Dell Computer, success and strategy, outsourcing, India, China, cheap labour, lost-cost computers
Dell Computer, founded in 1984 by Michael Dell, has experienced major international growth in recent years, and it continues to expand. The business model of the company is unique in that it was the first company to build computers and sell them directly to consumers, cutting away the middleman. Using this strategy, a customer is able to easily customize his or her computer by specifying the details, and after the order is made, Dell would put the computer together in one of their assembly plants. This strategy has been very successful in the United States, and in the late 1990's, Dell decided to expand this strategy internationally.
[...] Another marketing strategy tailored specifically to China is selling a low-cost computer. In March of 2007, Dell computer sought to improve their market share by defeating their competitor, the Lenovo Group, by offering a starting price of only $336. This low-cost strategy was meant to switch Chinese consumers from one computer provider to another based on simple economics: Prices will range from about 2,599 yuan, or $336, to 3,999 yuan, or $517, and the system will be available only in China, Dell said. [...]
[...] The strategy of using cheap labor to produce excellent customers service from English-speaking technical support agents has proved successful, and it is just one of the many cost cutting methods used by Dell to ensure that the cost of production remains low. Another important strategy in India was focusing more on software than on hardware. This major shift occurred at the end of 2007, when Dell computer closed its R&D department in India and moved it to China. When this occurred, the strategy of designing and creating hardware changed, and software become the new focus. When this occurred, a Dell spokesperson explained: Our future mission in India has been redefined. The country has great strengths in software. [...]
[...] References “Dell introduces a low-cost PC for China.” Bloomberg News, Reuters, The Associated Press, March Accessed April “Dell to employ 50% more in India.” BBC News, January Accessed April Kraemer Kenneth L. & Jason Dedrick. “Dell Computer: Organization of a Global Production Network.” Center for Research on Information Technology and Organizations pp. 2-17. “Michael Dell Sees India Playing a Key Role in the Online World.” Dell.com, March Accessed April Roderich, Daffyd. Whom the Dell Tolls.” Time Magazine, March Accessed April Sujit, John & Mini Joseph Tejaswi . “Dell India shuts R&D division.” The Times of India, December Accessed April 2015. [...]
[...] This shift represents a major change for Dell computer, which often used India to create innovative hardware ideas. Now that the focus is on improving the operations of call centers and developing advanced software tools for the company, Dell has proven capable of specializing its needs within each individual country. The fact that this change occurred is extremely ironic, but it goes to show how quickly things change in the technology industry. Only nine months before this closing occurred, Michael Dell had a completely different strategy for India. [...]
[...] Other important strategies that are currently ongoing in China include improvements in Human Resources policies. Several of these new HR policies in China have already proven themselves to be very effective. Many joint ventures in China have adapted practices that put more time into employee training, making of plants train more than 20 hours, vs of U.S. plants” (http://www.ddiworld.com). This has resulted in increased productivity, and although China spends about of its labor costs on training compared with only for U.S. [...]
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