Paul-Henri Ferrand, Vice President of Sales (South Asia), Dell, stated that Dell was aware that the road ahead in India would be challenging. "Delivering out of India is not going to be an easy thing," he admitted, pointing to the infrastructural constraints. "The market is also different. It is divided into white boxes (grey markets) and branded ones” (Kannan & Jagannathan, 2006). He also felt that consumers were highly demanding and looked for high quality at low prices (Kannan & Jagannathan, 2006). By setting up a plant in India, Dell was confident they would satisfy consumers and Indian consumers would get computers and services from Dell at a competitive price. Dell also stated that they did not want to manufacture low cost computers and would stick by the value proposition that its products would offer rather than the price points (Kannan & Jagannathan, 2006). The upcoming plant will be equal to other operations located in various countries.
Dell supported the `Just-in-time' concept for India operations, which meant that a production base would enable the company to deliver products faster to its Indian customers. The decision of the "Just-in-time company" would likely open the gates for a wave of manufacturing, especially in the area of electronic items (Kannan & Jagannathan, 2006).
Global Communications can improve the predictability and the consequences of their actions, like Dell, thus leading to a more successful organization. “Uncertainty means that the manager has insufficient information to know the consequences of different actions” (Bateman & Snell, 2004). Dell seemed to have read the picture well as five million computers and service were sold annually in India. This number was projected to double in the next three to five years.
IBM Global Services – Rachel Olsen
IBM Global Services provides products and services related to advanced information technology to clients in more than 170 countries worldwide, which McShane and Von Glinow (2005) would consider to reflect the advanced communication skills this company has developed. There are various sections of IBM that contribute to the success of the company by decreasing costs and increasing profitability, including infrastructure, strategic outsourcing, integrated technology, global business, application management and consulting and systems integration services. The issues IBM faces include increased competition and issues surrounding outsourcing to offshore companies, which are similar to the issues Global Communications is dealing with. However, IBM is a strong company and the actions taken to prevent these issues have resulted in success and profitability.
IBM Global Services have many competitors in various markets, including Accenture, Capgemini, BEA systems, Oracle, Sun Microsytems and Microsoft. These companies are large, successful players, which threaten the market share and profitability of IBM. To be a leading competitor in IT services, IBM offers an all-encompassing, one-stop shop solution for their clients by providing varying levels of support and services. According to Datamonitor (2007) IBM offers services in application development and infrastructure management, data storage, networking and technical support. By having a high standard of quality service IBM has developed strong a brand name, which has enabled them to be recognized as a reliable company to their clients around the world and consequently allowed them to withstand their competitive edge through challenging economic times. Badaracco and Webb (2004) would agree that the results of success and profitability reflect the fact that IBM holds true to their values of quality and reliability.
To reduce costs and improve efficiency IBM has expanded to markets in North America, Europe, India and China. IBM’s Indian based operations have increased revenues of 37% per year, and given IBM access to the Indian market (Datamonitor, 2007). The future prospects outsourcing of company services brings to the profitability and expansion capacities of the company are significant as is also projected for Global Communications.
Overall, IBM Global Services faces increasing competition pressures, however, through outsourcing, offering diverse products and being known worldwide as a reliable company through their brand name, these issues can be dealt with and expansion possibilities and increased revenues have resulted from these efforts. The outcome of IBM’s ability to provide clients with any service they require and be a global competitor and have resulted in profits of 44.9% from 2005 to 2006 (Datamonitor, 2007).
Saudi Aramco – Rachel Olsen
Saudi Aramco, or Saudi Arabian Oil Company, has its headquarters in the Kingdom of Saudi Arabia. This state-owned company is the world leader in crude oil production, which is divided into various departments including, exploration and producing; refining, marketing and international; engineering and project management; operations services; finance and industrial relations (Datamonitor, 2007). The company has partnerships and joint ventures with companies including Shell, ExxonMobil, and Texaco to expand refining and marketing into the Southern and Eastern parts of the United States and other parts of the world. According to Datamonitor (2007) Saudi Aramco has enhanced its market position due to strong oil and gas reserves, however, they lack in worldwide retailing and industry pressures, such as the rise in steel prices, industry consolidation and the political instability of the country, continue to threaten the company’s long term success.
Saudi Aramco does not have the retail exposure that companies like ExxonMobile and shell have through their gas stations, however, joint ventures and equity interests with companies like this have increased their exposure to these markets. Intense competition with other companies like ConocoPhillips and other large oil and gas companies who have huge financial backings to become leading producers in the United States threaten the revenue growth of the company, however, with the exposure to larger International markets with the joint ventures of other company’s Saudi Aramco is securing their future in the crude oil market and continue to be an industry leader producing 8.9 million barrels a day (Datamonitor, 2007).
The Middle East countries including Saudi Arabia have always had and continue to have disturbed political and social conditions. Datamonitor (2007) states that the ongoing unrest and threats of military action and attacks by terrorist groups, like Al Qaeda, cause disturbances in the company’s productivity, affect the supply and pricing for oil and gas and cause the need for enhanced security worldwide. Although there is a need for increased security due to these issues, which cut into the company’s revenue resulting in higher product costs for consumers, the enhanced security keeps refineries and other departments safe to continue productions.
