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E-BUSINESS

Use of SOCIAL
MEDIA by
Organizations as
a e-business
strategy

JAN
10 2012

DELL

VINAY
RAMAMURTHY
P120536

E-BUSINESS

DELL

INDEX
Executive Summary...........................................................................................................2
1. Introduction....................................................................................................................4
1.1 E-business, E-commerce and its relevance to Social Media..................................4
1.2 Organization DELL (Background).........................................................................5
2. Aims and objectives.......................................................................................................5
3. Critical Review, Findings and analysis..........................................................................6
3.1 Literature Review on social media...........................................................................6
3.2 Use of Social Media by DELL..................................................................................7
3.3 How and what is DELL trying to accomplish through social media?.......................8
3.4 What are the results of their accomplishments?......................................................9
3.5 Comparison with other organization.......................................................................10
3.6 Benefits...................................................................................................................11
3.7 Limitations...............................................................................................................11
4. Conclusions.................................................................................................................13
5. Recommendations.......................................................................................................13
6. Appendices..................................................................................................................14

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Executive Summary
This report provides a summary of how organizations of the present day are
utilizing the powerful tool called The Social Media to enhance their productivity,
profitability and at the same time create a reputation online. We discuss how social
media is bringing about change in the business processes? How businesses are
influenced in driving sales?

The benefits and limitations of social media as an e-

business tool, how the effective use of social media can help businesses to get
competitive advantage? How social media is influencing other e-business themes like
customer relationship management (CRM), e-learning, Supply chain and inventory
management. Even though the future of social media is questioned by few authors,
what influence is social media is having on organizations at the present moment of time.
This report considers DELL as an organizational case study to aid us in better
understanding of the e-business theme. How Dell is using social media, what are they
trying to accomplish? What are the results of their accomplishments? And comparing it
with other organizations to figure out benefits and limitations of the medium at present.
The Reports concludes with the key findings drawn from the research activity and a few
recommendations for Dell as an organization to consider for further development in the
area of SOCIAL MEDIA.

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1. Introduction
1.1 E-business, E-commerce and its relevance to Social Media
E-business is aimed at improving the competitiveness of an organization by
arraying innovative information and communication technologies throughout a business
and beyond, through links to partners and customers (Chaffey, 2011).
According to Kalakota and Whinston (1997), categories E-Commerce as

Communication perspective- delivery of information, products, services or

payment by electronic means.


Business Process perspective- use of technology towards the automation of

business transactions and workflows.


Service perspective- assisting cost cutting likewise increasing the speed and

quality of service delivery.


Online perspective- Buying and selling of products and information online.

Social-media marketing is growing rapidly (Kozinets et al., 2010).

The Social

Media buzz all over the globe is driving many businesses and organizations to go
Social. It helps businesses listen to the people, engage with customers, reach new
potential markets, maintain online brand reputation and also globalize, which makes the
medium a core element for e-business.
It is todays most transparent, engaging and interactive form of public relations which
combines the true grit of real time content with the beauty of authentic peer to peer
communication(heidicohen.com). Tools like Twitter, Facebook, Skype, LinkedIn and You
tube are the most popular ones amongst the many others which exist as social media
platforms. Using these tools does not mean that an organization has a social media
strategy in place; the tools just help as a tactic to aid the implementation of the strategy.

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1.2 Organization DELL (Background)


(Source: Datamonitor 360, DELL Inc.)
Mr. Michael Dell founded Dell Computer Corporation in 1984 to sell personal
computer (PC) systems directly to customers. Dell is one of the prominent technology
companies, offering a broad array of products, including desktop PCs, servers,
networking products, storage, mobility products, software and peripherals, and services.
The company primarily functions in the US. Dell is headquartered in Round Rock, Texas
and about 103,300. The company trades in several countries located across the
Americas, Europe, the Middle East, Asia and other topographical regions . The company
documented incomes of $61,494 million during the financial year ended January 2011, a
growth of 16.2% over the previous year. The operating profit of the company was
$3,433 million in FY2011, an increase of 58.1% over 2010.The net profit was $2,635
million in FY2011, an increase of 83.9% over 2010. The strengths and weakness of the
company are illustrated in the SWOT analysis (See Appendix-1).

2. Aims and objectives


The aim of this report is to analyze how social media is vital to the organizations
and marketers in the networked society to drive sales by effectively listening to the
needs of the customers.
The objectives are

Is Dell successful in using social media as a strategy?


