John Barham examines the US computermaker's strategy for expansion using a Brazillian base

Dell Computers, the Texas-based computer-maker that was among the pioneers of online ordering, is preparing to attack the difficult Latin American market.

Soon, Dell will start making computers at a new factory in the small, southern Brazilian city of Eldorado in its first manufacturing venture in South America. Within a few hours' flying time of Eldorado lie four of the continent's main metropolitan regions - Buenos Aires, Rio de Janeiro, Sao Paulo and Santiago - which generate about half the region's wealth and where most of the computer-using populace is concentrated. Dell hopes to serve all these markets - including more distant regions in northern Brazil and the Andean countries – from Eldorado.

According to Dell's plan, aircraft from Miami will land at a nearby international airport carrying computer components that will be sent straight to Dell's factory. Together with parts delivered from suppliers in Brazil, they will be assembled to order, packed and delivered to consumers across the continent.

The challenge for Dell is not only to mount an effective marketing campaign to educate customers about online ordering, it must also manage a complex logistics system and deal with the problems of unreliable road and air transport networks. And it must operate in half a dozen volatile Latin countries, with unpredictable governments and consumers as well as well-established competitors.

Dell could not afford to ignore the South American market much longer. It currently exports computers to a few Latin American countries such as Mexico and Colombia, but has never sold to markets in Argentina or Brazil. Latin American consumers last year bought 5 million PCs and demand is growing at 15 per cent a year. Growth is likely to remain strong for some time to come: in Brazil, the region's largest market, only 3-4 per cent of the population owns a PC.

Dell is not the first company to view South America as a single market. For a decade, Ford and Volkswagen and many other multinational companies have operated in the region's main countries as if they formed one integrated market. That was a natural reaction to falling import tariffs and consolidation of the Mercosur customs union linking Argentina, Brazil, Paraguay and Uruguay. However, the distances, the red tape and the animosities between national governments often make fulfilment of this strategy difficult.

Dell decided to locate in Brazil because it is the region's biggest market and because the government gives computer companies substantial tax incentives as part of its plan to develop local high technology industries. If Dell meets Brazilian local content criteria and attains agreed production volumes, its products are considered to be 100 per cent locally made and automatically gain duty-free access to Mercosur countries.

However, there is little Dell can do about the internal transport networks in Brazil or the bureaucracy in neighbouring countries. Although roads, air transport and delivery systems are tolerably efficient in south eastern Brazil and parts of Uruguay, Chile and Argentina, Dell may still find it is struggling to co-ordinate operations and sales over a vast region.

 

1. Dell will sell only in the big cities.

2. Dell already sells computers in South America.

3. The company also produces PCs in Mexico.

4. It plans to import all the components it needs.

5. Ford and Volkswagen have been operating in South America for some years.

6. Considering South America as a single market is not an easy strategy.

7. To meet 'local content criteria' Dell must use a certain percentage of components produced locally.

8. Dell hopes to sell its computers duty-free in many countries.

9. Delivery systems in Brazil are better than in other parts of South America.

Text 5

Approaches to selection vary significantly across cultures. There are differences not only in the priorities that are given to technical or interpersonal capabilities, but also in the ways that candidates are tested and interviewed for the desired qualities.

In Anglo-Saxon cultures, what is generally tested is how much the individual can contribute to the tasks of the organisation. In these cultures, assessment centres, intelligence tests and measurements of competencies are the norm. In Germanic cultures, the emphasis is more on the quality of education in a specialist function. The recruitment process in Latin and Far Eastern cultures is very often characterised by ascertaining how well that person ‘fits in’ with the larger group. This is determined in part by the elitism of higher educational institutions, such as the 'grandes ecoles' in France or the University of Tokyo in Japan, and in part by their interpersonal style and ability to network internally. If there are tests in Latin cultures, they will tend to be more about personality, communication and social skills than about the Anglo-Saxon notion of 'intelligence'.

Though there are few statistical comparisons of selection practices used across cultures, one recent study provides a useful example of the impact of culture. A survey conducted by Shackleton and Newell compared selection methods between France and the UK. They found that there was a striking contrast in the number of interviews used in the selection process, with France resorting to more than one interview much more frequently. They also found that in the UK there was a much greater tendency to use panel interviews than in France, where one-to-one interviews are the norm. In addition, while almost 74 per cent of companies in the UK use references from previous employers, only 11 per cent of the companies surveyed in France used them. Furthermore, French companies rely much more on personality tests and handwriting analysis than their British counterparts.

