Strategic Alliances Or Joint Ventures Business Essay
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Globalisation has opened up new and wide-ranging opportunities and development for businesses in every sector of business in the global market. According to the Professor Levitt and others who suggest that there is a global market for every business, as a result of this, many global opportunities have arisen because of the clustering of market opportunities worldwide.Business organisations strongly rely on technology to market globally, with companies moving from purely domestic, through some exports, then to an international market, where geography and nationality do not matter.
The report will explore Dell Inc international marketing strategy.
Table of Contents
Introduction ……………………………………………….............. 3
We can define international marketing strategy as a way which business organisations making use of one or more marketing mix decisions in the global market. This involves companies to establish manufacturing, distribution and processing facilities around the world with robust marketing strategies globally. Some of the international marketing strategies can be expressed as follows:
Standardisation depends upon an organisation's view of its overseas markets and the degree to which it is prepared to commit itself to meeting the needs of overseas customers. It is a process of developing and implementing technical standards in a standard way. Standardisation helps business organisations to segment its international markets with robust marketing strategy and marketing mix to meet the needs of each of its markets.
One many advantages of standardisation is that, it provides competition thereby allow cost to be lowered and increase profitability including task of supplying different markets becomes substantially convenient for customers.
The diagram illustrates the process of adapting the marketing mix to meet the needs of different geographical markets:
Success of many products in international markets has come about because business organisations have successfully adapted their marketing mix to meet local needs.
As globalisation plays an increasingly prominent role in the world economy, many business organisations are using franchising which is an expansion strategy for rapid growth in international markets.The franchiser grants to an individual franchisee the right to operate a single unit within a defined territory. This can be in three different forms.
Multi-unit franchising: granting the franchisee the right to operate more than one franchise from the same franchiser. Such example is McDonald.
Conversion franchising: acquiring and converting an existing business into a franchise
Strategic Alliances or Joint Ventures
Strategic alliances or joint ventures is a form of collaboration between two or more companies where each partner in the alliance usually retains their independence while contributing towards a mutual shared goal; such as:
Purchasing and distribution agreements
Marketing and promotional collaboration
Joint product development.
As one the leading computer manufacturing companies in the world, its headquarters in Round Rock, TX Texas Dallas USA, revenue of $52.902 billion, operating income of $2.172 billion, net income of $1.433 billion (2010), total assets of $33.652 billion, total equity of $5.641 billion, 96,000 employees’ worldwide with regional headquarters in Europe, Middle East and Africa.
DELL provides hardware information technology with Internet infrastructures to millions of customers worldwide. Their products are desktops, servers, notebooks, netbooks, printers, scanners, storage, smart phones and others.
Dell first product "Turbo PC" came out in 1988 also its final international headquarters in Ireland. The huge success of the company made Dell Inc to launch its first direct online marketing and advertising campaigns in 1996 with www.dell.com and subsequently websites like dell.co.uk and other countries around the world where DELL operates.
The strategy was a huge success as DELL became the first company to record $1 million in online sales. Dell's acquired ConvergeNet Technologies 1999 and later Alienware, which introduced several new items to Dell products, including AMD microprocessors.
Dell decided to expand its business beyond computers alone by rebranded its name to "Dell Inc" in 2003. Dell products are both Windows and Linux based platforms with different range of processing speeds.
There many factors both internal and external that affect the way businesses operate in its environment; it is very important for business organisations to be aware of these factors and the impact those factors will affect in the way businesses operate both locally an internationally.
According to Morrison Mike "PESTLE analysis is a useful tool for understanding the "big picture" of the environment in which you are operating, and the opportunities and threats that lie within it." With good understanding of the environment in which business operate (external to your company or department), one can take advantage of the opportunities and minimize the threats". (Morrison Mike 2009).
PESTLE which stands for (Political, Economic, Social, Technological, Legal and Environmental) are useful tool in measuring the business environment. By measuring these external factors in the business environment, it will help the business organisation to understand the risks related with market growth or decline. PESTLE analysis is often used within a strategic SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Figure 1 below shows the six factors of PESTLE analysis
Dell’s Global Marketing Strategy
Dell was created on a simple concept: it’s Direct Business Model, which starts and ends with our customers. Michael Dell firmly believed that by selling computer systems directly to customers, Dell could best understand their needs and efficiently provide the most effective computing solutions to meet those needs. This direct business model eliminates retailers that add unnecessary time and cost, or can diminish Dell's understanding of customer expectations. The direct model allows the company to build every system to order and offer customers powerful, richly-configured systems at competitive prices. Dell also introduces the latest relevant technology much more quickly than companies with slow-moving, indirect distribution channels, turning over inventory every four days on average. Dell Inc. is at the top of innovation and technological development in computer’s industry; and Innovation is the only sustainable competitive advantage available to the business.
