BRIC Power. Emerging Countries: Brazil, Russia, India, China and Dell Strategy. Peter Macejka, Róbert Žbodák

Transcription

1 BRIC Power Emerging Countries: Brazil, Russia, India, China and Dell Strategy Peter Macejka, Róbert Žbodák

2 About presenters Peter Macejka Róbert Žbodák Education: Masters in Trade & Marketing University of Economics Bratislava Work experience Dell: Emerging Distribution Finance Director (4 Yrs) Emerging Commercial FP&A Manager (3.5Yrs) Finance Consultant (0.5 Yrs) Project Manager (1.5 Yrs) Servicing Pricing Lead (1.5 Yr) Education: Masters in Financial Management Comenius University Fellow of ACCA Work experience Dell: Server Solutions Controller (1 Yr) Support Services Finance Consultant Emerging Markets (2 Yr) Western Europe FP&A Manager (2 Yrs) Revenue Accounting Manager (2 Yrs) Business Controls Mgr (3 Yrs) 2

3 Agenda Brazil, Russia, India, China and DELL strategy Global Economy Emerging vs. Advanced Overview of BRIC countries Meaning of the acronym Comparison of BRIC countries Dell in BRIC countries Brazil Dell Approach China Dell Approach India Dell Approach Russia Key takeaways 3

4 Global economy

5 Global economy , share of world GDP 56.8 % 43.2 % Developed Markets Emerging Markets Source: 5

6 Global economy , share of world GDP 32.8 % 67.2 % Developed Markets Emerging Markets Source: Source: IMF 6

7 Top 10 GDP ranking (Nominal) United States United States United States United States United States 2 Japan Japan Japan China China 3 Germany Germany Germany Japan Japan 4 France United Kingdom United Kingdom Germany Germany 5 United Kingdom France China France United Kingdom 6 Italy China France United Kingdom France 7 Brazil Italy Italy Brazil Brazil 8 China Canada Canada Italy Italy 9 Spain Brazil Spain India India 10 Canada Mexico Brazil Canada Russia Source: IMF 7

8 8 Consumption shifts to emerging markets

9 BRIC Countries

10 What is BRIC? BRIC - Brazil, Russia, India and China The term was coined by Jim O'Neill of Goldman Sachs in a 2001 paper entitled "Building Better Global Economic BRICs". It was then prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most of the current major economic powers. Over 25% of the world s land coverage 40% of the world s population 10

11 11 Comparison of BRIC Countries

12 12 BRIC Countries IT Market & Dell

13 Emerging Markets Business Model Quote / Rep Gii / Casa (Revenue) Credit Check Factory / ODM Delivery End Customer Channel (T2) HUB Customs Distributor (T1) HUB End Customer End Customer Customs VAR / SI (T1) Other Vendors 13

14 Emerging Logistics Model Tilburg hub Mfg Sources 1. Chengdu 2. Shanghai 3. Xiamen Mar. CCC6 Chengdu ODM, Shanghai Dubai Hub CCC4 Xiamen Wistron Zhongshan Joburg hub DBM STOCKING: Tilburg 1. Morocco 2. Tunisia 3. Nigeria 4. Ghana 5. West Africa Dubai 6. Egypt 7. Turkey 8. East Africa 9. IOI DIRECT SHIP: Current Routes 1. Angola 2. Mauritius 3. Kenya 4. Nigeria 5. Turkey 6. Morocco (via Marseilles) 7. Tunis (via Mar.) 8. Via Dubai FC 9. Ghana 10. Tanzania 11. Uganda 14

15 Dell in BRIC Countries

16 Brazil Dell Approach Dell invested in local production facility ahead of competition ( 99) Established a large-scale direct model (avoiding 10% transaction tax) Started with multi-national corporations, focusing on Servers & high-end PC Outperformed competition on services and customer support Later ( 05) expanded its focus on SMB business and increased Channel sales Since 2009 expanding geographically (to North-East of the country), and focusing on Consumer market & Storage Market share of Revenue, 2015 Source: IDC 16

17 India Dell Approach First ( 99) targeting multi-nat l corporations, focus on Servers & high-end PC Focused on smaller cities to avoid pricing pressure of largest markets Directly contracted 35 Tier 2 (local) distributors; providing credit and regional exclusivity Local assembly built ( 07) to reduce tax/duties and lead times (from 4-5 weeks to <10 days) Shorter lead times enabled direct online sales Geo expansion of on-site support to ~650 cities; focus on Consumer & SMB Opened Dell retail stores (since 2008) Market share of Revenue, 2015 Source: IDC 17

18 China Dell Approach Built local manufacturing in 1998, matching competitors Direct model acted as an enabler of success (brand differentiation) Started with multi-national corporations, later large Chinese companies listed abroad Initial focus on Servers / Storage; geographically 45 largest cities (40% of market) In 2003, senior leadership team investment to foster public / nat l LE relationships Outperformed competition on services and customer support (esp. Enterprise) Later expanded focus to Consumer & SMB via Channel; geographically to ~900 cities Market share of Revenue, 2015 Source: IDC 18

19 Russia Macroeconomic challenges: high dependence on oil & gas, lack of long-term savings (dependence on foreign debt), recent economic sanctions Institutional challenges: political system highly centralized (President), poor ranking in international surveys (ease of doing business, corruption perception, economic freedom etc.), strong involvement of state in the economy Dell s presence in the Russian market is very low Market share of Revenue, 2015 Source: IDC 19

20 Russia s dependence on oil drives unpredictability in IT market Note: IT market includes services and SnP in addition to PC/SV/ST Source: IDC Black Book, Energy Information Administration 20

21 Summary: Brazil, India, China model for success Action Pursue client profitably, even in markets where focus is enterprise Maintain strong focus on indirect business, even when pursuing direct model Develop local assembly to: Avoid import duty; Capture tax incentives; Improve supply chain Adapt business practices to take advantage of local tax structure, e.g., direct billing Drive initial market entry through international MNCs before targeting local PLE Evidence Client is minimum 63% of revenues, even in markets where Enterprise is stated focus ~45-60% of revenues in India and China from channel (Brazil 20%) Estimated reduction of ~10% in cost, and 75% reduction in lead times 5-20% reduction in cost in India and Brazil Entry strategy in Brazil, India and China focused on MNCs 21

22 Key takeaways BRIC countries and other emerging markets are playing an increasing role in the global economy The high GDP growth generates middle class and increased domestic consumption BRIC countries and emerging markets represent a great opportunity for every global company and cannot be ignored Every country is different and requires a specific business approach In spite of relatively successful stories in India, Brazil and China, Dell is facing a big challenge in the Russian IT market 22

23 Thank You