Author: Paco Yip/Picture: Pan Zhang
At the night of June 11, 2008, around 100 MBA students were sitting in Room 501, Weilun Building, listening intensively to lecture “Dell China: Strategy in Greater China and winning culture”. This lecture was organized by Strategy& Risk Club, IT& Telecom Club and Marketing Club of Tsinghua MBA.
The lecture was given by Mr. Issac Levin, director of Strategy and Business Development, Great China. Prior to taking over SBD, Mr. Levin was director of Marketing Planning and Operations at Dell (China) Co., Ltd. Before joining Dell, he was the Director of Products at Oracle / Siebel Systems.
Year 2008 is a significant year for Dell China. It is the 10th anniversary since Dell entered China market in year 1998. And it is the critical year for Dell to make a strategic shift to SMB (Small Business) market, if not a paradigm one.
How can Dell succeed and what is its plan? Mr. Levin gave his answer on behalf of Dell, the sustainable development culture and multi-channel sales model.
Sustainable development: a responsible enterprise citizen
To turn the tables and get the lion’s share, most essential factor for Dell China is the concept of “Sustainable Development”, which means that Dell will become a more responsible enterprise citizen.
Only via being environmental friendly and contributing to the society can Dell grows sustainably within the community. With this belief, Dell has initiated a series of activities dedicated to public service:
2006, Old Computer (Parts) recycling Plan
Oct. 2007, Carbon Neutral Plan
Feb. 2008, joined the °Climate Group(an independent, nonprofit organization dedicated to advancing business and government leadership on climate change) as the first company in IT industry
Jun. 2008, donated RMB1,000,000 for Tree planting plan in Beijing
Not limited to events above, Dell has donated RMB 8,000,000 to Sichuan people after the earthquake. Cooperating with China Youth Development Foundation, Dell has built up 6 “Dell learning centers” to help children in China to learn more about computers.
Engaging in all kind of events to make social contribution, Dell has involved more and gone deeper into the heart of China market.
Focus on SMB market – multichannel sales channel strategy
As introduced by Mr. Levin, Dell’s strategy in China is “Address emerging economies”. Large and Medium business IT market in China, especially in tier 1-3 cities, is becoming saturated according to the data provided by IDC, the growth rate has slowed down a lot. Yet demand in tier 4-6 cities increase dramatically. Particularly in SMB market, growth rate is up to 20% or above. Thus, Dell has shifted focus strategically concentrating on consuming computer in tier 4-6 cities and in SMB commercial IT market. The new launched series of VOSTRO is the mater piece to breakthrough.
In the year 2007, Dell adjusted the sale model correspondingly. It has initiated partnership with local retailers such as Gome to distribute deeply in cities of lower tier.
“As all of us knew, Dell is famous of its direct sale model. But now Dell is doing business with retailer and distributors, too. So how can Dell address the potential conflict between these two different models?” Wang Kang, a MBA candidate of 2007 asked.
Seemed being asked similar question for many times, Mr. Levin answered with confident smile:
“Actually there should not be big conflict between these two approaches of selling. To decide which one to use depends on the purchasing behavior and habit of our customers. We still use direct-sell method in tier 1-3 cities and large business market. Only in the markets in which customers trust and rely on distributors will we use the partnership model.
Due to different needs of different customers, we have divided regions into small grids and managed to sell respectively. The way we sell products in Shijiazhuang will be different from we do in Beijing. And Dalian will be different from these two as well. Meanwhile, we have set up ‘SMB solution center’ to provide better service to our SMB customers. Our slogan is ‘Get IT faster, run IT better, grow IT smarter’, helping our customers with simplified and convenient IT service.”
Mr. Levin also presented two other important tactics, narrowing product gap and improving service quality.
“Regarding narrowing the product gap between Dell and Lenovo in China, it just can make sure Dell and Lenovo are on the same chapter and have same order qualifier. How can Dell get the order winners to outride all its competitors in China?” Paco Yip, another MBA candidate of 2007 asked.
“Well, being a strong No. 2 player is also an important strategy.” Mr. Levin answered smiled again.
Graduated from Carnegie Mellon University and MIT-Sloan School of Management, Mr. Levin has showed a unique compound temperament of MBA, Engineer and Deller, which impressed the audience a lot.
As commented by Associate Prof. Song Xue Bao, Win culture is the core competence of Dell. It is the essential one that could not be duplicated. So does the power of Dell execution. Even other company can copy direct sale model and compete in SMB market, it is still not Dell. Only the win culture and execution make a unique Dell.
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