Do they have the competitive advantage and what can they learn from

other organizations?
To what extent they need to focus on social media as a business strategy
leading to innovation and growth of the organization.

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3. Critical Review, Findings and analysis


3.1 Literature Review on social media
Social media has motivated organizations and marketers to think in new and
different ways apart from what they were following from ages. It brings more of a
personal touch to organizations with respect to engaging with its customers. The use of
social media requires marketers to take a step back from old-fashioned campaign
thinking and emphasize more on relationship building (EBSCO, The Journal of
Advertising Research, 2011).
Organizations

must

implement

new

paradigms,

they

must

not

fright

experimentation and uncertainty as a result of their actions. If more than 80 percent


are using the medium regularly, what are organizations waiting for? A Dellcommissioned study revealed that while 88 percent of companies monitor online
conversations and feedback and 80 percent respond to customer feedback, only 20
percent put social media at the core of marketing plans. At the same time, 80 percent of
consumers support to use social media regularly (See Appendix-2).
Altimeter (2010), says scope of social CRM is illustrated better within the six
business applications like- Marketing, Sales, Service and support, Innovation,
Collaboration and Customer experience.
A research by Forrester (2007) suggests People, Objectives, Strategy, and
Technology (POST) as a useful framework for the businesses to develop a social media
strategy. Understanding what people expect on social media is essential. The
objectives can be set starting from customer engagement across the customer life cycle
stages i.e. from acquisition, to conversion and retention. Implementing the strategy is
vital as it is a disruptive approach. At last, choosing the right technological social media
tools to deploy your strategy, helps in achieving goals of an organization.

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3.2 Use of Social Media by DELL


Dell has taken the initiatives in stepping up and adapting social media as one of their
strategies for e-business in the future. DELL uses tactical tools and has many accounts
on Facebook, twitter etc. to assist and deploy their strategy. They maintain different
accounts by segmenting their customers

On Facebook they maintain pages namely Dell for business, Dell Lounge,

Dell Products and services, Dell computers and many more.


On Twitter they have accounts namely Dell Enterprise, Dell Outlet, Dell

Cares, Dell Sales, Dell Storage, Dell Home UK, Dell Home US etc.
They have verified accounts, blogs and websites (See Appendix-4).

As social media is global it is very important to segment the market, research and
analyze before using these tools, as different segments prefer different data to be
presented. But, some parts of the globe do not have access to all the tools, like for
example No Facebook access in china. It is important as an organization to use the
right tool to reach all its customers and DELL has a good SOCIAL MEDIA
STRATERGY to get all the things right and make it work, thus enhancing their
productivity and capability as an organization. Social CRM is a relatively new
terminology which defines a broad scope of social media across the customer life cycle
and value chain. A process of managing C2C conversations, to engage existing
customers, prospects and stakeholders with the brand enhances Social CRM (Chaffey,
2009). So social media has its effect on CRM building processes, the number of
followers can be utilized as a database in order to spread the word to reach many
people with very little effort and no investment on mass e-mail campaigns or
advertising.
According to Joe Kennan (Emarketingandcommerce.com, 2010) Dell uses social
media in different ways to enhance, drive sales and improve customer experience
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Listen, engage, learn and keep trying, and measure

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E-BUSINESS

DELL

React to what you learn


Put a heavy emphasis on engaging with bloggers
Be super relevant on social media tools
Use social media for B2B as well.

By listening to what its customers have to say, learning from them gives the
organization a clear picture of what is expected by people. It initiates development
processes also helps the company measure the success rates of their products in the
market and indicates where further improvement is necessary.
DELL uses its own website called Dell IdeaStorm.com as part of their Web 2.0
strategy to go social and engage with its customers online. This helps the company to
grow its existing customer base, acquire new markets and provide customer
satisfaction. These factors lead to customer acquisition, a way Dell stands out from its
competitors to gain the competitive advantage in the global market place.
They have setup a social media listening command center that monitors more than
22,000 Dell related topics, identifies customer service issues as well as brand
evangelists(Info graph: See Appendix-3 ). So social media has forced the company to
innovate and experiment in a new way by structuring a new business unit, which is like
adding a new dimension to how things were done traditionally. It creates opportunities
for e-learning, innovation, research and development which are vital for growth of any
organization.
3.3 How and what is DELL trying to accomplish through social media?

