Dell Boy Computers - Case Study Example

Dell Boy An organization's real e decisions will be most effective and efficient if these given decisions enable the attainment of the company's overall business objectives. This positive result can be achieved given an explicit consideration of how real estate strategy supports corporate strategy and the substrategies for component elements of the corporation, and then in turn how specific real estate operating decisions support the real estate strategy. Private real estate development projects works to create jobs, improve the tax base and encourage commercial development in a particular district or area. This specific approach provides a special context for combining differing and competing interests and increases the likelihood that a specific real estate decision will be consistent with the enterprise's overall real estate strategy and thereby support realization of corporate business objectives. (Whitehead, 1997) Dell Boy Computers relies on its brand name, the promise of support and its massive market presence to balance higher costs. As Dell Boy Computer Company is selling into an increasingly sophisticated and price-sensitive marketplace, it needs to do forward integration to market its profitable high-end computer products. To fortify its profit generating objective, Dell Boy goes into real estate development by creating apt settings for human activity that are in harmony with the environment and providing distribution services for its suppliers and customers. The top management of Dell Boy is restructuring the organization around common capabilities to achieve better strategic focus. The Company will renew profits and growth by focusing resources and management attention on three key areas: a.)Increase the volume and value of the market share in computer products through forward integration consisting of special warehouse services and an excellent service delivery platform; b.) Expand profit and revenue growth in personal computers by promoting aggressive and consistent marketing and promotional activities; and c.) focus on new business in the existing demand from the educational segment and in the small business and home personal computers segment. The company needs to be more selective about its property purchase as location is an important consideration for this project. The company can construct a big commercial lease building which can house its distribution operations and it can also be rented out to other commercial tenants. Through forward integration, Dell Boy Company will achieve important cost synergies, eliminate redundant management layers, and decrease other ancillary operating expenses including discretionary spending, which are expected to result in annual cost savings for the company. As Dell Boy Computer Company integrates forward into real estate, warehousing and distribution, the company needs to understand the benefits, and the development process this development entails. Property development for computer companies requires a clear perspective of public administration, physical planning, municipal regulation, market research, legal system, site appraisal, economic evaluation and assessment, financial contracts, contractual and bidding procedures, building design, construction designs, and marketing strategy aspects. The crucial costs of time, quality, and asset value are seriously considered. (Ratcliffe, et. al., 2003) The other leading computer companies such as Red Fox USA and Toshiba had relied on indirect distribution channels such as various retail stores and large shopping malls while Apple Computers, markets its products directly to the end users. For instance, Kwantinetz stated that Compaq's traditional sales and distribution technique covers a total of 90-day period for building, transporting, inventorying and setting the cost value of its manufactured goods to its existing indirect distribution channels. This very long lead time has added a tremendous 6 percent to Compaq's cost of business operations. To enable Compaq to service its distribution and marketing channels, the company maintained in-house inventory levels consisting of 35 days. The company's distributors also chalk up another 45 days to move the inventory through to a final sale. Then an added seven days are needed for the manufactured inventory to be shipped in transit. This distribution system had forced Compaq to have 70 days' more manufactured inventory in the production process. To maintain its competitiveness, Compaq decided to offer its resellers price protection for the manufactured inventory during the period that its products were in the pipeline. This is a very crucial time span since equipment parts cost for computers can decline from 30 to 35 percent in any given year. Compaq's very competitive rivals can respond by reducing prices. On the other hand, Compaq has been forced to price-protect its distribution channels up to the final sale. In short, Compaq was forced to finance and cost-guarantee its inventory, risking price declines on that inventory covering 70 days. Compaq lost an additional 6 percent due to the difference in what it costs to support the resellers' markups of their dealer compared to its cost if Compaq directly marketed and supported the same products. Thus, the prolonged inventory cycles and distribution channel process markups a 12 percent cost burden for Compaq. For the forward integration process to be viable and successful, Dell Boy Company computers must evaluate the potential returns against the potential risks and the degrees of uncertainty of this real estate decision. The operational objectives are paramount in a real estate development. Moreover, the enhancement of Dell Boy Company computer's corporate image is an essential factor for this decision. In terms of the generation of ideas to meet the company's established income and profit objectives, the managers must ensure that the property development is focused on imagination, opportunity and venture. A real estate project at the local level will deal