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Dell just in time manufacturing
: Advantages and Disadvantages of International Market Entry Strategies
: Advantages and Disadvantages of International Market Entry Strategies
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Recommended: Dell just in time manufacturing
Business Model
Dell has managed to become remarkably successful in a short span of time by following a direct "business to customer" model. By selling computers directly to customers, they have been able to best understand their needs and provide effective solutions to meet those needs. Dell built PCs to order, so customers received only what they wanted. Dell's just-in-time inventory system allowed them to order only parts that customers demanded, thus keeping the minimal inventories and enjoying the cost-reductions which in turn were passed to customers. Dell's extensive use of e-commerce contributed to further cost minimization, reduced the order and delivery time for customers, and customization. There are three golden rules at Dell: disdain inventory, always listen to the customer, and never sell indirectly.
Key Issue(s)
China had been identified as a very promising market and Dell has set the goal to improve its rank from seventh to second place in this PC market. However, Dell faces many challenges in this market. The Chinese government actively promotes the Chinese PC maker "Legend" who dominated the market; penetration of the Internet is relatively slow; software piracy is rampant; competition is intense. In addition, there is fierce competition for market share and Dell's competitors have started imitating Dell's business model. Dell needs to determine how it should modify its strategy to succeed in the Chinese market.
Alternatives and Evaluation
1. Open up Dell Retail Stores
The Chinese are uncomfortable with purchase high-ticket-price products that cannot be viewed before purchase. This is one of the reasons that Dell has invested in door-to-door sales calls. If Dell were to open up retail outl...
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...s option addresses the hesitance of customers to make such a large purchase for a product brand that is not well established in China. This option will allow customers to transfer residual risk and implement a disciplined approach to technology rotation. I believe that for China, customers will be more likely to choose Dell products because this is in a sense a "try before you buy" opportunity. There won't be such a large initial investment, plus they can feel secure that the purchase they make will not become obsolete technology in the near future. I believe that this option will help Dell established a more recognized, stronger brand name and that it will allow Dell to establish long-term relationships with their customers. This option is in line with Dell's plan for growth in China and will allow Dell to leverage its strengths to make it a successful strategy.
1. How and why did the personal computer industry come to have such low average profitability?
• Mr. Chung and his division of Samsung, SCH, has been in the Chinese market for some time and have a good read on the society and the current trends in the political, economic, and social events in China. Their recommendations for moving into the high-end market should be followed.
In these challenging times where technology changes on daily basis, companies are striving hard to focus on customers’ expectations and needs. This has increased expectations from the managers who are constantly trying to come up with new ideas and innovation to survive in the retail business. The health of any business is dependent on the way they are different from their competitors. In order to increase sales the company is completely dependent on uniqueness and the best way to satisfy the customers. Best Buy is committed to provide customers with a unique experience. In order to serve the customers to their best ability, Best Buy has changed its business model from Product Driven to Customer Driven.
Why has Dell been so successful despite the low average profitability in the PC industry?
A little more than 10 years ago, China’s path to e-commerce leadership would have been difficult to foresee, even as the tech boom in the US and other markets saw the development of e-commerce as an important B2C and C2C channel.
Dell's strengths were oriented around listening to the customers, responding to the customers, and delivering what the customer wanted. The direct relationship was first through telephone calls, then through face-to-face interactions, and now through the internet. It has enabled them to benefit from real-time input from real customers regarding products and future products they would like to see developed. The company also doesn't use reseller or retail channels because every computer is built-to-order, which allows less inventory. The direct model allows them to take the pulse of whatever market and provide the right technology for the right customers.
The company was focus more on different aspect from their competitors. In 1996, the company introduces its own laptop model and while competitors focused on providing new technologies for the business market, Legend designed desktops that the average Chinese consumer could use. The company soon became China’s PC market leader (21.5% share) and well known throughout the Asia-Pacific region in 1999.
Over the last 30 years the world has seen drastic changes in the Chinese way of making business. Nowadays, China has opened its businesses to the rest of the world, especially America and Europe (Teagarden & Cai, 2009). As a result, their economy has increased and the evolution of the companies have changed to be from closed doors to be international and multinational (Teagarden & Cai, 2009). This essay will analyze, first of all, how some Chinese companies have had success abroad, looking at the strategy that they applied to expand and to improve their products. Furthermore, this essay will show examples of successful Chinese firms, such as Lenovo and TCL Group, and how they achieve it.
Dell Computers Strategy Global companies play an important role in the business environment, because they connect their businesses together around the world. A good example of a global company is Dell Inc., an American computer-hardware company, headquartered in Austin Texas, which develops, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. They design, build and customize products and services to satisfy a range of customer requirements: from the server, storage and Premier Services needs of the largest global corporations, to those of consumers at home. According to the Fortune 500 2006 list, Dell ranks as the 25th-largest company in the United States by revenue.
In 1995 Dell entered the Chinese market. With a population of 1.3 billion this was a great new market for Dell to tap into. IBM, Compaq, and Hewlett-Packard had all ready realized this and had opened offices in China in the early 1990s.
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.
Dell Inc had very effectively used the direct marketing channel for the sales of computers to the end consumer. When all the other pc makers were selling through retailers and distributors, Dell had started efficient use of the direct channels.
Historically, personal computer companies produced most of the components for a computer which they assembled into their final products and distributed to resellers. The manufacturing of these components was vertically integrated into the organisation. Dell, as a small start-up, could not build this infrastructure. Instead, they developed a model where they developed relationships with organisations that could provide these components, allowing Dell to focus on selling and delivering computers. By selling directly to customers, initially through mail orders and later by using the internet, Dell avoided reseller mark-up. Dell also enabled customers to order customised computers, which Dell then assembled after receiving the order (Magretta, 1998, p.73-74). “Customers got exactly the computer they wanted and Dell saved money making the computers only when they were ordered” (Hill & Seggewiss, 2008)....
One of the largest technology company in the world, Lenovo had a humble beginning as a small Chinese firm founded in 1984. The company showed modest growth throughout the rest of the 20th century. It wasn’t until the company’s acquisition of IBM’s personal computer business in 2005 (Martin, 2014) that the company began to gain prominence in the technology industry. Lenovo’s innovation and strategic decision making has allowed the company to evolve on a global platform and enabled it to become one of the leading technology companies in the market today.
“The Dell Theory of Conflict Prevention,” is a theory that is approved by multiple famous authors. The theories main points are valuable and the theory should be looked upon more seriously. In Thomas Friedman’s essay, “The Dell Theory of Conflict Prevention,” he gives examples of how global supply chains would be constructive to promoting world peace. Friedman feels that if everyone is an ally to each other in some shape or form, then no one will want to engage in war. Madeline Albright would agree with Friedman’s theory according to her writings in “Faith and Diplomacy.” Albright felt that religion should play a factor in the diplomatic system of America, in order for us to maintain some kind of peace with other nations. Friedman and Albright both were looking for a solution to world peace. Albright would agree with this theory from the religious perspective. Appiah argued that an ideal global citizen would be essential to America, in his essays “Making conversation” and “The Primacy of Practice.” Appiah felt that people must have an understanding of each other in order to get along with each other. Both Appiah and Albright would agree with “The Dell Theory of Conflict Prevention.” “The Dell Theory stipulates: No two countries that are both part of a major global supply chain, like Dell’s, will ever fight a war against each other as long as they are both part of the same global supply chain”(Friedman 125).