Dell in China Strategic Rethinking - 1429 Words

I. Problems/Recommendations In 1995 Dell entered the Chinese computer vendor market. It initially focused at the low-priced end of the PC Market with direct sales. As competition grew and price wars at the low end consumer market began, Dell was unable to compete as their low end consumer model cost consumers twice as much as one of its competitors. Dell was also having trouble with their direct sales model, which led to complaints about slow delivery, service and support. Overall the industry began so see dramatic decreases in profit margins in the low-priced consumer sector. In order for Dell to profit in the Chinese computer vendor market it must be competitive in the low-priced consumer market, high-end consumer market, and†¦show more content†¦Also, like mentioned above only a small percentage of sales come from the internet and the majority of buyers in China like to test the product before buying. The JIT system may work in the United States, but the Chinese population has different needs and wants. Five main industries accounted for 50 percent of dells business: Government, education, telecoms, power, and finance. What is the other 50% allocated to? It seems Dell is fairly diversified within the industry. Diversification could cause Dell to lose focus on a growing market such as consumer PC’s. It may also reduce overall profit margins, since resources tend to get spread thin in high diversified companies. Also, state owned companies, MNC’s, and government and educational institutes accounted for most of the PC sales in China. Dell seems to have a decent market share in the corporate area, but growth is limited. Again, Dell should try to penetrate the consumer market due to the high potential for growth. In 2003 PC sales in China reached 22 million; second most after the United States. China’s population is four times larger than that of the United States. Not to mention only 6% of the Chinese population are internet users. With that being said the potential for growth in the Chinese market is unbelievable high. Assuming GDP continues to increase and unemployment is kept to a minimum. According to Gartner researchShow MoreRelatedEssay about Dell Erp7220 Words   |  29 Pagessupply chains and in the fast developing world of e-business and B2B electronic exchanges. Dell Computers success in reducing inefficiencies establishes it as a model for many other companies. The Dell Model Dells success is based on realizing the strategic power of the supply chain. The core of the Dell model is to deal directly with and sell directly to the customer, and build products to order. 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