dell_blue_lrg_logo.png dell_blue_lrg_logo.png Dell internationalization 1984 to 2004 Ivan Mitringa Lukas Stecak 03/03/2014 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Agenda 1.Introduction 2.Dell Evolution 3.Stopford Model • Confidential 2 dell_gray_logo.png • Dell - Internal Use - Confidential Career Triangle – Ivan Mitringa, FCCA, CIA, CTP Individual Contributor – Junior Level Individual Contributor/Leadership– Senior Level Audit Assistant Delloite & Touche 1Y Financial Controller UPC 1Y Reporting Analyst DELL 0.6Y Reporting Manager DELL 1.5Y HSB FP&A Controller DELL 2Y CER Channel Controller DELL 2Y DELL OUTSIDE DELL 2.6Y 9Y 1 2 3 1 University of Economics - Masters 2 ACCA – Association of Chartered Certified Accountants 3 CIA – Certified Internal Auditor Compliance/Accounting Corporate (Planning/Reporting) Sales (Segment) People Management IT Finance FP&A (US) DELL 1Y International Assignment Finance/Business Leader DELL /ANYWHERE 5Y Competitive Analytics (US) DELL 1Y BU Accounting Sr. Manager DELL 1Y Country Accounting Sr. Manager DELL 6M 4 4 CTP– Certified Treasury Professional Global Operations/ WW Procurement Financial Services dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Dell evolution 4 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png http://cdn.grin.com/images/preview-object/document.214796/cd0212ff67668088e4f202352b7e2a9d_LARGE.pn g 5 Confidential Pattern of International expansion Daniels & Radebaugh’s model: • organization’s extent of globalization • • • Patterns of international expansion: •Passive to active expansion •External to internal handling of operations •Deepening mode of commitment •Geographical diversification dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 6 Confidential Birth and Childhood (1983-1987) •1983-Dorm room business • •1984-Dell Computer Corporation •Dell Direct model • •Production only in USA • •Penetrating US market •1985- revenue growth from $6M to $70M • •Support services introduced • Competition – IBM, Apple, Japanese manufacturers Competitive Advantage Building a brand – 15% discount dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 7 Confidential Start of international expansion (1987-1991) C:\Users\Lukas_Stecak\Desktop\FDP\Internacionalizacia\world map.PNG Legend: HQ/Subsidiary Manufacture HQ in Austin, Texas MFG in Austin, Texas 1984 Canada West Germany 1988 Regional HQ United Kingdom 1987 1988 Poland Czechoslovakia 1990 1990 MFG in Limerick, Ireland 1990 Spain France Norway Sweden Finland 1990 1990 1990 Belgium & Luxembourg Mexico 1990 1990 1990 1990 Netherlands 1990 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 8 PC’s in the Mid 1990’s… dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 9 Confidential Start of international expansion (1987-1991) Challenges of internationalization: •FX Issue • •Logistics • •Geopolitics situation • •Competition • •Language • •Customer behavior • http://cdn.grin.com/images/preview-object/document.214796/cd0212ff67668088e4f202352b7e2a9d_LARGE.pn g FX issues Competition – followers as Gateway 2000 more aggressive in pricing (15-30% lower price) Geopolitics – The Fall of Berlin wall 1990 – new markets Improvement of logistics – Limerick factory dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png C:\Users\Lukas_Stecak\Desktop\FDP\Internacionalizacia\world 1994.png 10 Confidential Legend: excuses HQ/Subsidiary Manufacture World HQ in Austin, Texas MFG in Austin, Texas Puberty (1991-1995) MFG in Limerick, Ireland Denmark Regional HQ Hong Kong Singapore Regional HQ JAPAN Switzerland Australia Taiwan Regional HQ United Kingdom Malaysia 1984 1987 1990 1992 1993 1992 1993 1992 1992 1991 1992 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 11 Confidential Puberty (1991-1995) •1991 - Dell entered the retail channel •CompUSA •Staples •Best Buy •PC World, etc. • •Reducing suppliers •1992- First steps in Asia-Pacific-Japan (APJ) •1994- Dell quit the retail channel and focus only on Direct model http://cdn.grin.com/images/preview-object/document.214796/cd0212ff67668088e4f202352b7e2a9d_LARGE.pn g Reaction to customers who preferred a face-to-face, physical access sales process -> Growing sales but with minimum profit ->cash issues -> First operating loss in 1993 Indirect model didn’t work very well with Dell’s operating model and spartan approach Mid 1994 – Dell pulled out of the retail market 1992 launching business in APJ (export). Established competitors different customer expectations ( in APJ they like to feel and touch products) -> low revenue ($20M) dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Indirect model Puberty (1991-1995) dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png C:\Users\Lukas_Stecak\Desktop\FDP\Internacionalizacia\world 1995.png 13 Confidential Legend: excuses HQ/Subsidiary Manufacture HQ in Austin, Texas MFG in Austin, Texas Internet era and exceptional growth (1995-2000) MFG in Penang, Malaysia MFG in Limerick, Ireland 1984 1996 1990 MFG in Xiamen, China 1998 MFG in Eldorado do Sul, Brazil 1999 MFG in Nashville and Lebanon, Tennessee 1999 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 14 Confidential Internet era and exceptional growth (1995-2000) http://cdn.grin.com/images/preview-object/document.214796/cd0212ff67668088e4f202352b7e2a9d_LARGE.pn g •1995 – Dell.com • •1994 – 1999 – Sales grew at annual rate 49.5% from $3.5B to $25B • •Establishing factories around the world • •Decrease of direct cost by 15% •Growth in Asia-Pacific-Japan and Latin America • • • • • • dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png C:\Users\Lukas_Stecak\Desktop\FDP\Internacionalizacia\world 1999.png 15 Confidential Legend: excuses HQ/Subsidiary Manufacture HQ in Austin, Texas MFG in Austin, Texas True Global Company (2000-2004) MFG in Penang, Malaysia MFG in Limerick, Ireland 1984 1996 1990 MFG in Xiamen, China 1998 MFG in Eldorado do Sul, Brazil 1999 MFG in Nashville and Lebanon, Tennessee 1999 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 16 Confidential True Global Company (2000-2004) http://cdn.grin.com/images/preview-object/document.214796/cd0212ff67668088e4f202352b7e2a9d_LARGE.pn g 2000- Community engagement : Michael and Susan Dell Foundation 2000 – Environment issues – recycling program 2001- Market decrease but… 2003 & 2004 – no.1 in market share of computer vendors 2004 – Michael Dell Stepped down as CEO Direct model as successful Global strategy • • • • • dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Stopford Model 17 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 18 Confidential CIT and Dell Export Dell Direct model Licensing Services Joint-venture Affiliated company 2000 CIT 2011 Dell financial services white Thank You dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 20 Dell approach – Global commercial channel Level of cooperation dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png How does Michael Dell describe the Dell evolution? •http://www.youtube.com/watch?v=N3VOR31Hrn4 • 21 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Dell’s commitment to customers •http://www.youtube.com/watch?v=-5-3t4RAaio • 22 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Creating global business units 23 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 24 Dell organization based on the customer Dell strategic business units (SBU’s) aligned to customer segments World-wide view dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 25 Regional structure to global SBUs C:\Users\steve_lawton\Pictures\ACS_map.jpg C:\Users\steve_lawton\Pictures\global_map.jpg “We have laid the foundation for the transition from a global business that's run regionally to businesses that are really globally organized.” Michael Dell 1) 1) http://www.itexaminer.com/dell-implements-restructuring-plan.aspx dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Large Enterprise Public Consumer SMB 26 Dell organization based on customers End User Computing Solutions Enterprise Solutions Services Corporate/Shared (Supporting Functions) Dell strategic business units (SBU’s) aligned to customer segments dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 27 Financial reporting changes to reflect strategy http://en.community.dell.com/dell-blogs/dell-shares/b/dell-shares/archive/2013/01/10/financial-repo rting-change-product-and-service-based-p-amp-l.aspx Support functions dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png Dell reflecting current IT trends 28 dell_gray_logo.png • Dell - Internal Use - Confidential dell_gray_logo.png dell_gray_logo.png 29 Major IT trends Global industry trends •BRIC country IT market growth •Consumerization of IT – change of traditional work/life patterns Rise of Smartphones, Tablets, Ultra-books and Cloud Services Rapidly increasing storage requirements, services instead of in-house solutions