Dell inc. Presented by group 6: Jannie, Sabrina & Kasper

Agenda Dell’s history The strategy of Dell Assessing China by the SLEPT framework Market rivals Dell’s setbacks in China Strategy China

Dell’s history 1984: Founded by Michael Dell, Texas 1992: Top 500 of the largest companies worldwide 1996: Commence of e-shopping 1998 :Market extension to China 2003: Dell overtook HP’s position as no.1 in the industry 2007: Release of employees and lost no.1 position Latest from MarketLine Dell has over employees worldwide. The company recorded revenues of $61,494 million during the financial year ended January 2011.

Dell’s strategy Dell

Direct sales through Internet, B2C and B2B Streamlined the supply chain efficiently (supply & demand) Understand customers requirements because of direct contact Cost savings passed to customers Dell’s overall strategy

Dell’s strategy - China Business as usual supported by Michael Dell’s 3rd golden rule NEVER SELL INDIRECTLY

Assessing China by the SLEPT framework – Part 1 Social  Buying culture  Urban and rural population  Traditions Legal  Bureaucracy in securing government contracts  Contracts are typically one sided and non-negotiable China

Technology  Enhancement in communication and transport infrastructures  Boom in internet usage in the period Assessing China by the SLEPT framework – Part 2 Political  Government promotes local vendors  Government monitors users behavior Economic  Gap recognized between urban and rural cities in terms of high income pr. Capita.  Only 2.5% have credit cards  Cash payment still is the predominant method

Competitors 3 out of top 5 computer vendors are from China, they are promoted by the government. Lenovo and Dell will remain the foremost rivals in the future market outlook for China. Lenovo has imitated the direct model from Dell Lenovo headhunted Dell key staff Acquisition of IBM did enhance the potential and market share for Lenovo. Lenovo deployed new approach, called “Transactional model”, for SME’s.

Why Dell experienced setbacks Lack of knowledge about the Chinese market (tangible products, face-to-face) Market entry analysis is compulsory when entering new market Best practice approach was not the right strategy in China America is not China (copy & past)

Strategy China We have reflected on the followings: Human skills are essential. Acquire a market competitor with diverse core know-how. eco-Dell (discount Dell) made by recycled materials, imitate TATA business model. Development of niche product(s).

Thank you for your attention

Questions for Dell inc. 1.Identify and describe the key elements of Dell’s strategy and explain why it has been successful in the past. 2.Identify, analyse, and discuss the environmental factors using the SLEPT (social, legal, economic, political and technological) framework to explain what Dell faced when entering the Chinese market. 3.Why has Dell’s strategy not been so successful in the Chinese market as in other markets? 4.Will Dell be able to gain competitive advantage with its current strategy in the Chinese market? 5.Can Dell change its strategy and if so, what are the implications?