UBMM2023 Organisational Behaviour

1.0 Introduction

1.0 Introduction
1.1 Company Background Dell Computer was founded by Michael Dell at the age of twenty one in his dorm at the University of Texas, Austin. It is an American multinational information technology corporation that develops, sells and supports computers and related products and services. The company is listed at number 41 in the Fortune 500 list ("Fortune 500", 2006). Dells main strategy is to build computer only when orders are received (Build-toOrder). This build-to-order strategy has made Dell the most successful company in the information technology field. On the other hand, the channel disintermediation strategy of Dell has facilitated the fast growth of the company through direct marketing. Since 1990, Dell Computer has been offering personalized services such as maintenance, trouble shooting, servicing, repair and customization for all Dells products. At that time, no company could provide such responsive, efficient and personalized services at reasonable and sustainable costs as Dell. Michael Dells visionary and innovative leadership has made Dell the second most successful PC maker in the industry in 2007, second only to IBM.

The achievement of Dell today must be attributed to its successful organizational structure. This report discusses the organizational structure of Dell to develop in-depth understanding on how Dell applies theories of organizational structure to its operation. Organizational structure plays an important role to enhance responsiveness to customers, work efficiency, communication within company and flexibility. As Dell continues to grow and expand around the globe, works and tasks are becoming more complex and complicated. Human resource starts to involve different employees from different countries and different cultures. When more people are involved, management becomes more difficult due to conflict of interest, beliefs, values and power. Addressing these issues, organizational structure turns into the major concern of top management as it directly affects the companys flexibility in and adaptation to the fast changing environment today. Most importantly, it determines the performance and profitability of

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UBMM2023 Organisational Behaviour

1.0 Introduction

the company. The organizational structure of Dell today will determine whether the company could survive, sustain or succeed in the market in future.

1.2 Nature of Business Dells mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of highest quality, leading technology, competitive pricing, individual and company accountability, best- in-class service and support, flexible customization capability, superior corporate citizenship and financial stability. Dells global strategy is to be the premier provider of products and services, including those that customers require to build their information technology and Internet infrastructures. With a documented record of outstanding success, customer support, and quality, Dell has identified new markets to serve and new products and services to provide, leading the company to a moderate level of diversification. Most of Dells revenue comes from its dominant businesses such as corporate servers and personal computers. Therefore, Dell has both functional and divisional departments to remain focused on each product, market, and work while fully utilizing the skills and knowledge of its human resource. At the beginning, Dell operated as a pioneer in configures to order approach to manufacturing in company industry. Dell configures and customizes individual PCs to the specific needs of each individual customer. To minimize the delay between purchase and delivery, Dell has a general policy of manufacturing its products close to its customers. This allows implementation of just-in-time (JIT) manufacturing approach, which can reduce inventory cost, while creating a network structure that enhances flexibility of the company. Dells manufacturing process covers assembly, functional testing, software installation, and quality control, grouping experts with similar skills under the same department to achieve economies of scale.

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UBMM2023 Organisational Behaviour

1.0 Introduction

In 1992, Dell created and successfully marketed the worlds first fully recyclable PC computer. Dell also became the first company to offer free recycling of its products to customers in every country of business. In 2002, Dell expanded to other product categories such as television, digital audio players and computer printers.

Today, Dell offers a complete line of desktop, laptop, printers, cameras, network servers, data storage systems, HD televisions, projectors, mobile phones, smart phones, home theater systems and a vast array of technology accessories. In addition, Dell markets third-party hardware and software, and provides services like computer consulting, support, and training. Below shows all the product categories of Dell:

1. Main products - Desktop PCs, notebook computers, mobile workstations, servers and networking products.

2. Storage solutions - storage area networks, network-attached storage, directattached storage, disk and tape backup systems, removable disk backup, printers, and displays.

3. Third-party software products - operating systems, business and office applications, anti-virus and related security software, and entertainment software.