Many organisations operating across cultures have tended to decentralise selection in order to allow for local differences in testing and for language differences, while providing a set of personal qualities or characteristics they consider important for candidates.

Hewitt Associates, a US compensation and benefits consulting firm based in the Mid West, has had difficulties extending its key selection criteria outside the USA. It is known for selecting 'SWANs': people who are Smart, Willing, Able and Nice. These concepts, all perfectly understandable to other Americans, can have very different meanings in other cultures. For example, being able may mean being highly connected with colleagues, being sociable or being able to command respect from a hierarchy of subordinates, whereas the intended meaning is more about being technically competent, polite and relatively formal. Similarly, what is nice in one culture may be considered naive or immature in another. It all depends on the cultural context.

Some international companies, like Shell, Toyota, and L'Oreal, have identified very specific qualities that they consider strategically important and that support their business requirements. For example, the criteria that Shell has identified as most important in supporting its strategy include mobility and language capability. These are more easily understood across cultures because people are either willing to relocate or not. There is less room for cultural misunderstandings with such qualities.

 

1. Many international organisations have decentralised selection.

2. They look for different personal qualities in different cultures.

3. The 'SWAN' criteria have international validity.

4. The definition of some qualities can lead to cultural misunderstandings.

5. Mobility and language capability are clearly understood across cultures.

Text 6

 

Asda and Wal-Mart should be the perfect merger, given that the former has deliberately set out to copy the US retailing giant's style. But Asda is keenly aware of the pitfalls.

 

You could not hope to find a neater fit, said the commentators when Wal-Mart, the world's biggest retailer, agreed a £6.7 bn takeover deal with Asda, the UK's number three supermarket group.

It had long been known that the team which was brought in to rescue Asda from collapse in the mid 1980s had deliberately set out to copy virtually every aspect of the giant US discount group that could be replicated in the UK.

So Asda stores have 'colleagues', not employees. They have people in the parking lots to help drivers to park. They have old-age pensioners wearing colourful name badges, standing at the door to say hello and ask customers if they need help. In the Leeds headquarters no one has an individual office, not even the chairman. Finally, store staff get actively involved in promoting individual product lines, and are rewarded when their efforts lead to tangible sales improvements.

Most of these ideas came straight from Bentonville, Arkansas, home to one of the world's most unusual retailers. For Wal-Mart's corporate culture has become a legend in retailing.

The company's employees chant the Wal-Mart cheer before store meetings. They benefit from a share ownership scheme which is one of the most widespread in the industry. Top executives share rooms when on business trips, and pay for their coffee and tea from vending machines like the lowliest sales assistant.

Given the similarities, there are few who really believe putting Asda into the Wal-Mart network will result in anything but success. But, says Asda's Chief Executive, Allan Leighton, this is no reason to be complacent. Failing to bring together corporate cultures, even those as similar as Asda's and Wal-Mart's, could lead to the downfall of the most logical mergers. 'When acquiring or merging with a business, getting the cultures to fit is fundamentally important,' he says. Half-way houses, where compromises are made, never work, he believes, and nor does imposing one culture on another. 'A company calling their colleagues and treating them like staff is not the answer,' he says.

The key to getting the deal to work culturally rests on a few fundamental issues, he believes. The first and most important is terminology, he says. 'Businesses have their own language. You have to get everyone aligned so that when someone uses a word it means the same thing to everyone.

Middle management comes next. 'Initially, everything is done at the top of the organisation,' he says. 'But most of the work is done in the middle.' If middle management is not incentivised, a deal can go horribly wrong. 'It all boils down to people in the end. And what motivates people? Unless you can demonstrate very quickly that their influence in the organisation is at least the same if not better than before, then people will get concerned about it,' he says.

Third comes getting to know each other. Asda and Wal-Mart have spent the last few weeks swapping store managers and IT systems staff. 'We will go out there, look and bring back,' Leighton says. 'That way we will have ownership of the changes as opposed to having them pushed on us.'

It will always be hard to determine whether a merger or takeover has failed because the cultures simply did not fit. But success is more likely to elude those who do not really believe in the cultures they are trying to create. 'This all comes from the heart,' says Leighton. 'You do not get it from textbook management or instruction. You have to create an environment where people feel comfortable in expressing themselves in a different way.'

