Page 197 - Introduction to Business

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CHAPTER 5 Managing and Organizing Business 171

Small sole proprietor businesses have relatively little concern with organiza-
tional structure. In 1983, when Michael Dell started selling computers out of his
off-campus apartment at the University of Texas in Austin, there was one person
involved in the business—him. His parents, concerned with what he was up to,
showed up unannounced at his apartment in November 1983 and were not happy.
His dad saw a bunch of computer boxes lying around and said to him, “You only
have computer parts here; where are your books?” They made him promise that
he’d stop “fooling around” with the computer business and concentrate on school.
Within a few weeks, though, Michael Dell decided he couldn’t keep this promise to
his parents. His business of selling computers directly to customers was just going
too well. He told his parents he was going to take the spring 1984 semester off, but
if things in business didn’t turn out as planned, he’d go back to college. He never
made it back to the classroom. 19
In 1984, Dell Computer Corporation was formed. It moved out of Michael Dell’s
off-campus apartment to 1000 square feet of rented space. Within short order, it
moved on to even bigger space and had about 25 employees. Michael Dell, however,
still ran everything, literally keeping the key to the office’s Coke machine. One day
someone lost a quarter in the machine and came to Dell for a refund. For Michael
Dell, it was a “management moment” in that he decided he had to start delegating
some authority. He handed the key to the Coke machine to the employee who had
come to him and said, “From now on, you’re in charge of the Coke machine.” 20
Today, Dell Computer Corporation has about 40,000 employees, does approxi-
mately $40 billion a year in business, and has nearly 25 employees on just its senior
management committee. It has three major divisions: Dell Americas, which is
responsible for about 70 percent of the company’s business; Dell Europe/Middle
East/Africa, which is responsible for about 20 percent of the company’s business;
and Dell Asia Pacific–Japan, which is responsible for about 10 percent of the com-
pany’s business. The regional headquarters for Dell Americas, and indeed the head-
quarters for the entire corporation, are in Austin, Texas, not too far from the student
apartment where the business started. The regional headquarters for Dell Europe,
Middle East, and Africa are in Bracknell, England. The regional headquarters for
Dell Asia Pacific–Japan are split between Singapore and Kawasaki, Japan. In 1996,
Dell developed e-commerce capability, and it quickly became the first U.S. com-
pany to record $1 million in online sales. Today, Dell has one of the highest-volume
Internet sites in the world. In 1999, Dell started Dell Ventures as a wholly-owned
strategic investment and venture capital arm of Dell. Dell Ventures has invested
money in a wide range of computer-related companies including Hire.com, Net-
stock Direct Corporation, and Zeevo. 21
Since 1984, Michael Dell has spent a lot of time as a manager trying to figure out
how best to group, arrange, and allocate Dell Corporation’s resources and activities
so as to most successfully build the business. From having to decide who to put in
charge of the Coke machine to where to locate the company’s Asian regional head-
quarters, Michael Dell has had a lot of important decisions to make. This is called
organizing. organizing Setting up organizational
structures to carry out strategic plans

LEARNING OBJECTIVE 3
Explain chains of command, organizational charts, and job specialization.

Organizations and Organizational Structure. An organization is a group- organization A grouping of two or more
ing of two or more people working together to achieve certain ends. One person con- people working together to achieve
certain ends
ducting business, like Michael Dell working out of his college apartment, is not an

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