In-Depth Market Analysis of Dell Corporation - Case Study Example

DELL COMPANY PART TWO By Student’s name Coursecode+name Professor’sname Universityname City, State Date of submission Part A: In-Depth Market Analysis and Selection of target market It is becoming increasingly important for companies to internationalize to facilitate competition and growth. Since several markets are becoming saturated, companies are forced to search for and exploit new opportunities and these prospects are usually found in developing economies. Dell has sought to expand its marketing territories by export to a developing nation, East Africa, and specifically Kenya. One of the many reasons why Dell should consider investing in Kenya, and not in Uganda, is its fully liberalized economy. Kenya has removed all impediments that previously affected foreign private investment and free flow of trade. Among these barriers were import and export licensing, exchange controls, as well as restrictions on remittances of dividends and profits, all of which exist no more. These reforms have been cautiously undertaken by the Kenyan government to create the needed environment to attract foreign investment (Levin, 2008). Moreover, the position of Kenya East Africa is unique. It is surrounded by Somalia to the east, Ethiopia to the north, Uganda to the west, Tanzania to the south, and Sudan to the north-west. The immense Indian Ocean borders the nation to the southeast. Kenya is strategically positioned, as it is the entryway to the landlocked nations in East and Central Africa, including Uganda. Its seaport in Mombasa is also a valuable asset since it is a main deep-water harbour along the East African shoreline. Through this strategic geographic location, Kenya has emerged as a major player in regional commerce, investment, infrastructure expansion and general economic development. Despite many of its socio-economical problems, Kenya can be regarded as one of post-colonial success stories in Africa: relatively successful, comparatively established and host to countless international organizations (Levin, 2008). Furthermore, Kenya is the leading market in East Africa. A global investor like Dell can gain from its strategic location and well-developed trade infrastructure. In addition, the Kenyan market has been a usual choice for investors over the years, and various international firms have made Kenya their regional centre. Making an investment in Kenya at present also provides access to the wider East African regional market (Levin, 2008). In terms of infrastructure, Kenya, and specifically Nairobi, its capital, is a major transport hub for Eastern Africa. The nation’s main airdrome, the Jomo Kenyatta International Airport, is the hub of East African air transport, and is linked to many European and American cities. Kenya has a convenient time zone, GMT +3, which ensures that it situates itself as a leading terminus for business process outsourcing, call centre, software development and some other related activities (Levin, 2008). In addition, Mombasa, the major seaport of Kenya, serves as a main distribution centre for the profitable East African market providing links to landlocked adjacent nations. The port of Mombasa is linked to the globe’s major ports with over two-hundred sailing a week to ports in North and South America, Europe, Asia, Australia, Middle East and rest of Africa. The Trans-Africa highway links all the East African nations. The road transport network is widespread and fully developed with highways connecting to all main commercial capitals. The railway system is a one track, linking Nairobi to Mombasa and to Dares Salaam (Levin, 2008). Kenya has a well-developed system of education, with the principal language of training being English. There are a large number of English speaking employees, trained in diverse professions. In fact, the nation prides itself in its large number of professional workers, educated both within the nation and in institutions in North America, Europe, Australia and other regions. The country holds the merit of having the highest number of college and university educated English-speaking professionals within East Africa (Levin, 2008). Lastly, the existence of a well-established foreign and local private sector will provide Dell with the opportunity of working with renowned partners. Kenya’s substantial private sector, together with a significant number of foreign investors is regarded as one of the most resilient in the world. The nation has often been an economy, in which the free market chiefly determines the prices, resource allocation, and other marketing decisions (Levin, 2008). In contrast to Kenya, Uganda has so many barriers to foreign investment that will make it difficult for Dell to invest in the country. The barriers to investing in Uganda include high levels of corruption, short supply of electricity and high-energy costs, poor infrastructure, lack of skilled workforce, insufficient access to affordable loan financing, and incompetent government services. Lack of government guidelines and regulatory consistencies towards investment further hampers business inevitability and effectiveness (Organization, 2004). To begin with, the electricity network in Uganda reaches only ten percent of the populace, and load shedding throughout the country is common. The decrepit road infrastructure raises transportation costs leaving the country susceptible to blockages and interferences. A double-lane highway from Kenya remains the major route for eighty percent of Uganda's trade. Then again, Corruption and governmental intrusion in the private sector are prevalent in Uganda. In commercial disagreements, government authorities and politically connected insiders may disregard court rulings against them, thus they leave foreign investors with no authorized means of recourse. An example is a recent tax clash over the trade of oil rights, which has supported oil production in Uganda for more than a year and has resulted in some investors questioning the commitment of government to contract sanctity (Organization, 2004). Dell can therefore not invest in such an investment environment. American companies have noted some complications owing to lack of transparency and likely conspiracy between competing trade interests and government representatives in tendering procedures. Foreign firms are often targeted by tax auditors and collectors to compensate for revenue collection deficits. From the above discussion, it is evident that Kenya, more than Uganda, is the potential investment destination for Dell Company. Part B: Entry Strategy Developing nations have a great potential for future development. However, they can be problematical to