Dell’s Bangalore Disaster

Dell’s Bangalore Disaster

February 11, 2006

1. Was the company's experience positive, negative, or mixed? Justify your answer.

Deciding to do business overseas is both a big growth potential and a big risk for companies. It is important to know what the future prospects are for your business before deciding to do business overseas. There is a lot of research that is necessary to do before starting overseas business. It is important to know the laws of the country in which you are going to be doing business in. There are many legal implications your business could be effected by if you do not comply with the laws of the country. A new company can learn a lot from companies who are currently doing business in other countries. Learning from other companies mistakes can help you not make the same mistakes.

Dell is a company who does business all over the world. Dell has employees from both the United States and other countries. Dell had 46,000 employees as of Jan. 30, 2004. About 22,200 of those, or 48.3 percent, were in the United States, while 23,800 people, or 51.7 percent, worked in other countries. In 2003, 54.2 percent of Dell's workers were in the United States, which was higher than in 2004. Dell's work force grew 17.6 percent during 2003. During the same time period Dell’s workforce in the United States dropped from 54.2% to 48.3%. (http://msnbc.msn.com) Dell is a company who obviously does a lot of business overseas for a multitude of reasons, one being cheaper labor. It is less costly for Dell to pay someone to work 40 hours a week in India than someone to work 40 hours a week here in the United States. Many of Dell’s decisions to do business overseas are successes, but some of them do not always work out the way they are planned. One example of a negative experience Dell had was with a customer relations disaster. Dell recently moved support for several of its business lines back to the U.S. after a customer relations disaster. Dell claims this was a result of "the volume of calls generated by the rapid growth of those product lines." (www.c4.net)

Dell CIO Randy Mott said in an interview that the Bangalore center was unable to deal satisfactorily with the volume of calls generated by the rapid growth of those product lines. "In that example we were not as efficient as we wanted to be," he said. "We were growing very quickly in that (consumer) segment. It got a little ahead of us. We took the decision to get it back under control. Our customers expect more from Dell than other companies, and we weren't meeting those (expectations)." Surveys released in February showed that, while Dell's market share has continued to grow, customer satisfaction has declined. The company has acknowledged the problem and said steps are being taken to improve tech support and other customer services. (www.news.com)

2. What legal or political barriers did the company have to overcome? What technological obstacles did the company encounter? What cultural or business differences did the company encounter? What problems did these differences create for the company? What did the company do to overcome the obstacles? Did the company handle cultural and business differences effectively? Why or why not?

Dell is a company who has been doing business overseas for many years and knows exactly what is needed to set up a division of their company in a different country. Software licenses are needed to be updated to the particular country in which they are doing business in. Companies that provide outsourcing services could face prosecution if they do not ensure that their customers' software licenses are outsourcing-friendly and up to date. (http://news.zdnet.com)

There are cultural obstacles that are needed to be overcome when a portion of a business is moved to another country. Dell had to deal with customers complaining about the “thick accents” the customer service representatives had because they were unable to understand them. Customers complained