Dell’s Dilemma in Brazil              Submitted by :                 Group 1      Elizabeth Eappen(F11076)       Iris Char...
Dell Dell founded in 1984 by Michael Dell It became the second largest PC maker in  1999 after Compaq Direct Model-High...
Horizontal FDI Increased   sales of PCs in Latin America Decision to locate its first manufacturing  plant in Brazil. A...
Brazilian market overview   170 million population       Attractive Market   Deregulation       1992 Abandonment of ma...
States - 1divyanshi
Sao Paolo Benefits  •   Large prosperous population  •   Large pool of skilled labor  •   Large market Limitations  •   ...
Minas Gerais Benefits  •   70% reduction for 10 yrs, R$ 20 million      loan4yr grace and repayment period, free      lan...
Rio Grande do Sul   Benefits    •   75% reduction in tax for 12 yrs, R$ 20 million        loan,5 yr grace period, 10 yr r...
Dilemma Change   in governance Opposition to grant benefits to foreign  TNCs: Govt orders re-negotiation plans Ford sh...
Alternatives ExitingBrazilian market Switch to another state Negotiate with the new governor of Rio  Grande do Sul
Alternate 1 : Exiting BrazilianmarketImplications Loss of zero tariff advantage enjoyed in  Brazil being a member of Merc...
Alternate 2 : Switch to anotherstateImplications Other states did not meet the desired  requirements of : well developed ...
Alternate 3 : The Solution   Dell should stay put in Rio Grande       Best Incentives offered       Chances of re-negot...
Dell's dilemma in Brazil
Dell's dilemma in Brazil
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Dell's dilemma in Brazil

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  • NUNCA! NUNCA comprar um Dell em Brasil o serviço e horrível meu garantia fala próxima dia úteis e o mínimo que eu esperei para eles foi 7 dias úteis. este vez mais que uma semana e eles nunca fazer mais que uma coisa cada visita pra exemplo nossa DVD não foi funcionando também nossa HD foi verificada com problemas e o fonte também mas eles foi aqui só para trocar DVD próxima vez HD e próxima vez o fonte e todos vezes precisa ficar em casa dia inteira esperando para deles então para eles arrumar meu micro eu perdeu trabalho três dias.
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Dell's dilemma in Brazil

  1. 1. Dell’s Dilemma in Brazil Submitted by : Group 1 Elizabeth Eappen(F11076) Iris Charu Gomes(F11079) Neethu Thresa Jacob(F11096) Swarupa Rani Sahu(F11116) Divyanshi Gupta (F11121)
  2. 2. Dell Dell founded in 1984 by Michael Dell It became the second largest PC maker in 1999 after Compaq Direct Model-Highly efficient and low cost model
  3. 3. Horizontal FDI Increased sales of PCs in Latin America Decision to locate its first manufacturing plant in Brazil. Advantage of Market imperfections prevailing in brazil economy
  4. 4. Brazilian market overview 170 million population  Attractive Market Deregulation  1992 Abandonment of market reserve policy for computers Member of Mercosul, S. American customs unions Culture of Pragmatic Nationalism adopted by states Inward FDI policy benefits Guerra Fiscal/taxation war
  5. 5. States - 1divyanshi
  6. 6. Sao Paolo Benefits • Large prosperous population • Large pool of skilled labor • Large market Limitations • Govt. indifferent to Dell’s requirements • No special financial incentives • Security issues
  7. 7. Minas Gerais Benefits • 70% reduction for 10 yrs, R$ 20 million loan4yr grace and repayment period, free land site for the plant • Promotional agency INDI with highly qualified staff Limitations • High presence of heavy industries • Difficulty in meeting Dell’s specific needs
  8. 8. Rio Grande do Sul Benefits • 75% reduction in tax for 12 yrs, R$ 20 million loan,5 yr grace period, 10 yr repayment period • Promotion agency POLO • Well developed, modern infrastructure • Lower costs for plants overall facilities • Security factor • Well educated population Limitations • 1 day delay in delivering to customers in Sao Paolo
  9. 9. Dilemma Change in governance Opposition to grant benefits to foreign TNCs: Govt orders re-negotiation plans Ford shifting to Bahia
  10. 10. Alternatives ExitingBrazilian market Switch to another state Negotiate with the new governor of Rio Grande do Sul
  11. 11. Alternate 1 : Exiting BrazilianmarketImplications Loss of zero tariff advantage enjoyed in Brazil being a member of Mercosul Unable to tap the largest market in Latin America Loss of incurred cost in Brazil
  12. 12. Alternate 2 : Switch to anotherstateImplications Other states did not meet the desired requirements of : well developed infrastructure, efficient telecommunications, high security transportation, highly skilled work force Absence of fully privatized efficient foreign investment agency in other states catering to the Dell’s requirements
  13. 13. Alternate 3 : The Solution Dell should stay put in Rio Grande  Best Incentives offered  Chances of re-negotiation with the Govt  Dell’s policy consistent with the governor’s goals and agenda  Greater employment opportunities- greater access to information  R&D collaboration with the existing state universities  Linkage benefits to the economy

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