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International Business - International Market - Case Study Example

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Trade has become increasingly global in some scope today and there are reasons for this. One is the advancement in technology including communication efficiency and modernization where people are migrating to live in areas where they feel they are comfortable…
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International Business - International Market
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Download file to see previous pages It will investigate the current business strategies used by the company to conquer international markets, licensing and franchising, market strategies and ownership factors.
Dell Inc. is an American computer hardware company which is based in Texas, U.S. The company manufactures, supports, develops and sells a wide variety of products and services including; PCs, data storage devices, network switches, software, computer peripherals etc. Dell Inc. is one of the biggest companies in the world but it has currently encountered a lot of competition from other players in the industry including IBM and HP. By the end of 2006, the company had an employee capacity of 78,700 throughout its branches all over the world. The company is owned by Michael Dell who, in 1984 while being a university student, founded the company in his dorm room. The company is currently a wholly owned subsidiary of Dell Computer Corporation
After deciding to enter oversees market a variety of options were open to the company. These options vary with cost, risk and the degree of control which can be exercised over them in terms of security. Dell Inc. uses the following two methods of international marketing especially in some countries, such as those in Europe where the countries have developed infrastructure, organized import duty regulations etc. But in developing countries where level of economy is low, the company uses the direct method of exporting.
Exporting
Exporting is the direct sale of domestically produced goods in another country and does not require that the goods be produced in the target country. An example of this kind of marketing is counter trade. Counter trade is the expansion of operations in markets where competition is less but currency based exchange is not possible (Hollensen, 2004).
Direct method
In this method, DELL Inc. may agree to build a plant in a certain country and either assembles or manufactures their products and then operates as a full entity in the target country. An example of this method of trading is the barter trade. Direct methods have the following disadvantages
i. It is difficult to set price and service quality
ii. 'Dumping' may occur since it is not covered by GATT
iii. Inconsistency in specifications and delivery
iv. Quality may not be of international standards becoming so costly to the customer and trader.
Indirect method
The method of marketing does not require that the company invests in production facilities in the country and therefore, it is cheaper. The only costs that will be incurred are the marketing, transport and government expenses. This kind of marketing require full corporation of the following players; exporter which will be in this sense Dell Inc., importer in the target country, transport agents and the government trade officers. This is the marketing of goods produced in one country into another. In this case, there is no direct manufacturing in the intended country but significant investments in marketing are required. DELL Inc. can therefore manufacture their products in either Europe or Africa and export them directly to these countries. The advantages for this method are; production is home based hence less risky, gives an opportunity to learn markets abroad, potential risks of operating abroad are minimized. The only disadvantage of this method is that the company is at the mercies of unscrupulous agents who make more profit than the company itself.
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