Friday, June 01, 2007

The flipside to Dell expanding its distribution: cutting jobs

Hot on the heels of news that Dell is expanding its distribution into big-box retailers like Wal-mart (not to mention the veritable train wreck going on in my comments section), comes news of Dell's planned workforce reductions.

BBC: PC maker Dell to cut 7,000 jobs
At least 7,000 jobs are set to be lost at computer firm Dell after it said it would cut its global workforce by 10%.
The PC maker has struggled with falling sales and rising costs, prompting founder Michael Dell to take direct charge of the firm earlier this year.
Mr Dell said the job losses would be "difficult" but stressed they were critical if the firm was to deliver better value to customers.
The US firm employs more than 78,700 staff worldwide.

So in an effort to make more money in the last year, they've slashed prices, opened their doors to retail, and are now giving some workers the sack. No dissrespect intended to my new friend RichardatDELL, but is there any broad, generic, textbook strategy that they haven't tried?

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Charles Farley said...

There is an odd likeness to Circuit City going on here...


Anonymous said...

I am honoured by the reference as " new friend," although not really sure how to take it. Im working on the train wreck.

On our business turn around, allow me a couple thoughts on your question about broad textbook strategies not being tried.

Slashing prices you said. If you look at our quarterly earnings you will find that our "focus on more richly configured customer solutions and a better mix of products and services yielded significantly higher average selling prices and a better balance of profitability and revenue growth." Thats not price slashing.

On the product front we are going to bring to market innovative solutions with the latest technologies and leading-edge industrial design. For example, we just introduced some flash-based, solid state drives (SSD) as an alternative to hard disk drives on corporate notebooks. SSDs, which have no moving parts, bring a new level of reliability, performance and noise reduction to customers seeking the best in mobility performance.

The announcement of head count reduction is about eliminating redundancies. Its about aligning our operating expenses with the current business environment and growth opportunities. Its about getting closer to our customers again.

To put some of this in a broader context for your consideration, when Michael Dell resumed the CEO position he identified several issues and strategic directions for turning around the business. He also noted that we didnt get here in a quarter or two so the transformation was going to take effort over time.

Globally the business has different challenges depending on markets. He noted we needed to regain our focus and direct connection with customers. And, that bureaucracy was an issue limiting our nimbleness and effectiveness.

Turning around a $60 billion global business does not come over night, nor with a single silver bullet.

To accurately reflect on what we are trying to achieve, you might want to look at the fundamentals we are working towards: restore competitiveness to the core business; re-igniting growth; and building solutions critical to customer needs.

I hope that adds some information and value to what we are working to achieve.

Anonymous said...

Hey Lee, wanted to catch up with you and make sure you were aware of the recent announcement that we have entered our third retail partnership in our evolving global retail strategy. In August, we will begin selling products in Bic Camera stores throughout Japan to connect with customers that we may not have reached in the past. Thats in addition to the Wal Mart one, when I mentioned more was to come and then the UK announcement.

Also, since we "compared notes" on the turn around strategy, I also wanted to point out this report from Bloomberg earlier this month reviewing some of the action to date and directions

And, I am sure you have seen some of the new products and advertisements :-)

Just wanted to catch up since we had discussed previously