Dell has managed to become remarkably successful in a short span of time by following a direct "business to customer" model. By selling computers directly to customers, they have been able to best understand their needs and provide effective solutions to meet those needs. Dell built PCs to order, so customers received only what they wanted. Dell's just-in-time inventory system allowed them to order only parts that customers demanded, thus keeping the minimal inventories and enjoying the cost-reductions which in turn were passed to customers. Dell's extensive use of e-commerce contributed to further cost minimization, reduced the order and delivery time for customers, and customization. There are three golden rules at Dell: disdain inventory, always listen to the customer, and never sell indirectly.
China had been identified as a very promising market and Dell has set the goal to improve its rank from seventh to second place in this PC market. However, Dell faces many challenges in this market. The Chinese government actively promotes the Chinese PC maker "Legend" who dominated the market; penetration of the Internet is relatively slow; software piracy is rampant; competition is intense. In addition, there is fierce competition for market share and Dell's competitors have started imitating Dell's business model. Dell needs to determine how it should modify its strategy to succeed in the Chinese market.
Alternatives and Evaluation
Open up Dell Retail Stores
The Chinese are uncomfortable with purchase high-ticket-price products that cannot be viewed before purchase. This is one of the reasons that Dell has invested in door-to-door sales calls. If Dell were to open up retail outlets they would be able to keep the costs of their computers down (avoiding retail mark-ups in China) and they would be able to remain loyal to their three golden rules. This option would allow for customers to come into a store and view...
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