Dell: Selling Directly, Globally "I believe we have the right business model for the Internet age.

" - Michael Dell, CEO, Dell Computer Corporation' Dell Computer Corporation was into its fifteenth year of operation and had expanded from a US$6.2 million USbased business in 1985 to a US$21.7 billion international business in 1999. In 1999 it ranked second in both the US and the worldwide PC market. Its success was founded on the direct business-to-customer model, which revolutionised the PC industry, at first in the US and then in over 170 countries around the world. The Company had been setting the standards for pricing and performance worldwide, despite analysts repeatedly saying that, "This is an American concept. It cannot work here!" Then in 1996, Dell again rocked the PC industry by making its direct approach even more direct through the Internet. Dell On-line seemed a natural progression for Dell. In the first quarter of 1997, Dell reported daily on-line sales of USS I million. For the month of August 1999, daily

on-line sales had reached US$30 million, translating to US$11 billion per annum. By the end of 2000, Dell targeted to conduct half of its business in each region on-line. However, despite its remarkable growth and global expansion, there were still many regions Dell needed to break into to ensure its future position in the ranks, notably China. Analysts predicted that China would soon become the second largest PC market after the US, generating revenues of US$25 billion by 2002. In September 1999, Dell ranked inuithei seven in China's PC market. The Company had ambitions to achieve approximately 10 per cent of its global sales through the China market by 2002, which would secure number two ranking in China. The China market would thus account for 50 per cent of regional sales by 2002. Fifty per cent of sales were also to be achieved through the Internet. Was this timescale realistic? Was the market mature enough to handle its business on-line direct? Aaron Loke, Director of Marketing, was contemplating the expansion strategy for Dell to pursue in China. Could the "American model" work in China?

"Dell Paves the Way for a New Level of Direct Economics and Customer Benefits", 14 April, 1997, URL: httpwwww.deli.comicorporate(meala/newsrelease si 97/9704/14.111M, August 1999. Pauline Ng prepared this case in conjunction with P. Lovelock under the supervision of Dr. Ali F. Farhoomand for class discussion. This case is not intended to show effective or ineffective handling of decision or business processes.

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Dell Direct From Glory to Glory "I definitely felt that I was diving into something pretty major without knowing most of the details. ... But I did know one thing. I knew what I wanted to do: build better computers than IBM, and become number one in the industry." - Michael Dell' In 1983, at the age of 18 and with US$1,000, Michael Dell realised his life ambition and started out selling upgraded PCs and add-on components from his dormitory room at the University of Texas, Austin. This doter-room business officially became Dell Computer Corporation in May 1984. With the rapid growth of the Company, Dell went public in June 1988. Ten years on, Dell was ranked number two and the fastest growing among all major computer systems companies worldwide, with more than 26,000 employees around the globe [see Exhibit 1]. Michael Dell earned the reputation of being the youngest CEO ever of a Fortune 500 company. Furthermore, he was named one of the Business Week's "Top 25 Managers of the Year" in 1997, "Entrepreneur of the Year" by Inc. magazine, "Man of the Year" by PC Magazine, and "CEO of the Year" by Financial World. The success of Michael Dell and the Dell Computer Corporation was founded on the direct business-to-consumer model [see Exhibit 2]. The Direct Model The Company was founded on a simple concept: that by selling personal computers directly to customers, Dell could best understand their needs and provide the most effective computing solutions to meet those needs. Dell sold
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directly to customers, dealt directly with suppliers and communicated directly with employees, all without the unnecessary interference of intermediaries. To the customer, whether a regular consumer or a multinational corporation, Dell was their single point of contact and accountability. Dealing directly with customers meant that Dell knew exactly what its customers wanted. While IBM's PC was an open box designed to allow for expansion, reconfiguration and Continual upgrading, Dell chose to build PCs to order. Dell was the first PC manufacturer to offer free installation of applications software as a standard service option. By using patented technology, it installed network cards to customers' proprietary, in-house applications, right on the manufacturing line. Thus, Dell claimed that it offered its customers more powerful, more richly configured systems for their money than competitors. Rather than pursuing technology for technology's sake, customers got only what they wanted. Many PC manufacturers had fallen into the trap of guessing what their customers might want. Dealing directly with suppliers was essential for the successful application of Dell's direct model. Just-in-time inventory control created advantages that had an immediate impact on customets. hiventwy costs were kept to a minimum, new technological breakthroughs (e.g., faster chips, bigger disk drives) could be delivered to customers within a week as opposed to two months, and obsolete and dated stock holdings were minimised The threat of being caught in a transition to a next-generation product with an inventory of obsolete stock was a perpetual problem in the industry, but one that the direct model could avoid. Dell was able to pass along to its customers the savings from reductions in system component costs quickly because it maintained very low inventories. This was of paramount importance in the PC industry as the rate of
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development of new technology dictated PC prices. Dealing directly

2

Dell, M., & Fredman, C., (1999), Direct,from Dell: Strategies that Revolutionized an Industry, London: HarperCollinsPublishers, p. 11.