4. Peripheral products - printers, televisions, notebook accessories, mice, keyboards, networking and wireless products, digital cameras, power adapters, and scanners.

5. Infrastructure technology services - customer deployment, asset recovery, recycling services, IT consulting, strategy and enterprise consulting,

implementation for prepackaged software applications, research services, applications development and maintenance services.

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UBMM2023 Organisational Behaviour

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6. Business process services - claims processing, product engineering, payment and settlement management, life insurance policy administration, receivables collection, and call center management.

7. Financial services - originating, collecting, and servicing customer receivables related to the purchase of its products; and financing alternatives and asset management services.

Having a wide range of product category, Dells departmentalization involves both functional structure and divisional structures to ensure that each department is specialized in skills and manageable in terms of product, geographic area and client (corporate server, personal PC, etc.). This is due to the fact that Dells global business involves employees and customers from different countries. Therefore, some elements of product structure, geographic structure and client structure are all involved in the departmentalization of Dell. In-depth analysis will be discussed later.

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UBMM2023 Organisational Behaviour

2.0 Contents

2.0 Contents
2.1 Theories related to Organizational Structure Organizational structure refers to the division of labor and patterns of coordination, communication, workflow, and formal power that direct organizational activities (McShane & Glinow, 2010). It discusses mainly about the division of labor and coordination within the organization. There are four major elements of organizational structure: span of control, centralization, formalization and departmentalization.

Span of Control Span of control refers to the number of people directly reporting to the next level n the hierarchy. There are two extremes: wide and narrow. A wide span of control means that there are many people reporting directly to a manager, whereas a narrow span of control means that there are very few. It is interconnected with the organizational size and number of layers in the organizational hierarchy. A large number of layers in the organization hierarchy usually means that there is a narrow span of control. Each wide and narrow span of control has its own distinctive advantages and disadvantages.

Centralization Centralization is the degree to which the formal decision-making authority is held by a small group of people who are usually those at the top of the organizational hierarchy (McShane & Glinow, 2010). When the decision-making authority is held by only top management, the organization has high degree of centralization. When employees at lower level of the organizational hierarchy have decision-making authority, the organization is described as decentralized. In a decentralized organization, authority and power to make decision are dispersed throughout the organization. Each centralization and decentralization approach has its own advantages and disadvantages as well. Nature of business, environment and situational factors play important roles in determining whether the organization should centralize or decentralize.

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UBMM2023 Organisational Behaviour Formalization

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Formalization refers to the extent to which organizations standardize behavior through rules, procedures, formal training, and related mechanisms (Mintzberg, 1979). Formalized companies have greater reliance on various forms of standardization to coordinate work. Formalization typically happens for large organizations because large numbers of people are involved which lead to communication and supervision difficulties. It is a challenge for large organization to avoid too much formalization due to the fact that the organization must also be responsive and flexible to changes in environment, not just increasing absolute compliance of employees.

Mechanistic and organic structure When span of control, centralization and formalization are discussed together, two types of organizational structure are derived: mechanistic and organic organizational structure (Burns & Stalker, 1961). Organizations with mechanistic structure have narrow span of control, high degree of formalization and centralization, which rely on efficiency and routine behavior of employees. On the other hand, organizations with organic structure have wide span of control, low degree of formalization and centralization, which rely on flexibility, adaptation, learning, information sharing and empowerment of employees. Each structure has its own advantages and disadvantages.

Departmentalization Departmentalization specifies how employees and their activities are grouped together (McShane & Glinow, 2010). It involves six major pure types: simple, functional, divisional, team-based, matrix, and network. Departmentalization is usually discussed with organizational chart as it illustrates the chain of command system within the organization, common measurement of performance under the same department and coordination among people and subunits within the organization.