with various aspects of tax increment financing, bonds, land assembly and eminent domain. The managers need to tackle the aspects of land development such as zoning, urban planning and assorted aspects of regulatory constraints and hurdles. The project will need to assess local political support, acquire community support and promote the project's value to stakeholders. In addition, the company can emphasize the quality of design, construction and finish of the warehouses. The company must put a premium on ensuring all of the operational needs of the building before proceeding with the construction. (Scarrett, 1995). By building distribution warehouses, Dell Boy must effectively leverage the company's capabilities for their customers' success, and thereafter take the necessary measures to maintain a healthy balance between the company's revenue growth and profit levels. Furthermore, the company maintains its very strong commitment to product innovation, its expertise in algorithm optimization and computer systems development. The company's sleek silicon design is combined with advanced software application knowledge and high standard technologies to solve unique computing challenges. In the development of the warehouse for facilitating distribution, variable factors such as size, complexity, time, sophistication, economy, degree of innovation and extent of external forces has to be considered. The managers need to identify the key decision points in the process of development, such as when planning permission is granted, acquisition completed, building contract completed, to determine the consequences that flow from such events. Market research and marketing underpin every stage of the property development process. Market research is geared toward determning the demand and supply for computer products by geographical area. An improved level of market research has to be focused and systematic, since it will facilitate the swift distribution of the computer products. Alternative sites for Dell Boy Computers warehouses can be identified and assessed thoroughly in a given geographical area. The managers must decide the scope and extent of surveys and tests that need to be conducted, by whom and at what cost, in order to arrive at sufficient information to analyze the financial feasibility of a development proposal. The Dell Boy Computers warehouse project will entail a detailed assessment of market demand and supply. It will also present a series of projections of rents, values and yields. Structural engineering design foundations and subsoil will also be done. A check is conducted to ensure that the basic concept achieves the optimum use of the site or buildings and maximizes the amount of operational space. This real estate strategy is an integral aspect to the realization of the business purpose. It serves as an input to the production and service delivery function of the business. The warehouse needs to be in close proximity to the end users, customers and the suppliers. There needs to be optimal spaceto accommodate ample working space per worker. The building to be built will project the company image, external appearance, internal ambience of convenience to employees, suppliers, customers and financial stakeholders of the project. The real estate strategy is to facilitate and control production, operations and service delivery. This strategy can be addressed by a three pronged approach: seek and design facilities that will distribute the company products, favor locations which are convenient for the suppliers and favor lay-outs that are convenient for customers. The design of the physical spaces must complement all aspects of the managerial process. In addition, a component of the real state strategy that will be used is the Method of Distribution. This pertains to the attempt of the business to provide products and services that can be sold by its distribution system. Its capabilities support improvements in the distribution system. The company's products are distributed using the system. After an economic base study has shown potential growth for a geographic area, a market analysis of the trade area must be undertaken to evaluate the prospects of a site for a real estate development. (Banfield, 2006). For example, Cisco Systems in San Jose had adjusted its sales, marketing and distribution to the Internet-based "marketspaces." Cisco sells to sophisticated, highly-knowledgeable buyers such as Internet Service Providers, corporate communications managers and telecommunication operators. Every aspect of the sales function which spans credit checking, online order taking, immediate scheduling of manufacture, and displaying automated catalogs to sales prospects takes place over Cisco's extranet. This process has dramatically reduced its cost of operations and the total size of the sales and manufacturing staff. The needed customer technical support and inquiries are also supplied on the same system. (Business Communications Review, 1997). Dell Boy Computers real estate decision of building a warehouse for distribution operations will be most effective and efficient as it enables the attainment of the company's overall business objectives. This positive result can be achieved given the cost savings, close relations with the consumers, close support for the company suppliers and the profitable real estate investment of the company. References: "Distribution: Cutting out the Middleman." (1997). Business Communications Review. Volume: 27. Issue: 8. Weatherhead, M. (1997). Real Estate In Corporate Strategy. New York: Macmillan. Banfield, A. (2006). Stapleton's Real Estate Management Practice. New York: EG Books Scarrett, D. (1995) Property Asset Management. E. & F. N. Spon Ratcliffe, John, Michael Stubbs and Mark Shepherd. (2003). Urban Planning and Real Estate Development. New York: Spon Press. Wheelen, T. L. (1995). Strategic Management and Business Policy (4th Ed) Addison Wesley Hartigay, S. & Yu, S. (1993). Property Investment Decisions. A Quantitative Approach, E. F. N. Spon Read More