 

1. Asda and Wal-Mart have very similar corporate cultures.

2. Asda is the biggest supermarket group in the UK.

3. Wal-Mart is the biggest retailing group in the USA.

4. Asda had financial problems in 1980s.

5. Many of Asda’s employees are over 65.

6. Allan Leighton is sure the merger of Asda with Wal-Mart will succeed.

7. Wall-Mart plans to impose its corporate culture on Asda.

8. Creating a corporate culture cannot be planned in theory only.

Text 7

 

Like most of France's technocratic elite, Pierre Bilger is a Europhile and sees Alstom, the Anglo-French group he chairs, as an experiment in European unity

 

Few people better personify the French technocratic elite that has held France in a tight grip for many decades than Pierre Bilger. Bilger is the Chairman of Alstom, the giant power and railway equipment company formed out of the joint venture between Britain's General Electric Company (GEC) and France's Alcatel-Alsthom, which became a separately quoted company in 1998.

In his long career, Bilger has moved effortlessly from government to big business with the ease that the French state seems to encourage. He was born in 1940, in the Alsace region of eastern France. After school, he attended first the Institut des Etudes Politiques, then the prestigious Ecole Nationale d'Administration (ENA), the elite finishing school for French technocrats and many future government leaders.

On graduating, Bilger, like many of his ENA colleagues, joined the Finance Ministry, rising quickly up its ranks. In 1982 he switched from government to industry, joining CGE, as Alcatel-Alsthom was then known, although since the company was at that time owned by the French state, the change was more apparent than real.

At Alcatel-Alsthom his big project was overseeing the formation in 1988 of the joint venture with GEC. As soon as the joint venture, GEC-Alsthom, was formed, Bilger was given the task of running it.

After a decade of working for one of the largest Anglo-French joint ventures, Bilger is well attuned to Anglo-Saxon attitudes. He speaks frequently of shareholders and of the need to keep costs down but he still remains very French. His explanations are fluent and polished and his arguments have none of the down-to-earth style you might expect from someone running a British engineering company.

Although Britain and France are neighbours, their business cultures could hardly be further apart. What, I ask, had he found most irritating about the English once he was put in charge of a company full of them? 'What I found most irritating about our British colleagues was their great reluctance to go through what we French would consider a rational process of making a decision,' he answered thoughtfully. They insist on going straight to the point, whereas we like to have a systematic agenda. But over time I came to appreciate that this had its virtues as well.'

Like most French establishment figures, Bilger is an ardent Europhile. The company, he believes, is itself an experiment in unity; soon after the British and French parts were put together, German and Spanish units were added. After a brief attempt at using multiple languages inside the company, Bilger soon decided to impose English as the company language, partly because the English were reluctant to learn any other languages. 'We lost a few French managers because of that, but not many,' he says.

Alstom remains a technological leader and it is led by bright people. Bilger does not mention it, but in France the country's cleverest, best-qualified people can be found running manufacturing companies. In Britain that has not been true for almost a century.

 

1. British and French business cultures have many things in common.

2. The British tend to take decisions more quickly than the French.

3. The French do not like having long discussions to analyse things in detail.

4. The French feel they are systematic and logical in their approach to business.

5. British business people like to follow a strict agenda at meetings.

6. Alstom is no longer a purely French-British company.

7. In Alstom the French and English languages have equal status.

8. In Britain, manufacturing companies attract the best-qualified and cleverest people.

Text 8

 

For the past year Daimler has been part of the grouping with American manufacturer Chrysler. The German company's roots go back to the very first days of motoring.

 

If Germans associate one company with the state of Baden-Wurttemberg it is the automotive group DaimlerChrysler. The group was formed in 1998 through the merger of Daimler-Benz and Chrysler of the US. But the local association dates back to the late 1890s, when Daimler and Benz began the automotive age by producing the world's first motor cars. DaimlerChrysler is one of the mainstays of the Baden-Wurttemberg economy, sustaining 242,000 people in employment across Germany - the bulk of them in the state.

To extend its global reach, the company has ambitious plans to grow in the automotive business, and will invest ?46 bn developing sixty-four new cars and truck models in the next few years. Research and development spending is set to soar to what a spokesman says is 'a market leading position'. This year the company aims for sales of ?146bn, compared with previous forecasts of ?139.9 bn.