operate in due to for instance non-westernized trade practices. Consequently, the means of entry strategy has to be evaluated and chosen carefully. This part covers the entry strategies that would be used by Dell Company to enter a developing nation, Kenya. Distribution Strategy Dell will build partnerships with major computer retailers, including Dubbed, Inspiron Technology. This will allow the corporation to access a great deal of product distribution channels, which is a tremendous potential trading opportunity for the firm. Dell can also continue its straight-to-customer marketing initiative but also seek to advance its new joint ventures in television and print publicity, often in association with its retail collaborates (Gannon, 1993). Dell can also make use of the available campus computer programs to distribute its products. Exchange Rate Strategy Dell will price its products using the Kenyan shilling to facilitate easy buying of its products by the consumers. Kenya runs a floating exchange rate against foreign currencies. Consequently, the rate of exchange between the Kenyan Shilling and any other nation is determined by market forces, subject to interventions now and again by the Central Bank of Kenya (Albaum, Duerr, & Strandskov, 2001). Marketing Strategy Dell can diversify its trade by targeting private consumers, such as households and students that need to purchase computers. In doing so, the corporation can highlight several of the same features, including ease of ordering and customizability. Dell can target personal consumers by means of direct electronic mail campaigns as well as print advertising and television (Kotler, 2000). Additionally, Dell could establish a number of new features and products that individual users could value. Such features may include multicolored laptops, enhanced graphics, as well as sound cards. It is also important for Dell to know their customers, as knowing them means having knowledge that lest Dell continuously add value. It also means that Dell can now design new services, new products, and new pricing systems that constantly meet and surpass customer expectations. Dell will achieve this through originative use of their information systems and their people as well. The information systems will attract, store, operate, and report information on consumers. Their people on the other hand, will use this information to react immediately to any changes in market situations, changes from competitors, and variations in customer preferences. This is a way of getting more intimate with the consumer perspective. Cultural Strategy Business hours in Kenya starts from nine am to four pm, with a one-hour lunch break between one pm and two pm. A few businesses also run on Saturday mornings. The official language in Kenya is English so new foreign investors as Dell, can expect their consumers to have good language skills therefore, they can conduct their business in English. However, a little understanding of basic Swahili phrases always gives a good impression. In several businesses, the business day will stop at specific times for staff Muslim members to pray. Dell can easily adjust to these cultural settings since most of them are similar to working settings across the world (Albaum, Duerr, & Strandskov, 2001). Corporate Social Responsibility Strategy Dell will develop the capacity to examine and evaluate individual corporate social responsibility actions, a process that will require both an understanding of the motivation behind them and an assessment of their impact on the society and on the corporation (Root, 1987). Conclusions There is a huge potential within the Kenyan market for a computer company like Dell. The increase in the number of educated population as well as rise in technology has resulted in demand for computerisation in public offices and institutions. These enterprises will present opportunities for a corporation like Dell. The most important official motive is the developing nation Kenya’s fast economic growth, which results into an increased demand for end user goods and services in every sector. Naturally, a steady economy and legislations that act in favour of the foreign corporation’s operations within the country are conditions that set a foundation for economic development, and should therefore, be supposed as informal motives. Additionally, privatization and liberalization are activities taken by the government to warrant competition. Private investors who have the required skills and competitive advantage hence can create joint ventures or make use of any modes of entry to function in the Kenyan market. In general, investments have improved in different sectors of the Kenyan economy owing to the favourable investment climate. Part 3: Synthesis Final Report All marketing activities take place within legal, cultural, economic, political and other environments to which policies and strategies must relate. Dell thus needs to operate within the limitations of this environment, and in the case of expanding to Kenya there will be multiple environmental constraints to the company at any given time (Albaum, Duerr, & Strandskov, 2001). There are particular market-related factors that function as international merchandizing channel determinants. They can be categorized into; the size, nature and geographical distribution of clientele, the requirements, desires and preferences of these consumers, and the degree of the market’s economic development. On top of that, political stability and lawful hurdles can be noteworthy entry means determinants (Gannon, 1993). Finally, product variation in features has a major impact in the selection of channel. In this regard, such variations like technical complexity are taken into consideration. For instance, a technical product or service may necessitate an after sales service. The development stage of a product and its relative novelty to a foreign market can have an effect upon the entry strategy that is applied (Root, 1987). A company like Dell which has relatively unknown products in Kenya, would be essential to rely on agents rather than selling directly. List of References Albaum, G., Duerr, E., & Strandskov, J. (2001). International Marketing and Export Management. New York: Prentice Hall. Gannon, M. (1993). Towards a Composite Theory of Entry Mode Choice: the Role of Marketing Strategy Variables. Journal of Strategic Marketing , 41-54. Kotler, P. (2000). Marketing Management. New York: Pearson Publishing. Levin, G. (2008). Country Profile: Kenya. The Economis Magazine , 65. Organization, I. L. (2004). Uganda Country Profile. Geneva: International Labour Office. Root, F. R. (1987). Entry Strategies for International Markets. Lexington. Read More