Dell in China: Strategic Rethinking

In 1994, Dell made the bold decision to remove their products from retail stores and focused on direct to customer sales. In 1996 Dell began selling through their website which is to this day their most successful sales channel. By eliminating their retail store presence Dell was able to reduce costs on multiple fronts, reduce inventory, and maximize profits. Dell created an order system which allowed customers to specify and select options, components and features they wanted on their Dell device. Dell 's just in time inventory system lowered inventory holdings to just 3 days from 9 days and storage costs were thus minimized significantly. In 1995, Dell entered the Chinese market where a population of 1.3 billion was a great opportunity to create a significant market presence; IBM, Compaq, and Hewlett-Packard had all penetrated the Chinese market prior to this date and had opened offices in China during the early 1990’s. It wasn’t long before Dell proved to be worthy competition with not only international companies but also with local companies like Toshiba, Samsung, NEC and Acer. With so

Dell. Dell’s products—computers, servers and printers—are commodities. Dell tends not to develop the technologies underlying these products. Instead, it purchases the components from firms that develop the technologies (semiconductors and computer software). Dell’s direct-to-customer marketing strategy is not unique, but the extent to which Dell performs this strategy better than anyone else in the industry gives it a competitive advantage. Its size, purchasing power, quality control, and efficiency permit it to operate as a low-cost provider.

The economy in China is doing well. China has in its recent years reached financial stability. This is due to the fact that there is a high level of domestic demand. Because of this, many companies around the world begin to invest in the Chinese market. China is also one of the fastest growing when it comes to Information Technology and has been able to attract companies such as Google and even Microsoft. It has been forecasted that the Internet industry in China is expected to increase at a rate of about ten percent within the next five years. This is great news because Google will be able to benefit.

This can be further validated, by seeing “Over the past 10 years alone, incomes have quadrupled. In 2000, the average income was just $760 per person” (Censky, “China’s Middle Class Boom”). It is seen “the average disposable income of urban Chinese households rise to around $3,000 per capita in 2010” (Censky, “China’s Middle Class Boom”). For Best Buy to enter a positive market where the consumers have increased annual incomes of middle class citizens would benefit Best Buy in increased sales. China’s GDP in 2013 stood at $9.4 trillion that had a 7.7% increase from the previous year. When there is a positive increase to the GDP this shows economic prosperity. Compared to England and Canada, China has a significant higher GDP, which is steadily increasing. Businesses benefit from a positive increasing economic market where consumers are willing to spend money. In order for Best Buy to enter the market in China, Best Buy “must obtain approval from a number of general administrative agencies, and must receive support from specific administrative agencies relating to the investment” (Government Influence On

Having the low cost advantage Dell is able to expand the gap between cost and customer's willingness to pay. Therefore, they are able to satisfy their end-consumers, who are educated want product stability, high-end performance and low lifetime costs. They have served the US market and started to expand their market worldwide; in addition, they have

What are the elements of Dell’s strategy? Which one of the five generic competitive strategies is Dell employing? How well do the different pieces of Dell’s strategy fit together? In what ways is Dell’s strategy evolving?

The proposal presented herein gives the background information of Dell Computers Corporation highlighting the current operation for the manufacture of computers. The proposal highlights the potential of the company to increase its market share and profitability through change of its culture from order based to inventory base.

Dell Computer Corporation was founded in 1984 by Michael Dell. From the early 1990s until the mid-2000s, Dell was ranked as a PC market leader relying on their distinctive marketing pattern “Direct Model” which undertook direct communication with customers and provided customized products. Recently, the PC industry is facing inconceivable worldwide competition, and Dell is gradually losing their competitive advantages by using its direct model in critical business segments. The company is facing shrinkage of growth, increasing competition, declining quality of customer service, and limitation of expansion. These issues have an enormous impact on Dell’s position as a technological giant in the PC industry.

Dell Company has a successful business strategy. As it is following cost leadership strategy. Its success story is hidden in cost proposition, delivery, and unique customization. In response to the high performance and better chances for growth Dell is applying two way strategy parallel to one another.

With China emerging as a global power in business within the last decade, knowing about doing business in China has become more important than ever. There are both many advantanges and challenges with doing business in China in this modern era, and understanding both sides of this coin is the key to being successful in China. Some aspects to keep in mind include the cultural barrier, the price of the work force in China compared to the United States, and have the “made in China” brand be accepted back in the United States.

3. An August 12, 2002 Business Week article, indicated that by 2007 Dell intended to double revenues to $60 billion. How should Dell go about building the nearly $6 billion annual sales growth needed to achieve that target?

5. With the changing market situations after 2004, what new location-bound FSAs should Dell develop to cater to retail buyers in China? Or, alternatively, what complementary capabilities should Dell expect from its distributors?

These are customized products at low prices, plus fast delivery and perfect customer service. With the direct business model, all of Dell's products are manufactured by customer’s order. This approach help Dell Computer Corporation become the world's largest leading manufacturer and direct distributor computer systems. A customer can call to branch or access to www.dell.com Dell to order your computer which you want. Within 5 days the computer will be delivered to the customer with the same computer configuration, Dell offers lower price about 10-15 % than the prices of competitors. Besides, a maintenance service of Dell is considered perfect. Dell is a leading company with reliable products and perfect service with 40% of world PC shipments in U.S’s owned computer makers. Distribution form one - one from customer’s needs helps Dell does not get bogged down with the computer that nobody wants. With direct model sale, Dell should not have to pay for intermediate distributor. Thus Dell offer prices below the average up to 12 % compared to competitors. Nearly 2/3 of Dell’s products are sold to government, large corporations and educational

Both Dell and HP are two strong players in PC industry which refers to an industry where companies produces PCs (desktops and notebooks), handheld devices (smart phones and tablets), and workstations. However, with growing global expansion, Dell and HP’s performance differs. Dell, once the world’s largest PC maker in 2001, has continually lost its market share to HP and Acer since 2007 (Guglielmo 2009). The cause is rooted in two differences of these companies: company diversifications and core competences. Therefore, how firms can continually survive in the PC business is more of an issue for Dell than for HP.

Based on the APV and comparable multiples valuation, it can be seen that the future of Dell looks bleak as it stands today. The Personal Computers (PC) industry is not a great industry to invest in unless you are ready to innovate and adapt to the changing demands of consumers. Adding this to the fact that consumers are slowing moving away from PCs to smartphones and tablets makes it a no-brainer for Dell to make significant changes to its business model as soon as possible