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UBMM2023 Organisational Behaviour 2.2 Dells Organizational Structure

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Below shows the organizational chart of Dell (Dell Homepage, www.dell.com):

CEO Michael Dell Director Klaus Luft Director Donald Carty Director Thomas Luce Director Alex Mandl Director William Gray Director Shantanu Nara. Director James Breyer Director Gerard Kleister. Director Janet Clark Director Laura Conigliar. Director Ken Duberstein Director Ross Perot CFO Assistant to the CEO CIO Public & Large Enterprises Sales Dell Services Software Marketing Operations Dell.com (Online) Legal Human Resources Strategy Strategic Programs Asia Pacific Japan Finance Finance Americas Finance Global Segment Finance Solutions (Europe, Africa) Enterprises Solutions Group Sales (Europe, Africa) Quality, Regulatory, Test Global Operations Finance Latin America Europe Marketing China Product Management Engineering Platform Marketing Storage Management Software PartnerDirect (Europe, Africa) Healthcare and Life Sciences Global Brand Corporate & IT, HR Worldwide Consumer Marketing Global Channel

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UBMM2023 Organisational Behaviour 2.2.1 Overview

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From the chart above, Dells organizational structure has three levels of hierarchy. The CEO is situated on the upper hierarchy level since Michael Dell is appointed to control and manage all the aspects of the company. Being on the top of the hierarchical structure, the CEO has the most authority over the companys operation over other employees. The CEO also has equally as much responsibility in running the company. However, the CEO does not have full authority over the company as he is only appointed as CEO to manage the company. The chairperson would have the most authority over the company with directors having some influence over the companys decisions as well. With so many employees needed to be overseen, Michael Dell delegates his authority to middle and lower level managers and has them supervise the employees for each respective department, by giving tasks to departments and have them held accountable in finishing the task. Michael Dell will still have to be responsible in making sure that the tasks given are successfully done in the most efficient and effective way.

The departments and their respective managers stated can be seen on the second level of Dell organizational chart. As seen from the organizational chart, the departments in the middle hierarchy level are broken up into more specialized with respective main departments being responsible for supervising them. For example, CFO is branching to Asia Pacific, America, global and corporate finance. The departments situated lower in the hierarchy structure have less authority over the operations of the company but also less responsibility compared to the departments situated higher in the hierarchy. For example, CFO will have greater responsibility and authority over all managers and employees under the department Asia Pacific Finance. Employees in the lower hierarchy levels are usually not the decision makers and are supposed only to follow and perform the orders given by the employees in the higher hierarchy level. Judging from the organizational chart, Dells organizational structure involves some elements of both functional and divisional departmentalization. In real business world, it is less likely to see pure type phenomena of business theory, including organizational structure. Using Dell as an example, there are finance divisions based on
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geographical area (Asia Pacific, Europe, America), market divisions based on different clients (corporate, small & medium enterprise, consumer), product divisions based on different product categories (solutions, software, service, storage), and functional divisions based on marketing, financing, accounting, engineering and operating functions. This means that Dells departments and employees which does the same type of work (marketing, human resource, etc.) are grouped together under the same department. As seen from the organizational chart, each department in the middle hierarchy level branches to a few or many more subdivisions (Human Resources to all third level subdivisions, CFO to four Finance subdivisions), resulting in more specialized skills and knowledge being created and utilized under the same department.

Despite having only three hierarchy levels and appearing to be like a wide organization, Dell has a narrow span of control which tall organizations usually have. This means each manager has less subordinates to manage as opposed to a company with a wide span of control. This is due to Dells extensive use of departmentalization, which increases each departments efficiency through specialization and makes departments more manageable. Moreover, since Dell does not have many levels of hierarchy, the chain of command is fairly short, making communication and relaying orders much quicker. Dells authority is fairly diluted to low hierarchy level of the organizational chart, which identifies the companys structure as decentralized. A decentralized organizational structure means that a companys authority is distributed throughout the company instead of having just few individuals who are decision makers. Decentralization is very common for large companies as the CEO will not have the time to make decisions for everything, same as Dell. By doing so, decisions on less important issues can be made by employees in the lower hierarchy levels. It greatly improves work efficiency while increasing the employees morale since they have greater authority to allocate resource or make decision.

