white Dell internationalization Ivan Mitringa, Juraj Batovsky ‹#› dell_gray_logo.png Agenda ‹#› dell_gray_logo.png Ivan Mitringa ‹#› dell_white_logo.png Dell internationalization 1984 - 2013 ‹#› dell_gray_logo.png Patterns of International expansion Daniels & Radebaugh’s model: •Extent of globalization •5 axes Patterns of international expansion: •Passive to active expansion •External to internal handling of operations •Mode of operations •Deepening mode of commitment •Geographical diversification ‹#› dell_gray_logo.png Birth and childhood (1983-1987) •1984: PC’s Limited, University of Texas •Dell Direct business model •Production and focus only on US market •1985: revenue growth from $6M to $70M •Introduction of support services Competition – IBM, Apple, Japanese manufacturers Competitive Advantage Building a brand – 15% discount First computer (1985): Turbo PC ‹#› dell_gray_logo.png Start of international expansion (1987-1991) •Challenges of internationalization: •FX Issue •Logistics •Competition •Language •Customer behavior •Geopolitics situation 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 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 • 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 Internet era and exceptional growth (1995-2000) •1995: Dell.com •Establishing factories around the world •Decrease of direct cost by 15% •Growth in Asia-Pacific-Japan and Latin America •1994 – 1999: Sales grew at annual rate 49.5% from $3.5B to $25B • ‹#› dell_gray_logo.png True Global Company (2000-2004) • •2000: Community engagement - Michael and Susan Dell Foundation •2000: Fair practice •2000: Environment issues – recycling program •2003 & 2004: no.1 PC vendor worldwide •2004: Michael stepped down as CEO •Direct model as successful Global strategy • ‹#› dell_gray_logo.png Current status (2013-Now) • •420 subsidiaries in 78 countries •3 regional HQs •7 manufacturing plants •111.300 employees WW •Private company World HQ in Austin, Texas Regional HQ United Kingdom Regional HQ Singapore Manufacturing: •Austin, Texas •Penang, Malaysia •Xiamen, China •Chengdu, China •Hortolandia, Brazil •Chennai, India •Lodz, Poland Many products and all components obtained from 3^rd party vendors. Significant portion of products assembled by various contract manufacturers mostly in Asia. ‹#› dell_white_logo.png Organizational Structure ‹#› dell_gray_logo.png Organizational structure of international company • •Export department •Strategic partnership •International subsidiary •International division •Global Structure •Multidimensional structure •Matrix organizational structure Executive director Export department ‹#› dell_gray_logo.png Dell organizational structure development EC EUC ESG Software Services Shared Go to Market Strategy Enterprise Services Enterprise Mobile Client Regional BUs Global customer BUs Unified Sales under CBU Solution BUs 1.Export department 2.Regional business units (First Europe then Asia + Japan as a separate due to high growth opportunity, 1995 Y/Y growth of 121% for Dell), 4 Regional HQs and manufacturing facility in each region (Austin, Limerick, Penang)  consolidation of common functions to reduce redundant costs and improve ability to deliver quality services in that market, Americas region first with customer segments: Business and US Consumer (1997) -> creation of global consumer business (2009)  creation of global business units based on customers reflecting the impact of globalization on customer base, customer requirements now share more commonality based on their sector rather than physical location (2010) 3.Global CBUs (2011): SMB, Consumer, PUB, LE  CSMB, PUB, LE  CSMB, PLE 4.Global CBU 5.Solution & Product led BUs with shared go to market strategy EUC: Jeff Clarke (Vice Charmain and President) ESG: Marius Haas (President) SW: John Swainson (President) SVC: Suresh Vaswani (President) Marketing: Karen Quintos (Senior Vice President) HR: Steve Price (Senior Vice President) CFO: Tom Sweet (Senior Vice President) CEO: Michael Dell ‹#› dell_white_logo.png Thank you! Q&A ‹#› dell_white_logo.png Backup ‹#› dell_gray_logo.png Dell in Czech Republic Dell Praha •Headcount: 108 •Departments: –Sales & Solutions –Services & Delivery –HR –Finance –Marketing Dell Ostrava •Headcount: 40 •Software group –Architecture blueprint –Design –UI Specification –Programming –Final realization ‹#› dell_gray_logo.png Regional structure to global SBUs C:\Users\steve_lawton\Pictures\ACS_map.jpg C:\Users\steve_lawton\Pictures\global_map.jpg ‹#› dell_gray_logo.png Dell customer based organization World-wide view Dell strategic business units (SBU’s) aligned to customer segments ‹#› dell_gray_logo.png Direct model ‹#› dell_gray_logo.png Indirect model ‹#› dell_gray_logo.png Summary Compensation Table 2013 ‹#› dell_gray_logo.png Headcount development