One of the most critical issues facing the group as it attempts to achieve those targets is where it will find, in sufficient numbers, people with the right qualifications to make it all happen. Baden-Wurttemberg and Germany alone will not be able to provide enough recruits. 'DaimlerChrysler needs to hire 4,500 engineers and IT people in the next three years,' says Marc Binder of Human Resources. That's a big number and it will be impossible to find enough of them in Germany, let alone in one region. You have to hire them from the top schools in the world.'

Traditionally, Daimler-Benz always recruited engineers within Germany. In 1999, however, its recruitment campaign went global. Part of the impetus was that the transatlantic merger had broadened the spectrum of job opportunities. Using the Internet, DaimlerChrysler issued a blanket invitation to college graduates around the world - with emphasis on mechanical engineering, process technology and aerospace engineering - to attend an open day at eleven DaimlerChrysler locations around the world. Of the 800 who attended, about 55 per cent were invited for interview - a far higher proportion than in previous recruitment drives.

A few months later, the group launched a novel campaign to attract recruits for its International Management Associate Program. It advertised in the international press, inviting would-be trainees to call a company hotline during a four-hour period over two days. Some 200 applicants were interviewed.

Competition for talent from other large industrial groups is bound to increase. Rivals such as BMW, in neighbouring Bavaria, have similar needs. But Mr. Binder says: 'We try to convince would-be recruits that we're the most global company and it's more interesting to work at DaimlerChrysler in this exciting period after the merger.' Recruits are also offered opportunities to work in different units of the group.

The recruitment problem has been made worse by a steady decline in the number of students electing to study engineering since the early 1990s - when there were too many newly-qualified engineers entering the market. Large numbers of students chose to study other subjects, leading to today's shortage.

DaimlerChrysler is supporting initiatives to try to ensure a steady flow of engineers and graduates from other technical disciplines. Over the course of the next few years, the group will be supporting the establishment of two private universities in Baden-Wurttemberg - the Stuttgart Institute of Management and Technology and the International University of Germany in Bruchsal.

 

1. DaimlerChrysler is the largest employer in Baden-Wurttemburg.

2. Daimler Chrysler employs more people in Baden-Wurttemburg than in other parts of Germany.

3. The company plans to increase its investment in research and development.

4. DaimlerChryslers' policy is to recruit engineers in Germany whenever possible.

5. DaimlerChrysler uses the Internet in its recruitment campaigns.

6. BMW is a more attractive company to work for.

7. Not enough students study engineering in Germany.

8. DaimlerChryster is planning to set up its own technical university.

Text 9

 

Intel, the world's leading chip-maker, got into the business of building global brands almost by accident.

For Intel, the lights went on in 1989. An advertising campaign aimed at getting computer manufacturers to change to its latest processor, the 386, had the surprising side effect of persuading consumers to ask for 386-based computers.

"At the time," says Dennis Carter, Intel vice-president and director of marketing, "I didn't really know what a brand was. But it became evident that we had created a brand and that it made a difference in consumers' purchase plans."

The next step was to brand not merely one product but the whole range, using the now-familiar "Intel inside" logo. Intel launched the campaign in 1991 with its first "cooperative advertising" programme, offering to share the costs of advertising with computer manufacturers that used Intel chips.

Soon after came the first "Intel inside" TV commercial - a journey through the inside of a personal computer, ending up at the microprocessor - with Intel's logo. It had become the first semiconductor company to sell its product to consumers as though it were a new cola.

Intel initially tailored its advertising to different markets. In Japan, for example, the logo read "Intel in it" but was abandoned when the company found the "Intel inside" brand was better recognised because of information from the US. "This really drove home the idea that the PC market is the same everywhere in the world," says Mr. Carter.

Since then, its logo has appeared in more than $3.4 billion (£2.1 billion) worth of advertising - including spending by PC manufacturers, according to Intel.

 

1. Intel wanted to turn just one of its products into a brand.

2. 'Brand' can be used as a verb.

3. Intel paid for the advertising campaign by itself.

4. The first advertisement only showed the outside of a computer.

5. Intel was the first semiconductor company to advertise to consumers.

Text 10

 

For Edgar Biss, the Eureka moment came in a slow-moving bank queue. There must, he thought, be a faster way to count money. With experience in heavy weighing industry, his thoughts naturally turned to that technology for a solution.

The result was Tellermate, a banknote and coin-counting machine which needs to be far more sensitive than the machines for weighing 5,000 tonnes that Mr. Biss used to work on. Its maker, Percell Group, a private company based in Newport, south Wales, is now counting its second Queen's Award for Exports, as well as one for Technological Achievement.