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UBMM2023 Organisational Behaviour Between Mechanistic and Organic Structure

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It is difficult to classify Dells organizational structure into either mechanistic or organic structure. In real business world, organizations usually fall in-between pure types of business theory. Dells structure has narrow span of control, high degree of formalization but low degree of centralization. It does not belong to either mechanistic or organic structure. Dells structure will have greater reliance on employees clear role perception, learning, motivation and adaptation since power to make decision is decentralized to managers at lower hierarchy levels. On the other hand, below these low level managers, Dell relies on routine and efficient work performance as these low-end labors do not have concern on decision making but high expectation on job efficiency. In short, Dells organizational structure is a good example to show how flexibility to environmental changes can be balanced against standardized work efficiency. 2.2.2 Formal Relationship in Dells Organizational Structure The overall effectiveness of Dell is affected by the organizations structural design and by the individuals filling the various positions within the structure. On the other hand, the relationship between these individuals within the structure plays an important role as well. We discuss the formal relationship occurs within Dells structure in this section.

Line relationships In line relationships, authority flows vertically down through the structure, for example from the director to managers, section leaders, supervisors and other staff. In Dell, there is a direct relationship between superior and subordinate, with each subordinate responsible to only one person. Line relationships are associated with the extent to control within functional or divisional department. For example, Dells line managers have authority and responsibility for all matters and activities within their own department.

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UBMM2023 Organisational Behaviour Diagram 1: Line Relationship in Dell

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Staff relationships Dells staff relationships arise from the appointment of personal assistants to senior members of staff. Persons in a staff position have no direct authority in their own right but act as an extension to their superior and exercise only representative authority. For example, personal assistants of CEO, CFO and CIO have no direct authority but representative authority of their direct superior. Normally there is no direct relationship between the personal assistant and other staff except where delegated authority and responsibility has been given for some specific activity. In real business practice, personal assistants often do have some influence over other staff, especially those in the same departments or grouping. This may be partially because of the close relationship
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between the personal assistant and the superior, and partially dependent upon the knowledge and experience of the assistant, and the strength of the assistants own personality.

Diagram 2: Staff relationship in Dell

Lateral relationships Lateral relationships exist between individuals in different departments or sections, especially individuals on the same level. These lateral relationships are based on contact and consultation and are necessary to maintain coordination and effective organisational performance. It can be formal or informal relationship. To avoid conflict, lateral relationship is very important especially for managers from different departments. For example, accounting manager would want to save as much as possible, but marketing manager would want to spend as much resources as possible to achieve marketing objectives. Collaboration such as weekly meeting between interrelated departments is held in Dell to facilitate lateral relationship (Bateman & Snell, 2004).

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UBMM2023 Organisational Behaviour Diagram 3: Lateral Relationship in Dell

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2.3 Advantages and Disadvantages of Dells Organizational Structure Advantages As mentioned earlier, Dell has both functional and divisional departments, based on organizational functions, clients, products and geographic areas. Such extensive use of departmentalization complements the weaknesses of each other while strengthening the strengths of each other. In Dells structure, each department in the middle hierarchy level branches to a few or many more subdivisions. Since each department has a very specialized function and requires very specialized skills and knowledge, there will not be too many problems on confusion over the tasks performed by each department. Dell will be able to operate efficiently with a small amount of bureaucracy. Dell is a wide organization as it only has three hierarchy levels, meaning that the communication within the company will be quick as there is a short chain of command.

