Dell Cost Reductions Analysis
On May 31, 2007, Dell Inc. announced it was making several changes to the way it did business in order to restore competitiveness to the core business, re-ignite growth, and build solutions critical to customer needs. As one of the changes the company:
Initiated a comprehensive review of costs across all processes and organizations from product development and procurement through service and support delivery with the goal to simplify structure, eliminate redundancies and better align operating expenses with the current business environment and strategic growth opportunities. As a part of this overall effort, Dell will reduce headcount by approximately 10% over the next 12 months. The reductions will vary across geographic regions, customer segments, and functions and will reflect business considerations as well as local legal requirements.
a)What are some costs savings that Dell might realize by reducing its workforce by 10%? (Other than the obvious reduction in salary and wages expenses)
b)How might Dell's unit-level, batch-level, and/or facility-level costs be affected assuming some of the workers being terminated are assembly employees being replaced by new robotic assembly machines.
c) Which costs and expenses are avoidable at Dell?
Dell Cost Reductions Analysis is discussed in great detail in this solution.
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