Overall, although Saudi Aramco faces many issues including decreased exposure to retail markets, increased industry consolidation and competition, and political instability they continue to be the world leader in crude oil production. Saudi Aramco recognizes these pressures, however, can identify many opportunities for the continued success of the company including international expansion, continuous growing global energy demands and many joint ventures with other large oil and gas companies.
Comparative Analysis
Forming ethical programs can have a positive effect in the workplace as they can give executives and employees a guideline to use in the case of making moral decisions (Trevino and Brown, 2004). IBM Global Services, Saudi Aramco, and Dell, have developed high ethical practices in which they base their success and employee satisfaction on. Saudi Aramco (2008) provides an in depth explanation about the company values including, excellence, fairness, integrity, teamwork, safety, trust and accountability, whereas IBM (2008) simply state their values as dedication to clients success, innovation, trust and personal responsibility as their values. Additionally Bell, has also worked hard to develop their governance program that includes a good ethical Program (Bell Canada Enterprises, 2008).
Job satisfaction, as defined by McShane and Von Glinow (2005), is a person’s perception and affinity for his or her job and responsibilities. IBM and Saudi Aramco boast high satisfaction of their employees and offer their employees many benefits. While both companies provide many career opportunities and advancement Saudi Aramco also offers lifestyle benefits such as schools, busses and fitness facilities at no charge and grand living arrangements like villas inside the compounds away form the normal Kingdom of Saudi Arabia society. These incentives entice employees to work and live in Saudi Arabia and increase the likelihood that employees will stay loyal to a position. Each of the incentives, employee benefits and testimonials can be found on each company’s professional website (IBM, 2008 and Saudi Aramco, 2008).
While researching the best practices of each company it was interesting to note how companies from various industries can have very similar issues, opportunities and strategies to continue to strive for success. Both IBM and Saudi Arabia have financially strong competitors, who threaten the profitability of the company; therefore they have come up with various strategies to continue their reign as industry leaders. IBM and Saudi Aramco, in particular, have multiple departments responsible for targeting various markets and have influence and offices in many different countries to keep a global competitive advantage. Similarly, Bell and Dell, also pursue global business successfully. Both IBM and Saudi Aramco have joint ventures with other major companies within their industry to increase their success in the industry.
IBM, Saudi Aramco, Bell and Dell, have built professional websites to promote their company to the public, which help increase global awareness as this information is available to anyone with Internet access. This mode of communication (McShane & Von Glinow, 2005) is an effective and convenient method that reaches out to current and prospective executives and employees and shareholders or key stakeholders.
There are a few differences between IBM, Bell, Dell and Saudi Aramco. IBM, Bell and Dell have built a highly regarded reputation that is connected to its strong brand name so that people around the world recognize them as a powerful, reliable company, whereas Saudi Aramco does not have a brand name, as they are weak in the retail sector. Saudi Aramco has recognized this issue and united with companies such as Shell and ExxonMobil who have recognized names to help them market to retail around the world. The political pressures that Saudi Aramco faces, due to the instability of the Middle East countries, are not an issue for IBM, Bell or Dell. These political strains and security demands increase costs, which cut into profits, however, necessary to keep the employees and company safe and productive.
Bell is one of Canada's largest communications companies (2008). Bell is in the same competitive industry as Global Communications, so they will be utilized in a competitive benchmark for key areas related to the telecommunication industry like increasing concerns with share value. Bell was successful in growing share value in a dipping market, unlike Global Communications. They were able to achieve this through clear management and governance guidelines that were created for well constructed plans and the decision making processes. As compared to Global Communications, Bell was able to successfully recognize that they were accountable to their shareholders and created guidelines that clearly outlined their responsibilities. The company believes that good corporate governance practices help create and maintain shareholder value, while Global Communications did not even mention their key stakeholders. The decisions were set by the board and implemented by the leadership team without any clear plan or shareholder approval. If Global Communications created clear guidelines for the decision making processes, they may have been better able to solve the problems of low share value, and relate it to improved planning practices.
Similar to IBM’s commitment to ethics and integrity, Bell Canada Enterprises (2008) states that as dictated by the Statement of Corporate Governing Principles and Guidelines, the role of the board in this situation is to approve the annual business plan that will outline the strategy, objectives and set out measurable financial and operating targets. With this information including procedures and guidelines clearly defined, Bell is significantly different than Global Communications, in that Global Communications did not have these guiding principles or did not practice them.
Dell is one of the world's largest suppliers of personal computers and related products. While they are not in the same industry as Global Communications, they will be utilized as a generic benchmark for their practices in globalization. They were able to increase their global efforts successfully by understanding their market, having abundant information available for decision-making and contingency planning.
Dell, Bell, IBM, and Saudi Aramco, all recognized that a huge decision like globalization and increasing business in other countries would have to be well planned and researched. They had much information regarding the potential market, the market demands, and expectations prior to moving to India. Furthermore Dell was able to create operations in India that impacted not only the globalization of sales, but cut costs so that prices to their consumer were reduced.
References
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