Furthermore, functional structure of Dell facilitates the role perception of each employee, enhancing their skills and knowledge over time since they are only focusing attention on their area of expertise. It results in greater organization performance due to specialization of skills and knowledge.
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The divisional structure of Dell based on client, product and geographic creates several distinct advantages. Some companies adopt only one form of divisional structure among the three mentioned, while it greatly depends on the nature of business of the organization. For example, since Dell is a global business with a global brand, it may be necessary to develop departments based on geographic area. Within the particular geographic area, functional departments must be developed as well. With a wide variety of product lines, Dell needs to develop divisional department based on product categories to ensure focus and specialization. Furthermore, with customer segments that encompass corporate, small & medium enterprise and household consumers, it is necessary to develop divisional department based on client type in order to meet the different services required by different clients (large enterprises need sophisticated business solution, small & medium enterprises need budget-oriented solution, consumers need repair, maintenance and customer service to be convenient and responsive). On the other hand, it may not be necessary for Amazon.com to have such extensive departmentalization, as Amazon.coms business nature is click-and-mortar pure-type online retailer. Therefore, Dells extensive departmentalization helps to enhance department efficiency through specialization and make departments more manageable. Furthermore, Dell avoids having too many levels of organizational hierarchy, which greatly shortens the chain of command, making communication and relaying orders much quicker than traditional organization with long chain of command. Information flow within Dells organizational structure is fairly fast.

The narrow span of control of Dell allows managers to closely supervise, monitor and coach their respective subordinates. Such narrow span of control creates pressure among employees, which then leads to greater performance optimization. The high degree of product and service customization by Dell, which is well known as the companys distinct competitive advantage, requires Dell to have narrow span of control. Since employees are not performing routine jobs (they are personalizing products based on customer requirement), frequent needs for direction and advice from supervisors are needed. Close supervision and coaching by department managers allow Dell to facilitate specialization in skills and knowledge, while preventing conflicts from happening among
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employees within the same department. It is essential to prevent employee conflicts within same department especially when Dell is a large corporation that involves more than 100 thousand employees in 2011 (Dell Annual Report 2011 Q1, 2011).

With high degree of formalization, Dell can increase efficiency and compliance of employees within the company. Rules, procedures and formal code of conduct are necessary when hundred thousands of people are involved in the company. These tools help to limit the behavior of employees from maximizing their own interest. If every employee attempts to maximize self-interest, it conflicts with the organizational goals, which may lead to business failure. Rule, procedures and formal code of conduct formulate expectation on the performance and behavior of employees, in order to align them with the organizational goals of Dell. Dells decentralization delegates the CEOs authority to middle and lower level managers and has them supervise the employees for each respective department, by giving tasks to departments and have them held accountable in finishing the task. Such decentralization gives more authority to lower level employees, motivating them to be active and passionate in meeting the organizational goal. Dells extensive departmentalization shows the evidence of its decentralization, by delegating authority responsibility to each department manager. In Dells structure, department managers will be responsible to the performance of their respective department, and held the power to make decision as well. Therefore, they are motivated or expected to act in the interest of the organization. By giving more authority to employees, it enhances their morale while reducing their absenteeism. Furthermore, Michael Dell will not be too busy to make decisions for all departments.

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UBMM2023 Organisational Behaviour Disadvantages

