International Business Strategy Model 6d2k5s

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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 . The election of the board is done through the voting system and those who fail to gather the necessary majority votes are made to resign and new 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

3 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 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

4 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 . (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 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

5 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 programs to health institutions, schools, businesses as well as special packages for Information Technology professionals and staff. Another form of also offered by Dell is the collaborative 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 encom 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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