Performance measurement and control are very important for any organization either government or business to measure the success of the organization and it is one of the most difficult parts of strategic management (Wheelen & Hunger, 2012). According to Crosson & Needles (2014), Performance measures are “quantitative tools that gauge an organization’s performance in relation to a specific goal or an expected outcome” (p 302). Many studies have suggested that organizations need to use both financial and nonfinancial performance measures to assess their strategies and operations (Milost, 2013). The financial performance measures might include net earnings, return on investment (ROI), net income as a percentage of sales, the costs of poor quality as a percentage of sales and earnings per share (EPS) (Milost, 2013; Wheelen & Hunger, 2012). The nonfinancial performance measures might include number of customer complaints, customer satisfaction, job satisfaction, management control system (Milost, 2013), economic value added (EVA), market value added (MVA) and a balanced scorecard (Wheelen & Hunger, 2012). It is suggested that organizations use multiple performance measures of 20% of the factors that determine 80% of meaningful and reliable results (Wheelen & Hunger, 2012).
Dell’s Performance Measurement
Dell was started on a simple concept of made to order machines and delivered directly to customers without distributers or retailor stores. Due to strong competition in Computer business and “Rising sales coupled with rapidly falling net income caused Michael Dell to rethink his retirement and resume his role as CEO in January 2007” (case study, p 9-2). “Dell has made more than 10 acquisitions, cut about 10,000 jobs, and hired executives from Motorola and Nike to add more excitement to its product line” (case study, p 9-5). The industry’s focus shifted from desktop PCs to mobile computing, software, and technology services where HP’s stock gained 11% and IBM gained 31% while Dell’s stock fell 42% since January 2007 as this shift of business focus was an area of relative weakness for Dell (case study, p 9-5).
Michael Dell indicated that “The computer industry started out as a hardware business, but customers now are showing more interest in solutions than they are in products. So that’s obviously where we’re headed.” (Preimesberger, 2011, p18). According to Dell’s official Webpage (2014), Dell completed the reorganization of its functions during the first quarter of Fiscal 2014 from the “customer- centric” functions to the following product and services business units (Form 10-Q, 2013):
• End-User Computing ("EUC"): EUC includes desktop PCs, thin client products, notebooks, tablets, third-party software, and EUC-related peripherals.
• Enterprise Solutions Group ("ESG"): ESG includes servers, networking, storage, and ESG-related peripherals.
• Dell Software Group: The Dell Software Group includes systems management, security, and...