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Although both functional and divisional structure of Dells departmentalization provides various advantages, there are also significant drawbacks. Lawler (2000) identifies several limitations, which may be currently facing by Dell. First, employees may tend to focus attention on their skills and professional needs rather than on the companys product, service, or client needs. This happens when experts are trapped only under the same specific department, where they are unable to develop broad understanding or big picture about the companys business, product, service or customer needs. For example, a R&D engineer may be over-paying attention to the specifications, perfection and features of the product, rather than considering budget constrain, customer needs or manufacturing process. If the product is too complicatedly designed, although it may comprise all necessary or extra features, consumers may not need them, price may go up, and manufacturing process may be difficult or inefficient. Top management would not want to see these from happening. Second, poor coordination occurs among departments, especially when they are treated and given orders separately. When there is no coordination, conflicts may happen. As mentioned earlier, accounting department may want the budget to be as least as possible, while marketing department may want the budget as large as possible. When conflicts happen, each department has each different goal to be fulfilled, which may conflict with the organizations strategic goals. They may then pay more attention to departmental achievement individually rather than organizational achievement, although each department is developed to serve the same organization. Narrow span of control of Dells structure creates disadvantages such as slow or less-timely information flow, higher overhead costs and undermined employee empowerment and engagement. However, these problems happen only when the organization has tall hierarchy (more levels of hierarchy). In Dells organizational hierarchy, there are only 3 layers top, middle and low. Such low number of layers helps Dell to minimize the abovementioned problems. The major problems faced by Dell are the consequences caused by its low number of hierarchical levels. First, Dells managers may face increased workload and stress in management. Since they are directly
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responsible to the performance of their subordinates, they must be extremely careful and prudent in coaching and supervising their subordinates, which may greatly increase stress and workload of the managers. In this case, performance of managers may be adversely affected. Second, such low number of hierarchical levels may result in fewer managerial jobs, which cause the companies to have less maneuverability to develop managerial skills. Promotions become riskier as they involve a huge jump in responsibility and authority in a flatter organizational hierarchy. Therefore, managerial career of employees may be limited, which adversely affects the morale, productivity and performance of employees. The major problem associated with Dells high degree of formalization is the decrease in organizational flexibility. As a technology company, being flexible and adaptable to changes in environment are always necessary. Rules, guidelines and formal code of conduct that formulate expectation on employee behaviors may limit their creativity in response to situation. They may just merely follow the prescribed behaviors to avoid penalty or punishment even when the situation clearly calls for a customized response. Therefore, learning and creativity within the organization are limited as well. When innovation is absent in a technology company, it may result in business failure. Some other problems associated with high degree of formalization are work stress and dissatisfaction of employees, which may reduce their motivation then subsequently their performance. Dells decentralization may cause several disadvantages for the company. First, lower level managers may make decisions without fully understanding the big picture of the organization. Since low and middle level managers are usually responsible to only their area of expertise, they do not have better understanding of the companys strategic vision as a whole. For example, Michael Dell may understand that Dell is positioned as a global brand, but local marketing department in Europe may not necessarily think that the global context of Dells brand is important. Therefore, decisions from lower level managers become contradictory to and conflict with the companys strategic vision. Second, poor coordination among departmental managers happen again. Since these
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managers have greater authority decentralized from higher level managers, they may not need to communicate with each other (such as meeting) to make decision, which limits the flow of information within the company. Third, innovation and ideas are limited as well. For example, although one part of the organization may have generated some innovation and ideas that are beneficial to the company, these innovation and ideas may not be shared with other part of the organization due to poor coordination. Top management may not be accessible to these innovations. As a technology company, Dell will definitely not wish to see such situation from happening.

In short, Dell may encounter the following potential problems: 1. Poor coordination between departments; 2. Limited innovation, creativity and information flow; 3. Conflicts between departmental goal and organization goal; 4. Reduced employee morale and motivation; 5. Increasing operating cost due to conflict management and resulted poor performance.

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3.0 Recommendation

3.0 Recommendation
Dealing with the abovementioned potential challenges and problems, we suggest Dell to adopt the boundary-less organizational-structure design asserted by Dess, Lumpkin, Eisener and Peridis (2006). Organizations that become boundary-less become more open and permeable, resolving the coordination and conflict of goals problems encountered by most large organizations. There are three basic approaches: barrier-free approach, modular approach, and virtual approach.

Barrier-free Approach Traditional organizations had boundaries intended to maintain order by making the role of managers and employees clearly defined. But these boundaries also stifled communication and created a not my job mindset. For example, employees from marketing department may not wish to interfere with the affairs of accounting department. Addressing such issue, a barrier free organization enables an organization to bridge differences in culture, function, and goals to find common ground that facilitates information sharing and cooperation. However, boundary-less approaches should be considered a complement to, not a replacement for, current organizational structure of Dell. In 2002, Toyota adopted the barrier-free approach using teams and groups, providing a good example for Dell to benchmark (Promprasit & Jumreorn, 2009).