The company is able to manage itself better by listening and responding to the
feedback. They are adapting these tools in almost all functional departments of the
organizations which shows the impact that social media has on them as a business.
As companies embark on social media, the key is to embed it throughout every facet of
the organizationfrom sales to marketing to engineering to customer service to HR to
finance (EBSCO, CRM magazine 2011).

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Dell is breaking down walls literally to get its key customer-facing employees
working together over social media and ensure that customers stay loyal to the Dell
brand. It filters conversations pouring into its new Listening Command Center to
determine the nature of each comment, tweet, or post. The dedicated Social Outreach
Services team, working next to the command center, then does what it needs to do to
keep customers happy (Dayon and Savitz, 2011).
Clearing stocks, by sales offering discounts on social media can also add as
another dimension. In an interview with the executive director of online marketing for
Dell Rishi Dave says B2B social media focuses on managing multiple decision makers
at a single company and working with them through a multi-step sales process.
Companies must have the ability to amplify thought leadership content on a regular
basis to keep high-level decision makers engaged and conversing on their brand's
differentiated value. (clickz.com). Thus it is giving the competitive advantage alongside
with value added which is beneficiary.

3.4 What are the results of their accomplishments?


Dell has reached the top place as a social and global brand according to
Headstream and Rener. It has given scope and opening for the top management to be
more accessible on terms of communication and liquidity where they are able to directly
engage with the customers. All in all their efforts have paid off (Dayon and Savitz, 2011).
They are now one of the top five companies leading the way and standing out amongst
their competitors, and are regarded as the masters in the art of listening
(scottmonty.com).
Dell, as part of their efforts taken in the use of social media tools has gained a
lot of customer interacting with it. To be specific on the statistics
(smmmagazine.com, 2011)

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Ideastorm It received more than 13,000 suggestions out of which 430 were

implemented.
Twitter- more than 1.5million followers.
Facebook- Reached more than 200,000fans.
YouTube- More than 4000 subscribers.

The idea storm website allows people to give ideas on products which turn out to be an
important aspect for innovation. Head of digital media communications Kerry Bridge
says there have been 417 ideas the computer manufacturer has acted on (Hargrave,
2010).
Dell feels that, for any company to be successful they must renovate into social stream
and then nurture and defend its brand (Dayon and Savitz, 2011). It is a continuous
ongoing process to build a social media strategy and Dell has taken it to the next level.
They have recently created a social media training and certification program directed at
employees (marketaire.com, 2011).

3.5 Comparison with other organization


Dell shaped Social Media Guides to help small and medium businesses
effectively use these tools to grow and better serve customers. Whereas, IBM created a
platform for small business to share their stories focusing on areas like enterprise
management and improve dialogues with end users. This led scope for IBM to
communicate more B2B use of social media. It helped them partner or merge with small
businesses and learn from them as well (ibm.com, 2012).
Organizations like INFOR who is a leading provider of industry-specific enterprise
applications and services, wanted to improve dialogue with end-users and senior
management of their System i customers, they turned to LinkedIn to accomplish their
goals. According to INFOR, the most invaluable result has been insight into specific
topics of customer interest, which will help to improve customer satisfaction and
influence the companys growth strategy. (ibm.com, 2012) such shared stories benefits
organizations.
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3.6 Benefits
Social media is made of people; the buying behaviors of the public are changing
fast, so being on top of social media is a key. A report said contemporary consumers
use social media to help make purchases because they rely on recommendations from
friends (The Economist, 2009).
According to Beynon-Davies (2004) the benefits are

Lower inventory causing less working capital.


Faster order and delivery cycle.
Subcontracting of sub-assemblies reflecting on low fixed costs.
All contributing to sustained financial performance.

Dell is saving a lot of money which was prior invested in advertising through the print
media. Now through the social media and their twitter account @Dell outlet it is just a
140 character text message, a link which does all the work. It has reflected in the
increase in revenue incomes too (inc.com, 2011).

3.7 Limitations
The draw-back of social Media is to measure the results. Marketers are making two mistakes in
the process (Farb, 2011)

No goals set, and if you as a marketer are not measuring your social media efforts it is

impossible to calculate the success rate of the strategy.


The focus is shift more towards the quantitative side and organizations are neglecting the
value added to their customers.

