Delivering on Consumer Electronics

There's good reason why competitors don't match Dell's success in selling computers. From the outset, Michael Dell's vision recognized a market — with different kinds of potential users — the business sector, non-business organizations such as schools and other institutions, as well as the growing segment of PC users in homes — each with different needs and resources. Choosing to focus more on the business and institutional segments, Dell envisioned an unheard-of combination of service features for PC customers: high-quality products, lowest cost, ease in ordering and receiving products, live interaction with expert technical assistance for building a PC "the way you like it," super-fast deliveries, and after-sales communications to ensure product performance and keep users informed about upgrades to enhance their PCs.

The market response has been overwhelming, resulting in Dell's dominant position as industry leader with $35 billion sales in 2003. Dell's unique vision for integrating all stages of marketing — development of the product and related services, pricing it, selling to consumers directly via telephone or Internet, delivering directly to customers from efficient manufacturing plants, and promotional messages for product awareness and use — are unmatched by competitors that are struggling to copy Dell’s way of doing business.

As if not enough to cause headaches in the PC industry, Dell recently launched itself into the broader consumer electronics market for even greater revenue growth. Today's giant electronics retailers, such as Circuit City and Best Buy, may soon be looking over their shoulders if Dell's customer-friendly business model is successfully carried over into flat panel TVs, DVD recorders, MP3 players, and digital cameras. Plans even call for opening an online music downloading store on the same popular Website where downloading store on the same popular Website where PC users buy other Dell’s products. The potential range of products is enormous because music, movies, photos and other entertainment are increasingly digital and, thus, are becoming compatible extensions of PCs.

Commenting on the company's new thrust, Chairman Michael Dell states, "The whole new ballgame is these worlds [computing and consumer electronics] converging, and that's a world we're comfortable in”.

Practice 2. Give the Russian equivalents to the words and word-combinations from the text:

- focus more on business;

- super-fast deliveries;

- after-sales communications;

- integrate all stages of marketing;

- via telephone;

- cause headaches in the PC industry;

- look over one’s shoulder;

- customer-friendly business model;

- digital camera;

- a potential range of products.

Planned economies

Planned economies are sometimes called "command economies" because the state commands the use of resources (such as labour and factories) that are used to produce goods and services as it owns factories, land and natural resources. Planned economies are economies with a large amount of central planning and direction, when the government takes all the decisions, the government decides production and consumption. Planning of this kind is obviously very difficult, very complicated to do, and the result is that there is no society, which is completely a command economy. The actual system employed varies from state to state, but command or planned economies have a number of common features.

Firstly, the state decides precisely what the nation is to produce. It usually plans five years ahead. It is the intention of the planners that there should be enough goods and services for all.

Secondly, industries are asked to comply with these plans and each industry and factory is set a production target to meet. If each factory and farm meets its target, then the state will meet its targets as set out in the five-year plans. You could think of the factory and farm targets to be objectives which, if met, allow the nation's overall aim to be reached.

A planned economy is simple to understand but not simple to operate. It does, however, have a number of advantages:

- Everyone in society receives enough goods and services to enjoy a basic standard of living.

- Nations do not waste resources duplicating production.

- The state can use its control of the economy to divert resources to wherever it wants. As a result, it can ensure that everyone receives a good education, proper health care or that transport is available.

Several disadvantages also exist. It is these disadvantages that have led to many nations abandoning planned economies over recent years:

- There is no incentive for individuals to work hard in planned economies.

- Any profits that are made are paid to the government.

- Citizens cannot start their own businesses and so new ideas rarely come forward.

- As a result, industries in planned economies can be very inefficient.

A major problem faced by command or planned economies is that of deciding what to produce. Command economies tend to be slow when responding to changes in people's tastes and fashions. Planners are likely to underproduce some items as they cannot predict changes in demand. Equally, some products, which consumers regard as obsolete and unattractive, may be overproduced. Planners are afraid to produce goods and services unless they are sure substantial amounts will be purchased. This leads to delays and queues for some products.

Practice 2. Give the Russian equivalents to the words and word-combinations from the text:

- produce goods and services;

- a large amount of central planning;

- have a number of common features;

- meet one’s target;

- not simple to operate;

- enjoy a basic standard of living;

- divert resources;

- be very inefficient;

- underproduce some items;

- predict changes in demand;

- be overproduced.

Market economies

The best examples of this type of economy are to be found in small South-East Asian states like Hong Kong and Singapore, though even they are not pure examples of market economies. Even they contain some businesses owned and run by the state.

In a true market economy the government plays no role in the management of the economy, the government does not intervene in it. The system is based on private enterprise with private ownership of the means of production and private supplies of capital, which can be defined as surplus income available for investment in new business activities. Workers are paid wages by employers according to how skilled they are and how, many firms wish to employ them. They spend their wages on the products and services they need. Consumers are willing to spend more on products and services, which are favoured. Firms producing these goods will make more profits and this will persuade more firms to produce these particular goods rather than less favoured ones.

Thus, we can see that in a market economy it is consumers who decide what is to be produced. Consumers will be willing to pay high prices for products they particularly desire. Firms, which are privately owned, see the opportunity of increased profits and produce the new fashionable and favoured products.

Such a system is, at first view, very attractive. The economy adjusts automatically to meet changing demands. No planners have to be employed, which allows more resources to be available for production. Firms tend to be highly competitive in such an environment. New advanced products and low prices are good ways to increase sales and profits. Since all firms are privately owned they try to make the largest profits possible. In a free market individual people are free to pursue their own interests. They can become millionaires, for example. Suppose you invent a new kind of car. You want to make money out of it in your own interests. But when you have that car produced, you are in fact moving the production possibility frontier outwards. You actually make the society better-off by creating new jobs and opportunities, even though you become a millionaire in the process, and you do it without any government help or intervention.

Not surprisingly there are also problems. Some goods would be underpurchased if the government did not provide free or subsidized supplies. Examples of this type of good and service are health and education. There are other goods and services, such as defence and policing, that are impossible to supply individually in response to consumer spending. Once defence or a police force is supplied to a country then everyone in this country benefits.

Practice 2. Give the Russian equivalents to the words and word-combinations from the text:

- private ownership of the means of production;

- private supplies of the capital;

- surplus income;

- meet changing demands;

- be highly competitive;

- make the largest profits possible;

- pursue one’s own interests;

- in a free market;

- make the society better-off;

- provide free or subsidized supplies.