Teams and groups are an important part of barrier free structures because they 1) substitute peer-based for hierarchical control; 2) often develop more creative solutions via brainstorming and other group problem solving techniques; 3) absorb administrative tasks previously handled by specialists; and 4) remove the boundaries between functional departments. We suggest Dell to develop team-based structure in its departmentalization to enjoy these benefits while resolving the stated potential challenges and problems. Dell can develop the following three types of group to achieve the barrier-free approach:

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1. Team groups these are fairly autonomous groups with broad terms of reference and limited supervision. The team designates the positions to be filled, the allocation of members, and instigates changes when necessary. They possess greater authority than normal employees to carry out their tasks. Examples are problem-solving groups, research teams, maintenance crews. 2. Task groups jobs are clearly defined, and individuals are clearly assigned to specific positions by top management. Such task group has some flexibility over methods of work and the pace of work, but limited discretion over the selection of group members. Supervision and standardized performance measurement are still necessary. Examples could include many administrative or clerical workers. 3. Technological groups members have very limited autonomy to determine or change the operational activities. The pace of work is also likely to be controlled. The content and method of work are specified, and individuals are assigned to specific jobs. There is little scope for individual discretion, and often limited opportunities for interaction among members. An example is assembly-line operations (Bateman, Snell, 2004).

Groups provide security, social satisfaction for members, support individual needs and promote communication, formally or informally (e.g. through the grapevine). They also are liable to show all the problems found in an operation, exploiting the opportunities to identify problems. According to Michael Dell, CEO of Dell, the winners in the next few decades will be the companies with the most empowered work forces. In order to align with such goal in Dells management, individuals must be empowered, and the only way to give them more control while meeting their social needs is team approach (Heywood, Siebert & Wei, 2005).

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3.0 Recommendation

However, such team-type processes that emerge in boundary-less approach often need to be carefully managed. The entire organization, including its goals and strategies, must support the effort. One way to enhance team based barrier-free approach is to effectively implement well-designed information technology systems that support knowledge gathering and sharing. It helps keep track of the teams processes, results, performance and behaviors. Dell can also improve the effectiveness of team approach by removing barriers among functional departments such as design, engineering, manufacturing, logistics and sales, forming them into individual small teams that are each responsible for different project. With team approach, Dell is able to increase the motivation and morale of employees, improve the coordination between departments and reduce conflicts between departmental goals.

Modular Approach The modular approach describes a central hub surrounded by networks of outside suppliers and specialists that perform non-vital functions. In other word, modular approach outsources non-vital functions, tapping into knowledge and expertise of best suppliers to accelerate organization learning while retains strategic control. Such approach can decrease overall costs, quicken new product development by hiring suppliers whose talent may be superior to that of in-house personnel. It also enables a company to focus scarce resources on the areas where they hold a competitive advantage, which is, the customization and personalization of product and service by Dell. These benefits can be translated into more funding for research and development, hiring the best engineers, and providing continuous training for sales and service staff.

The modular approach allows Dell to save operating cost, while reducing the opportunities for conflict by cutting down the total number of employees within the organization. The resulted saving can be channeled to either creativity program or R&D as well. However, Dell must bear in mind that it should avoid outsourcing critical components of its business in ways that compromise its long-term competitive advantage, such as R&D and branding functions.

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UBMM2023 Organisational Behaviour Virtual Approach

3.0 Recommendation

The virtual approach describes an evolving network of independent companies suppliers, customers, even competitors - linked together to share skills, costs, and access to one anothers markets. By pooling and sharing resources and working together in a cooperative effort, each gains in the long run. In other word, virtual approach is a type of strategic alliance in which complementary skills are used to pursue common objectives. Virtual organizations may not be permanent; participating firms may be involved in multiple alliances at once.

