CONTENT

Section                                                Page

SUMMARY        

1.        INTRODUCTION        

2. THE BACKGROUND OF DELL COMPANY        

7. CONCLUSION        

REFERENCES        

Figure List

SUMMARY

With the progress of globalization, an overwhelming majority of large-scale enterprises look globally for their markets, technologies, labour and capital, they becomes multinational enterprise and frames a series of modes to enter the world market. Nowadays, information technology has become the hottest industry and the mainstay industry of the whole world economy, Dell, a giant in this industry, is actively throwing itself in international business, and it has made enormous strides in exploiting the world market.

This report focuses on the topic of Dell’s international business. It covers the reasons why Dell engaged in international business, and how Dell entered the world market. This report also elaborates on the success and failure Dell has achieved, finally, it provides some recommendations for operating more effectively in the next five years.

  1. INTRODUCTION

When domestic market for a firm’s product turns saturated, it is necessary for the firm to think of entering overseas market to expand its business, and it starts to exploit worldwide market imperfections and the competitive advantage of nations. Dell, as a PC magnate in United States, has expanded its business all over the world through its “Direct Business Model”, and achieved a great accomplishment, but what are the factors that inspire Dell to engage in international business? And what mode Dell had chose to operate abroad? This report is going to explore.

This report will evaluate both organizational and environmental reasons Dell decided to engage in international business, and express views on entry modes by which Dell attempted to accomplish its international objectives, it will then go on to identify and appraise the success and failure of Dell, finally, it will explore how Dell can be better.

2. THE BACKGROUND OF DELL COMPANY

Dell, founded in 1984, now is the largest PC manufacturer in the world with 61400 employees and net profit of 3.6 billion in 2005. (Wang, 2006) Dell’s international business started from 1987 and establishing an office in Britain stands for the beginning of expanding foreign market, in 1994, Dell pushed  on line, which covered 84 countries’ site and was translated into 28 languages, it spells all the transaction of Dell was put on the Internet, additionally, Dell is a typical company with flat organization structure which removes hierarchy and bureaucracy, furthermore, a thing deserved to be mentioned is that Dell continuously succeeds best on the overseas market depending on a simple principle: “Selling computer systems directly to customers”. (Timeline. 2000)

3. WHY DELL ENGAGE IN CHINESE BUSINESS

Dell Company engaged in international business for a number of internal and external reasons.

3.1 External factors

  1. Technology advantage. Innovation in information technology (IT) and transportation method enables people to know the thing happens anywhere in the world. America, as the home town of Dell, is the forerunner of IT industry around the world, accordingly American electronic products obtain worldwide awareness. (Chou, 2006) As the technology gaps among American and the other countries, products, especially those with hi-tech content, will have a discrimination of product life cycle in different countries. (Liu, 2005) This means, American computer enterprises can take the advantage of technology into play to enlarge the sales of their products and profits. (Rugman & Hodgetts, 2003)  

  1. Economic environment. In the last two decade, an overwhelming majority of developing countries got a rapid growth economically; especially the purchasing power promoted sharply, thus the demand of hi-tech products increased. (Rugman, & Hodgetts, 2003) Economic environment eases IT industry for several reasons: Firstly, computer is a kind of expensive product which needs certain level of purchasing power. Secondly, high living standard leads to a high overseas demand for high-quality products. (Bennett, 1999) 

  1. Social environment. In order to ease the economic development, companies and governments in developing countries have been perfecting support services and facilities. Improved infrastructures bring opportunities for Dell, because it provides Dell with efficient logistic system and the high-speed assembling fittings which are the powerful support of its direct model. (Chou, 2006)

  1. Political and regulatory. Generally, governments have less restricted on cross-border economic trade than they did in respond to People’s desire to gain the great variety of goods and service with lower price. (Rugman, & Hodgetts, 2003) Government usually attaches sufficient importance to domestic economic development in peacetime. Introducing foreign competitors in, can help to exploiting market imperfections (xie, 2003). Domestic enterprises will be more efficient and stronger facing foreign competitions, and Lower price and higher quality created by international competition will be beneficial to local citizens. Concerned about this, lots of organizations set out the aim at realizing liberalization of trade, like WTO, who requires the member states to remove tariff barriers. There also have lots of regional organizations which offer advantage for international business. (Hu, 2006)
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  1. International competition. Pressure of international competition is a persuasive factor for Dell to engage in international business. (Bennett, 1999) On one hand, the invasion of foreign homogenous companies will hamper the growth of Dell and limit the profits, thus Dell has to protect their home market share in response to increased foreign competition; On the other hand, if the domestic competitors of Dell enter into the world market, it is indispensable that Dell use a “follow the competitor” strategy. (Rugman & Hodgetts, 2003)

3.2 Internal factors

  1. Expand sales. Dell has strong marketing and financial strength which can ...

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