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International Business Strategy model

The growth of the Dell Company into a powerful manufacturer of computer and
accessories and the availability of low cost manpower make the United States
computer industry an attractive destination for foreign manufacturers. Research
suggests that ‘by 2016 the size of the United States computer industry is expected
to grow by 45%, to reach a mark of US$ 234-360 billion’ This paper will identify the
data that would be required and the resources where the data is available to enter
the United States market. Also, the paper would advise on the quality of the data
available and the minimum data requirements considering the cost constraints. The
data analysis will be carried out using an International Business Strategy Model

Success of any organization or company that is involved in profit making relies

totally on good and proper management structure and responsibilities of the
organization. Dell not excluded in this. Dell is run by the board of directors
consisting of nine people with the founder as one of the board members. The
election of the board members is done through the voting system and those
members who fail to gather the necessary majority votes are made to resign and
new members are elected. It also has several committees which are entrusted with
the approval of financial decisions, governance as well as other committees that
act to safeguard the interest of the company (D’Costa, 2008). The overall
management and decision making process by Dell goes beyond the board as Dell
has the global management committee that is entrusted with the responsibility of
making most of the strategic decisions.

External environment

There are diverse tools applicable for the analysis of the competitive as well as the
industry environment. Some of these tools include the generic strategy models of
Porter in addition to 5 forces model. The models are devoid of information with
regard to the political as well as economic risks that are encountered by Dell in the
situation that business is conducted in the foreign locations.

The assessment of the external environment involves the analysis of the political
as well as the economic risk. The extent of the stability of the company in addition
to the most important characteristics relating to the political as well as the
economic conditions in the potential host countries in consideration of the business
as well as the strategic objectives in Dell (Lawrence & Lorsch, 1967).

Analysis of the political situation.

These are sets of laws and policies that govern the way operation of any company.
Dell as a company has been met with several unfriendly environments which have
deterred their activities to exploit the information technology industry. Similar
situations have been witnessed in several countries which have been characterized
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with a high level of political instabilities that actually derails the progress and
investment opportunities of the organization including Iraq and other neighboring
countries. Secondly different countries like Canada have policies that restrict the
investments from other companies outside the country as a way of promoting and
building the domestic industry with Japan and China acting as good examples
(D’Costa, 2008). This forced Dell to establish partnerships with the local companies
where they were forced to take up small percentages of the shares.

The process of decision making in Dell Company is an exemplifier of its belief system which are
not inflexible or even unalterable. The duty of the management at the top is the reshaping as well
as redirecting the belief systems in a way that is likely to support the strategic choices. This has
necessitated for a research that is aimed at the identification of the belief systems that comply to
a diversity of strategy types. According to the findings of studies, it has been documented that
there is an achievement of high organizational performance after the alignment of the
characteristics of decision making to the strategies (Lawrence & Lorsch, 1967).

According to the literature of international strategy, the management of the characteristics of

decision making have a reference in business competition on a global perspective. This is based
on the geographic as well as the cultural distances of the subsidiaries in the context of the unit of
the business that is responsible for an inherent creation of variability in the decision making of
the organization. This therefore calls for an attention in the process of the management of the
characteristics of decision making in an attempt of avoiding the potential fragmentation in
addition to the dissipations that may exist across the locations.

INTERNATIONAL BUSINESS STRATEGY MODEL

EXTERNAL ENVIRONMENT

In the context of the external environment, there are three elements that should be
addressed. These include the Political Risk, Economic Risk and Industry and
Competitive conditions. Political risks involve the policies of the ruling party and the
opposition party towards the computer industry needs to be identified. The details
of which can be accessed from their respective websites. Moreover, the attitudes of
both parties toward inward foreign direct investment and trade barriers, such as
import taxes, are also important for foreign entrants. Though the government is
quite stable, the regular terrorist attacks have been a cause for concern (Kogut, B.
1989).

INTERNAL ENVIRONMENT

To address the internal environment one of the tools that can be used is the value
chain analysis. Through the value chain, individual activities can be scrutinized to
identify whether there are any firm specific advantages. Data will be required to
compare the company’s capabilities with its competitors. A potential competitor in
this case would be HP. To get a clear picture the following data would be required to
identify whether there is a gap in the product requirements from the consumer and
the products available. There is also a need of the identification of the possibility of
achieving the economies of scale. This is followed by the identification of the right
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production volume which can give a good indication for unit cost. Whether to have
everything in-bound or outsource some of the activities. In case outsourcing, then
where to outsource (location) keeping in mind the logistics costs involved. The basis
of conducting this analysis is to identify whether the firm can develop a competitive
advantage and also whether the advantage can be sustained. Internally, two factors
that might cause a hindrance are – infrastructure and culture. Although the
information mentioned above is relatively easy to obtain, this only gives a rough
indication and includes a certain amount of uncertainty. For example, product
development ability is influenced by the company culture, that is, whether it is
innovative or bureaucratic. The location of suppliers (raw materials) is another
example of uncertainty, which also directly affects the delivery costs. Indeed, there
are numbers of variable factors that need to be taken into account. (Kogut, B.
1989).