Product: Dell's unique approach to manufacturing separates the different processes so that Dell is not reliant on singular production or supplier's chain for equipment production enabling it to target the customers based on the regions in which the products are manufactured.
Price: Dell's product pricing reflects the affordability of the local consumers; Dell has been able to provide products and services at the local prices without incurring additional costs to price.
Place: Dell's products are always available at the nearest retail stores creating easy accessibility for its customers and forming a large and diversified consumer base.
Promotion: Dell in the past has not concentrated on extensive marketing campaigns but this revolutionarized in 1999 when Dell changed its tactics by engaging in extensive marketing campaigns. The "Be Direct" attitude has changed the way consumer view Dell as the local producers.
Dell’s Joint Venture Agreement
Dell offers various customer financial services for its business and consumer customers in the U.S. through DFS, a joint venture with CIT. Loan and lease financing through DFS is one of many sources of financing that Dell’s customers may select. Dell is dependent upon DFS to facilitate financing for a significant number of customers who elect to finance products sold by Dell. Dell also purchases loan and lease receivables facilitated by DFS on substantially the same terms and conditions as CIT. Dell’s purchase of these assets allows Dell to retain a greater portion of the assets.
Dell Inc PESTLE Analysis
Political factor: Government policies do have a great impact in the way businesses operate. For example, Dell Inc has lost a huge amount of money when the new coalition government came into power. The government decided to reduce spending and make a huge cut in the IT sectors. They have cancelled a lot of IT contracts including supply of Computers from various manufacturing companies which Dell Inc is part of.
Economical factor: Lack of sales has become a generic problem since the start of recession; consumers are not ready to spend due to unstable economy; consumers are now prioritising their needs and go for the highest priority. For example Dell Inc sales forecast is not met; consumers prefer to repair their old computers than to buy new ones or purchase the cheapest ones in the market reducing demands for products with brand name like Dell.
Socio-Cultural factor: Despite the fact that we are in the 21st century of technological age, the rate of computer illiteracy among people is still very high which is affecting sales of computer around the world. As a result of this Dell Inc has started education technology initiatives programme in 2011 in connection with the United Nations Private Sector Forum on the Millennium Development Goals by donating $10 million to the programme. (Sept.22, 2010 content.dell.com)
Technological factor: Various companies are producing new designs and innovations to meet their customer’s demand. For example Dell has just launched three new products namely: Mini 3 smart phone and 5-inch tablet concept, first ultra-mobile gaming laptop, the Alienware M11x, updates of Inspiron studio and Alienware laptops with Intel Core i3, i5, and i7 processors.
Legal factor: Many companies have lost huge amount of money due to legal battle; either with the rivalry company, consumers or the government. For example, in 2008 Dell found himself in a legal tousle when customers accused Dell and Dell financial services for never provided proper refunds to its customers, failed to provide repair services as advertised, and the worst of it all, Dell mislead its customers about its financing terms. The lawsuit cost Dell $3.35 million.
Environment Factor: World leader and put more pressures on all companies around the world to produce more environmental friendly products because of global warming. Many companies are now using eco-friendly materials for production. For example Dell have just launched a eco-inspired computer with a bamboo casing which 81 percent smaller than a standard desktop, uses 70 percent less power and is filled with recycled materials like old bottles, milk jugs and detergent cases and due to be on sale later this year.
The only factor in the aforementioned factors that will have the greatest potential positive impact on Dell Inc the near future is technological factor. Apart from the fact that Dell Inc is a technology company, it is now extremely difficult for businesses around the world to survive without technology; it is very simple, no technology no business success.
Furthermore, there are huge demands from customers for companies to produce a simple and efficient technological solution; this is now creating a stiff competition and rivalry in the computer technology market. For example, Citrix Systems Inc started WYSE thin client for virtualisation, now other companies have their own thin clients. Dell’s thin client is Dell OptiPlex FX160 while HP’s thin client is HP t5565 thin Client. It is now a race against time for companies to produce the best up to date products that will satisfy their customers need.
In conclusion, Dell Inc needs a long standing and robust plans to keep up with the pace of other competitors both in the technology market and international market by continuing to produce quality and up to date technology product for its customers.