Unlike the modular type, virtual organization firms give up part of their control and participate in a collective strategy that enhances their own capacity, makes them better able to cope with uncertainty and environment, while enhancing their competitive advantages. Dell can achieve such benefits by formulating resources and knowledge sharing alliance with competitors with either weak or strong positions, such as Acer, or even Microsoft. Competitors with weak positions are more willing to collaborate with Dell due to their needs to be backed-up or guided by a large and powerful company. Dell possesses such requirement. However, collaborating with stronger competitors is the only way to enable Dell to access to valuable skills and knowledge, although it is more challenging to achieve. Currently, Dell has formulated an alliance with Symantec, the best-in-class antivirus company well-known for its Norton 360 antivirus software, to deliver a comprehensive server and client management solution for efficiency minded IT organizations. It is apparent that Dell wishes to focus on its most valuable customer segment - enterprises of all sizes - by offering them the easiest, most secured and most cost-effective corporate servers. Such relationship also creates opportunities for Dell to create mutual relationship with Microsoft since Symantec is the gold-certified partner of Microsoft (Sherman, 2010).

In this way, Dell is able to stimulate innovation and creativity among employees, by accessing to the new knowledge and skills of Symantec. Information flow and organization learning are both greatly enhanced throughout the organization due to the accessibility of information between two companies. It addresses the challenge of limited
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creativity, innovation and information flow currently encountered by Dells organizational structure. Some companies that we suggest Dell may collaborate with in future include HP for its printer product expertise, Sensonic for its peripheral product expertise and Razer for its gaming product expertise (Dell acquired Alienware in 2006 to develop its gaming laptop product line).

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4.0 Conclusion

4.0 Conclusion
Dells organizational structure plays an important role in its success and achievement today, providing high degree of product customization and responsiveness to its customers. The success should be attributed to Dells extensive use of departmentalization, narrow span of control, flat organizational hierarchy, high level of formalization and high level of decentralization, which fall neither into the category of mechanistic or organic structure described by Burns and Stalker in 1961.

However, some challenges must be addressed by such organizational structure. The common problems faced by Dells structure include poor coordination between departments due to extensive use of departmentalization, conflicts of goal and interest between departments and the organization, limited creativity and innovation due to poor information flow, and increasing operating cost due to conflict management and resulted poor performance.

Therefore, we recommend Dell to adopt the boundary-less organizational structure design proposed by Dess, Lumpkin, Eisener and Peridis in 2006. There are three approaches: barrier-free approach, modular approach, and virtual approach. Barrier-free approach can be effectively implemented using teams and groups which remove barriers between different departments, as long as at the same time the company implements sophisticated IT systems to monitor the behavior and performance of the team. Modular approach is basically the outsourcing of non-vital functions of the organization, which can help Dell to reduce operating cost and opportunities for conflict, while giving more funds to involve in R&D or creativity programs. The virtual approach involves the establishment of alliance, which enables Dell to access to knowledge, skills, expertise or creativity of other companies to facilitate organizational learning and innovation.

In conclusion, there is no best organizational structure. It greatly depends on the firms environment, size, technology, strategy and its nature of business. As

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4.0 Conclusion

organizations grow in size, they become more decentralized and more formalized since more people from different countries and different cultures are involved. Rules, guidelines and formal code of conduct are inevitable. The technology of the organization determines whether to adopt an organic, mechanistic or hybrid structure. Organizational strategies such as positioning, targeting and branding greatly affect the organizations structure as well. For example, Dells high degree of responsiveness to customers and personalization in product and service require its organizational structure to be flat in hierarchy and narrow in span of control, to ensure efficient performance and fast information flow. Therefore, these contingencies must be considered by corporate leader before they determine the structure of the organization.

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5.0 References

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