Economic Situation

The economic stability of a country determines the purchasing power and the
potential ability of the customers. This is partly the reason why Dell invested
majorly in most European nations as opposed to HP which took advantage of this
and invested outside Europe in the recent years. Yet another factor that hindered
Dell’s activities and major operations is the drastic changes in the inflation rates as
seen in many European countries including the United States of America. The
merging of HP and Compaq was seen as a way of providing stiff competition to Dell
and other companies dealing with the manufacture and installation of the various
computer accessories. According to the report released by a US based magazine
known as Fortune, Dell ranked 25th in their list of 500 largest world companies
(Apte, 2004).

Social Status

The general demand for personal computers and its accessories id mainly
dependent on the level of education among the citizens in a particular country.
There is a strong direct relationship between the level of education and the
embracement of the computer technology (D’Costa, 2008). The need for personal
computers in the banking sector, educational, health and other related factors
contributed to the rapid expansion of Dell and Hp as the leading companies
entrusted with the information technology in the Unites States as well as other
countries that were embracing both communication and information technologies.

Technological Situation

The information technology industry is considered one of the fastest and most
evolving sectors in the world. This has been due to the level of research and the
urgent need for the technology in the evolving world. The merger between HP and
COMPAQ elicited many controversies with many clients arguing that it weakens the
companies. Dell as a company offers various aspects of technical support in various
perspectives for example the Dell’s consumer division that is known to offer the
customers the services that go beyond business hours where the customers are
given the opportunity to call at any time of the day and night seven days a week to
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give an answer to the need of the customers. Through this package, several options
are made available to customers based on the sizes of their businesses as well as
for institutions for example Dell offers support programs to health institutions,
schools, businesses as well as special packages for Information Technology
professionals and staff. Another form of support also offered by Dell is the
collaborative support with the vendors in the software technology (D’Costa, 2008).

INSTITUTIONAL SYSTEMS

An institutional structure is made up of official and casual institutions that govern a

firm’s behavior’. Official institutions encompass of laws, regulations as well as rules
whereas the casual institutions include norms, cultures in addition to ethics. Data
about the regulations with respect to the computer industry will need to be
identified. Regulations for defense of intellectual property civil liberties call for being
identified. The quality of the data available is good (Lawler, 1974).

Informal Institutions:

The most important factor to consider within the informal institution is the culture.
US is a country with diverse cultures and it is important to make sure that the
product or the marketing of the product does not affect the sensibilities of any of
these cultures. The next important factor to consider is ethics. Evidence needs to be
gathered to determine whether, bribery is a norm within the industry or not. The
quality of data might not be the best but at least it would be a start and give a
standpoint for the firm to make logical decisions (Porter, 2009).

GEOGRAPHICAL FACTORS

Data has to be gathered to identify the perfect location for entering the market. It
is important to identify whether there any cluster formations within the industry.
By having an establishment within the cluster, the firm can get access to external
economies of scale. The following factors are important while choosing the
location:

• Availability of suppliers within the vicinity.

• Consumer density within the chosen location.
• Access to effective and efficient manpower.
• Local regulations within the area.

Once again the data available is quite superficial with respect to geographical
factors. The best way to gather substantial data is through market research
consultancy firms.

CONCLUSION

The international business strategy model defined above is a useful tool to address
the data requirements for entering the computer industry in the US. While the data
required is quite extensive, there is certain information essential for a firm’s entry to
the industry.
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Bibliography

Kogut, B. 1989. A note on global strategies. Strategic Management Journal, 10: 383-389.

Lawler, E., 1974, “Effective organization-match”, Organizational Dynamics, 3(1): 19-29.

Lawrence, R., & Lorsch, J., 1967, Organization and environment. Boston, MA.

Arora, P., 2001, Quality Certification and the Economics of Contract

Software Development, Carnegie Mellon University, Pittsburgh.

Alamgir, J., 2008, India's Open-Economy Policy, NY, Routledge.

Apte, 2004, “Global Disaggregation of Information-intensive Services”,

Management Science, Vol. 41, No. 7, 1250-1263.

ATIP, 1997, ATIP97.066: Indian Software Activities

Bharadwaj, K., (1991, "Regional differentiation - India", Industry &

agriculture in India ever since independence. O U P, 189–199.

Dave, R., 2001, Patterns of Success in Indian Software Industry,

Stanford University.

D’Costa., 2008, Technology Leapfrogging: Software Industry - India,

Calouste Gulbenkian

Porter, M., 2009, How competitive forces shape strategy, Harvard

business Review.

Porter, M., 2009, Competitive Strategy, N Y, Free Press.

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