The document discusses Dell's dilemma in establishing a manufacturing plant in Brazil. It analyzes Dell's options of exiting the country, moving to another Brazilian state, or negotiating with the governor of Rio Grande do Sul. The document recommends negotiation as the preferred option, as it allows Dell to maintain its relationship with the promising investment location while potentially changing the governor's stance, though there are risks if political issues reemerge. Maintaining good relations with all political parties is also advised.

1. Dell’s Dilemma in Brazil
Cheryl Correa
Ramya C
Rhea Locker
Gitanjali

2. Contents
 Case Overview
 Listing of Problems
 Available Options
 Our Analysis
 Conclusion

3. Case Overview
 Entry into manufacturing in Latin
America
 Choice of site in Brazil
 State incentives to attract FDI
 Why Rio Grande do Sul?
 Change in political atmosphere
 What next for Dell?

4. Methods of doing business in a
foreign country
 Export the product
 Allow local company to produce
product under license
 Joint venture with a local firm
 Wholly owned subsidiary

5. Listing of Problems
 Political opposition to incentives given
 Nature of investment promotion
organization in states
 State-specific deterrents to investment
 Choice of negotiation strategy with
governor Dutra

6. Available Options
 Exit the country
 Move the plant to another state
 Negotiate with the governor

7. Preferred Option - Negotiation
PROs CONs
 Best state for  Risky as governor
investment response cannot be
predicted
 Good relationship
with investment  No guarantee of
promotion agency another political
crisis not arising
 Possible change in after setting up the
the stance of the plant.
Governor.

8. OUR SOLUTION –
NEGOTIATION STRATEGY
Investment Creation of Better
into the state more jobs Wages
Better Better
Better Social
standard of Purchasing
Status
living Power
High HDI

9. Alternative to Negotiation
Choose Minas Gerais
PROs CONs
 Less differences  Incentives are not
between political as attractive as Sul.
parties.  Lesser proportion
 Additional of skilled labour.
incentives provided  Perceived as a
like free land. heavy industry belt.
 Promotion agency
is govt+private mix

10. Least Preferred – Exit Brazil
PROs CONs
 Can move to  Largest growing
another Mercosul economy in the
state. Latin American
region.
 Investment not  Favourable
made as such. demographics of
Hence not much Brazil not present
financial loss. in any other Latin
American Country.

11. CONCLUSION
 Awareness of political situation
important in investment decisions
 Intra-country competition for
investments has both opportunities
and risks
 Companies must have backup plan
 Maintain good relations with all
important political parties in the state