But, Dell has overcome this and become one of the few companies to measure the
return on investment. In the past 2 years the company claims to have sold more than
4m worth of goods just through Twitter (Hargrave, 2011).
However, there are limitations on part of social media as far as consumers
attitudes on advertising using these platforms. According to studies only 22% have a
positive attitude and 8% abandoned social networking sites due to lots of adverts (Ad
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Reaction, 2010). According to C. Wright Mills (1959) Individuals experiencing a


dissatisfaction or grievance, what terms private troubles, engage with like-minded others on
social media to translate their private troubles into what Mills terms public issues and
subsequently to mobilize resources toward resolving those issues (Business Source Premier,
2011). So organizations must be aware of these factors and avoid excess advertising
and deal with the private problems of individual customers in a tactical manner.
Social media is facing a lot of problems with advertising on their channels. For example
Facebook is yet to figure out a solution how to make money without annoying the users.
If the channel tries to post too much of adverts there is always a risk of annoying people
(guardian.co.uk, 2012).
Users are using the medium to express their dissatisfaction by creating face book
communities, groups and pages called I hate dell, expressing issues on customer
service, products and features (facebook.com, 2012). This is a very bid drawback as
people tend to read all negative feedback and also post images asking other people
following not to buy the products from Dell. The organization must come up with
solutions for such problems which exist on social media (See Appendix-5). As more
authors question about the longevity of social media a statistics says: face books
growth will hit 13.4% in 2011 compared to 38.6% in 2010, twitter followers fall from
293.1% growth in 2009 to 26.3% in 2011, (briansolis.com, 2011). So statistics like these
must be taken into consideration while building the social media strategy and how far an
organization must use social media as a tool for their business.

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4. Conclusions
So from the report we can conclude that social media at present is a very
powerful tool for organizations and marketers. It has significant effect on driving sales,
increasing Brand awareness and maintaining online social reputation. It creates a need
for change in business processes, aid learning from customers which leads way to
innovation to gain competitive advantage in the market.

It is interlinked with other themes of e-business and impacts areas like supply

chain, inventory management, e-learning, customer relationship management.


The medium is very transparent, so organizations must be careful and well aware
of things/content which needs to be shared. If they are not handled in a proper

way, reflects on the brand reputation company posses.


Dell has got its social media strategy right, which is showing on their results of
increased sales and cut down in costs from the past two years. Thus gaining a

competitive advantage.
Dell as an organization is leading the social media for a competitive advantage.
They successfully achieved customer acquisition and retention value which in
turn increased the number of customers to be brand loyal.

5. Recommendations

Dell must look for innovative ideas like the IBMs sharing of social media success
stories by small businesses, and reach out to them as B2B partners which helps

in growth, expansion, innovation and learning.


They must take measures to respond to communities and keep customers happy
on forums and Facebook pages which are created saying I hate Dell at the

earliest.
Prevent or stop further circulation of images posted which says: Friends dont let
friends buy DELL (See Appendix-5). They organization must take action by
either reporting such images as spam if they really are. If not, try to solve the

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users issue who really faced problems and got annoyed with improper support
from the company. Such images are a threat and they dent the brand reputation

of the organization.
Build new and advanced tactical tools like the idea storm to get customers

engaged more with the brand.


Adapt effective ways in measuring the return of investment through every
customer who follows or like and engages with the organization. Questions like
what is the value of one customer who follows the brand is unanswered, and
would be interesting to get such data for further growth of the organization

through social media.


As the future is very unpredictable and longevity of social media is questioned,
organization must wisely use the available resources within the organization for
implementing social strategy, instead of hiring new people and setting up new
business units to drive the process.

6. Appendices
6.1 Appendix -1

SWOT analysis- (Source: Datamonitor 360, DELL Inc.)


Strengths

Strong market position supported by robust brand value

Cash flow generation competences to support growth

Diversified operations with emphasis on growth areas

Acquisitions to drive development

Weaknesses

Relatively weak R&D skills

Inferior margins paralleled to peers

Opportunities-

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Rising markets will dominate the worldwide IT spending marking strong growth.

Enterprise products to receive a boost from servers and tablets

Threats

PC market poised for a likely decline

Concentrated competition.

6.2 Appendix -2

Source: EBSCO, CRM magazine 2011

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6.3 Appendix-3

Source: Voliter digital

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6.4 Appendix-4

Source: fastgush.com
6.4 Appendix-5

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Source: (Facebook.com: images)

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