Nowadays, India has become a country of innovations and new initiatives: for instance, in this andocentric country, female politician Pratibha Patil has been recently elected as President. The country is currently expanding its foreign policy and partnership with other countries and thus seeks to receive new trade opportunities, so the country has become attractive to international corporations, who, in their turn, search for new markets. The present paper draws a profile of the country and describes Dell’s penetration into Indian IT market.
India is a major part of the Indian subcontinent, situated in the southern part of Asia. One of the most important geographic characteristics of the country is the presence of the Thar Deset in the west, which actually determines dry and hot climate in this part of the country. Due to the presence of the Himalayan Mountains, the northern part of the country, however, has tropical wet climate. The country has a number of rivers such as the Ganges, the Brahmaputra, the Kosi and the Mahandi (Caudle, 1996). Indian demography is known for the country’s extremely high density of population and the young median age of 24.
9. “With an estimated population of 1. 12 billion, Indian is the world’s second most populous country and is expected to be most populous in 2040. Almost 70% of Indians reside in rural areas, although in recent decades migration to larger cities has led to a dramatic increase in the country’s urban population. India’s largest cities are Mumbai (formerly Bombay), Delhi and Kolkata” (Economic Research Service, 2007, p. 12). Indian society is still greatly stratified, as the situation with the division into castes has remained to great extent stable.
The most negative aspect of this stratification is the principally low motivation for the members of the lower castes (like “the untouchable”) to succeed in education and professional development and improve their well-being. This system determines a place in life for practically each person, and it is extremely difficult to change the time-honored polity (Montek, 2002). Wealth distribution is thus very disproportionate in the country, as 10 per cent of the population, the higher circles, receive 33 per cent of the overall income in the country.
“Despite significant economic progress, ? of the nation’s population earns less than the government-specified poverty threshold of $0. 40 per day. Official figures estimate that 27. 5% of Indians live below the national poverty line” (Economic Research Service, 2007, p. 14). Income inequality in the country continues to grow, as the poorly represented, but strong urban middle class, is dynamically enriching, whereas the welfare of the other groups remains practically stable. The country has highest rate of child malnutrition in the world, which is 46%.
Speaking about religion, the majority of the population, 80 per cent, are Hindu, and the second largest religious group is Muslims, who constitute 13. 5 per cent of the population and are socially active. Only 75 per cent of Indian males and 55 per cent of females are literate, in the provincial areas, literacy coefficient falls to 46 per cent (Alexander, 2002). Indian culture is ancient, rich and exotic, from the Western position, as it includes traditional marriage and birth rituals as well as other interesting ceremonies.
Nevertheless, India, in the cultural context, is globalized, similarly to the other Asian countries. The residents of urban areas speak English fluently (Montek, 2002) and prefer Western values (career, professional development, personal growth). As for Indian economy, “for most of its post-independence history, India adhered to quasi-socialist approach with strict government control over private sector” (Alexander, 2002, p. 136). Nevertheless, beginning with the 1990s, India has been introducing new economic reforms, which promote free trade and democratize foreign policy.
“Foreign exchange reserves have risen from $5. 8 billion in 1991 to $ 247 billion in 2007, while federal and state budget deficits have decreased” (Economic Research Service, 2007, p. 14). In terms of purchasing power parity, the country’s GDP is $4. 156 trillion. The recent economic growth is taking place owing to the 509-million workforce, 60% of which work in the area of agriculture. The service sector is also growing: 28 per cent are employed is services, and only 12 per cent in industry (Alexander, 2002). The country’s agriculture, however, creates only 28% of GDP.
“In 2006, estimated exports stood at $112 billion and imports were around $187. 9 billion. Textiles, jewelry, engineering goods and software are major exports commodities” (Economic Research Service, 2007, p. 16), whereas the major import goods are chemicals and machineries. Speaking about politics in India, it is important to note that the country is gradually distracting from the inter-caste struggle, but not so long ago, in 2004, there was a territorial conflict over Kashmir, but the overall peace process, started at the end of the 1990s, is still ongoing and has brought considerable results.
For instance, the Indian National Congress and the Communist Party of India, characterized as very controlling and authoritarian parties were replaced by the National Democratic Alliance towards the end of the 1990s. Having learned this lesson, the INC changed its course in 2004 and its candidate, Pratibha Patil, developed a social-democratic agenda for the president election. Nevertheless, Prime Minister M.
Singh has acquired quite a negative reputation, as he was involved into several corruption cases in the country and promoted oligarchy in the past (Alexander, 2002). It is hard to describe the country’s legislation briefly, but it is important to note that the newly-adopted laws and regulations contain almost no restrictions of national trade and competition, whereas international corporations are supposed to expand their influence through investing into Indian businesses and government-owned enterprises.
The legislation encourages export, so international companies, establishing business in the spheres of IT and the Export Processing Zone, receive permission for absolute ownership and more “lenient” taxation, but they are obligated to export at least 75 per cent of their production from the country. The country creates to some extent dissatisfactory opportunities for import, as the procedure of setting a business is complicated by the need for additional documents and permissions. This means, potential importers encounter a very bureaucratized procedure and little legal encouragement.
Dell. Inc, one of the world’s largest manufacturers of computer systems, was created by M. Dell in 1984. The company’s mission is stated in the following way: “Selling computers directly to customers” (dell. com, 2007). Using this principle as a foundation of the business, “Dell could best understand the customer’s needs and efficiently provide the most effective computing solutions to meet these needs. The direct business model eliminates retailers that add unnecessary time and cost” (dell.
com, 2007). The product subdivisions include computers for small, medium and large businesses as well as for domestic use , and the scope of systems the company produces is very broad. The company designs and develops its products up to the minor details – from the basic concept and technology, to product end-of-life solutions. The company’s Board of Directors is composed of nine top-managers: Don Carty, Michael Dell, Sam Nunn, Alex Mandi, Klaus Luft, Judy Lewent and Michael Miles and William Gray.
This circle arrange and activity and appoint the members of the five committees, which include the Audit Committee (accounting issues), the Finance Committee (mergers/acquisitions), the Compensation Committee (employee-related policies), the Governance and Nominating Committee (major organizational issues) and the antitrust Compliance Committee (designed for control over law observance). In 2006, the company entered Indian computer hardware and software market (Kannan, 2006). Its customers thus derive from upper and middle classes and are thus very demanding, especially concerning the ratio between price and quality.
The country thus set competitive prices for its computers, but placed emphasis upon the novelty and objective value on its results of technological break-through. “Dell laid great thrust on the ‘Just-in-time’ concept. A production base would enable the company to deliver products faster to its Indian customers” (Kannan, 2006, p. 8). Another component of dells’ strategy was the introduction of new cost-reduction techniques: “Similarly, Dell’s corporate strategy was to pass the actual saving -due to a reduction either in component pricing or in structural cost – to consumers” (Kannan, 2006, p.
8). In addition, the ‘Just-in-time’ concept implies the introduction of manufacturing in India in order to increase the pace of technological innovation and initiative. Due to the fact that international companies are underrepresented in Indian IT and computer hardware markets, whereas the consumption of these products grows drastically (50-80 per cent) annually, Dell seized 7 per cent of the market in less than 7 months.
Dell’s direct selling model and perfect customer service seem to have been appreciated by Indian PC-users therefore. To sum up, with the progress of science and technology in India, conspicuous consumption of computers is anticipated. In this sense, Dell selected the most efficient marketing strategy, as the ‘Just-in-time’ idea serves the purpose of accelerating the progress of Indian technologies and facilitating international communication. Reference list Alexander, Y. (2002).
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