Dell Case
What should Maxwell recommend to Michael Dell?
Executive Summery
In order to expand their business to Latin America and set up a manufacturing unit there, Dell choose to set up a manufacturing unit in Brazil. The reason for choosing Brazil as the country to set up the unit was that the rise in sales in personal computers as the highest in Latin America compared to the world and Brazil was one of the largest Latin American countries with a population of more than 1500. This made Brazil a very attractive country.
The company chose to set up its unit in the state Rio Grande do Sul as the company found that the state had the requisite number of qualified personnel, adequate supply of electricity and requisite infrastructure for telecommunications and transport. The state also offered special financial incentives to the company. During that period Brazil was divided into a number of states and each state was fighting with each other to get Dell to set up their unit in their states.
However after the new government came to power, the states were given a lot more power to govern than they earlier had. Now they could dictate industrial policy of their state. The new government challenged the financial concessions that the previous government had been given to Dell. This led the company to seriously contemplate how to tackle the situation and what steps it could take to resolve the crisis so that it could achieve its business objectives.
The Options for Dell
Maxwell who was then the prime advisor to Dell, suggested three options to the company. The first option that Dell had was to leave the state of Rio Grande do Sul and move onto another state. This would be similar to the step that what Ford had taken in the case of Babia. The other states which had been visited by Dell before it decided to select Rio Grande do Sul, had made some equally interesting financial and special status offers o the company. Hence the company had the luxury of having similar options from other states Maxwell though that Minas Gerais could be one of the options for Dell to shift base in Brazil.
Maxwell noted...
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