNBC, www.msnbc.msn.com, February 23.

5. Interview with Andy Esparza, Vice President of Global HR Services, Dell Computer Corporation, June
30, 2005;

6. Interview with Dick Hunter, Vice President, Americas Manufacturing, Dell Computer Corporation,
June 27, 2005.

7. B. Breen. 2004. Living in Dell time. Fast Company, November, pp. 86-97 .

8. Serwer. A. 2005. America's most admired companies: The education of Michael

Dell. www.fortune.com, February 22 .

This case was prepared by Michael A. Hitt, Chet Miller and Adrienne Colella for Organizational Behavior:
A Strategic Approach. The inspiration for this case came from Jayme Heffler, our Editor. We owe her a
debt of gratitude.

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 Questions (10 marks each)

1. Identify the aspects of high involvement management contained in the “Soul of Dell” vision
statement.

2. Describe how Dell’s approach to global manufacturing reflects an awareness of cultural diversity
issues.

3. Explain the importance of globalization in Dell’s growth strategy.

4. Outline the problems that might arise due to globalization for a firm that is dedicated to direct
customer sales? Support your answer with examples from Dell’s history.

5. Analyze the strategic importance of leadership at Dell.

6. Explain how the leadership theories discussed in your Ebook apply to Dell?

7. Illustrate how Dell’s meeting and communications procedures would resolve conflicts within the
organization.

8. Analyze the strategic importance of Dell’s nonhierarchical structure.

9. Assess how Dell’s culture is reflected in its organizational structure.

10. Evaluate how well Dell has managed change.

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