Percell exports more than three quarters of its production. More than 85 per cent of sales are made to non-bank customers, such as retailers and fast food restaurants. Its success depends on accuracy, speed and ease of operation. The machines range in price from less than £500 to about £800. So far, Percell has sold 60,000 of them.

Weighing coins is a straight-forward task, but Tellermate must be extremely sensitive to reach accurate calculations on piles of no more than two dozen banknotes. Weight can vary with torn corners or tape, or even by wear and humidity.

Percell more than doubled its exports last year, selling to more than 25 countries. It is now looking to expand in Latin America, having established a bridgehead in Brazil, the company pays special attention to the language skills of its sales staff, focusing on familiarity with a local market. 'It's not just about language, it's about culture,' says Chris Lare, Percell’s technical director. For example, the French and German sales efforts are run by nationals of those countries, although both were recruited in the UK.

Another strength is to adapt Tellermate to suit each customer's existing procedures. Some count notes in ascending order; some the other way around. Some want the total shown by value; others by the number of notes. All are equally certain that their own way is the best.

 

1. If you have a Eureka moment, you suddenly have a very good, original idea.

2. Mr. Biss’s Eureka moment came when he was queuing at a railway station.

3. Biss had no experience in the technology of weighing things when he had the idea for Tellermate.

4. Tellermate can be used to count both coins and banknotes.

5. Percell is based in England.

6. Percell has never won a Queen’s Award for Exports before.

 

Text 11

 

Look at the statements below and at the five short advertisements for MBA courses. Decide which advertisement each statement refers to. You will need to use some of the letters (A, B, C, D or E) more than once.

1. This course offers the most competitive prices.

2. This course is staffed by well-known tutors.

3. There are facilities for students with disabilities.

4. This course uses a system of continuous assessment.

5. If you study on this course, you must live in the college for several days.

6. Team work is essential on this course.

7. You can plan your attendance to fit in with your own requirements.

8. Individual tuition is offered at this institution.

9. Work experience at a senior level is essential for acceptance on this course.

A

MBA at Alpha College

Gain an international business qualification at Alpha College in London. Total quality course at a truly competitive price. A brighter portfolio means brighter prospects. Quality output demands quality input; there are therefore minimum requirements for applicants:

· Education at least to graduate level.

· Minimum five years’ experience at managerial level.

For ten-week terms (Monday to Thursday): short, highly intensive learning opportunities for the committed businessperson. No weekend or residential school attendance required. Contact us direct to hear more. Phone, fax and e-mail numbers overleaf.

 

B

MBA the Harvey Business School way

Looking for the best? The highest quality does not come cheap. When you consider the calibre of the world-famous professors you will be studying with, you will understand why our course is not the cheapest available. We do, however, offer total flexibility – you can arrange your hours to suit your own pattern of work and personal obligations.

N.B. Final examinations in June every year. All our teaching premises are wheelchair accessible.

For further details call 0207 66785 now, or e-mail us on harvey@interschool.com.uk

 

C

Gain the MBA recognised worldwide

Unlike other MBAs the Carfax college MBA is known all over the world and is praised by employers for its realistic approach. The entire course is based on projects and case studies, and progress is monitored and graded throughout the course. You must be willing to work closely with others, as this is an integral part of the learning process. For a brochure contact the address overleaf.

 

D

Part-time MBA course in Dulwich

Need to sharpen up your CV? Employers demand the highest qualifications but are rarely willing to release their best employees for long periods of time. The Dulwich MBA therefore offeres a three-year part-time course; only day release is necessary, apart from the four-day residential summer school in July or August each year. As the course is spread over three years, there are greater opportunities for assimilation of the information which you acquire. All key texts were published in the last five years.

 

E

Flexibility at Elwood

Flexibility is vital in today’s business world. We therefore offer a modular course, which means that you can gain any of the following qualifications while following the general MBA course:

§ Bachelor of Business Administration (2 years)

§ Certificate or Diploma in Financial Management (2/4 semesters)

§ Diploma in Personnel Development Studies (4 semesters)

It is this type of flexibility, so important throughout business today, together with the vitality of our approach, which makes our course the best on the market. Specially tailored one-to-one or small-group courses for the highly experienced manager also available. Call the number overleaf for a free brochure.

Text 12

Look at the statements below and at the reviews of various new business products. Decide which review each statement refers to. You will need to use some of the letters (A,B,C,D or E ) more than once.