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with a few main suppliers on a global basis reinforced Dell's competitive advantage. Michael Dell's reasoning was that through closer contact with customers and with more infoimation about customer needs, there was less need for massive amounts of inventory. There were three golden rules at Dell: disdain inventory, always listen to the customer and never sell indirectly. The formula worked well for Dell. Its build-to-order manufacturing operation for the US was located in Texas, for Europe in Limerick (Ireland), for Asia Pacific in Penang (Malaysia) and for China in Xiamen. Growth and Expansion Beyond the US "Our success was, in fact, something of a crisis point.- Michael Dell' Rapid growth and expansion were necessary if the Company was to survive. The Company started out targeting the small- to medium-size businesses in the US market. While its competitors were aiming at the top end of the market (i.e., the large corporations), Dell chose to lead a price/performance revolution from the bottom up, bringing new technology at affordable prices to the widest possible group of customers. The strategy worked well in the US. By the end of 1986, Dell had achieved US$60 million in sales. Michael Dell was concerned about the next step for his Company because staying small would make them vulnerable to the consolidation that was taking place in the PC industly. hi the fall of 1986, he called together the executives of the Company and held a brainstorming meeting. Three key realisations materialised that were to map the course that Dell was to take: Dell had to target large companies if the business was to grow; 2. To do this, they had to offer the best support in the industry; 3. Despite the fact the Company was only two-and-a-half years old, it needed to expand globally and to grow
1.

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beyond the US. "Many people told us the direct model would fail in virtually every country we expanded into ... The message was always the same: Our country is different, your business model won't work here." - Michael Dell' In June 1987, Dell ventured out of the US for the first time and started business in the UK. Journalists and analysts speculated that Dell's direct model might work in the US, but not in Europe. However, 11 more international operations opened over the period 1987 to 1991. By 1994, Dell had international subsidiaries in 14 countries, and sold and supported its products in more than 100 additional markets through partnering agreements with technology distributors. In 1995, construction began on the Asia Pacific Customer Centre (APCC) in Penang, Malaysia. In the first half of 1995, Dell opened offices in six La/unities in the legion. Malaysia became the hub of a comprehensive Asia Pacific management, sales and marketing network that included Australia, China, Hong Kong, India, Indonesia, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Thailand. The intention was to begin on a selected basis and to extend out from country to country over time. In 1998, the Xiamen manufacturing and service centre (China Customer Centre) was opened. The regional headquarters of Dell Asia Pacific remained in Hong Kong. In 1998, Dell operated sales offices in 33 countries and served customers in more than 170 countries and territories around the world. 3 Dell, M., & Fredman, C., (1999), p. 26. 4 Dell, M., & Fredman, C., (1999), p. 28.

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Results that Spoke for Themselves "Dell Computer Corporation defies gravity. Whether you measure its growth in sales, profits, market share, or stock price, the Company is simply weightless." - Business Week, 2 November, 1998 Dell went through extremely rapid growth throughout the Company's history [see Exhibit 3]. Its build-to-order, directsales approach allowed it to far outpace industry growth rates. In 1995, a Company press release reported that Dell's stock value had appreciated by more than 700 per cent since the Company's first public offering in 1988.5 In the same year, Fortune Muguzine ranked Dell for "best investment" with an 81.2 per cent "total return to investors" over the previous year. By December 1997, Dell had overtaken IBM and became the second-largest supplier of desktop PCs worldwide, with a 9.7 per cent share of the market and a 1015 per cent price advantage over its major competitors who distributed their products through indirect channels.' [See Exhibit 1.] Between 1988 to 1998 the Company's stock value increased by 36,000 per cent. In the same period, it had grown from a US$159 million company to a US$18 billion company.' By February 1998, the Company reported a sales increase in Europe of 61 per cent in the fourth quarter of the 1998 financial year, bringing sales close to USS1 billion. Sales from Asia Pacific increased by 79 per cent itt the 1998 financial year compared to the previous year, an increase that was more than in any other Dell regional business, albeit from a small base. In August 1999, the Company announced that it was number one in PC shipments within the UK. [See Exhibit 4 for a breakdown of revenue by geographic region.] For the quarter ended 31 July, 1999, the Company reported
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revenue of US$21.7 billion. It became the number one PC vendor to businesses in the US. Dell again led industry growth in unit shipments, revenue and earnings. Shipments increased by 55 per cent, two times analysts' estimates of total industry growth. Dell's operating income was 11.3 per cent of revenue, and operating expenses declined by nearly one percentage point. Return on investment was 260 per cent, four times higher than that of Dell's nearest major competitor. At quarter end, Dell held six days of inventory. [See Exhibit 5 for details of Dell's achievements.] Selective Expansion Dell had applied an expansion strategy that involved selective introduction of the direct model, country by country. The strategy followed the same pattern in each country: in the first instance, Dell would make use of distributors (e.g., currently in India). The benefits of the direct model over the indirect model (such as reduced costs and increased attention to customer experience and satisfaction) were obviously lost. The decision to apply the direct model depended on the "readiness" of the country/region and would rest on a number of factors, including: The size of the market, current and potential. y The availability of resources, especially a sales force that was capable of applying the direct-sales model: the PC industry was dominated by vendors selling through indirect channels The skills-set required for relating to customers needs and translating those needs into customised products and services was not readily available.
y

Be Quick and Focused; Global Markets Surging Ahead, Dell CEO Says", (27 January, 1995), URL: www.dell.comicorporatemediainewsreleases/95/9 501/27.htm, August 1999. 6 US Department of Commerce, "The
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Emerging Digital Economy", 15 April, 1998, URL: http://www.ecommerce.gov/emerging.htm, August 1999. 7 Dell, M., & Fredman, C., (1999), p. 225.

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Sufficient management resources at the local level: senior management required knowledge of the behaviour of the local market, the training potential and needs of the local labour force, as well as other cultural, physical and political limitations that had to be overcome. y Local acceptance of Dell's direct model: potential customers who had not heard of the Dell brand would find it difficult to pick up the telephone and order Dell PCs without having seen one. This applied even more so in countries/regions where the cost of a PC was two or three times an individual's monthly salary. From Dell's experience, customer trust had to be earned. This would initially entail significant resources mobilised to ensure face-to-face contact with potential customers. However, once trust was established through product and service satisfaction, customers were happy to make repeat orders through the telephone. y Suppliers' ability to deliver parts at short notice: Dell's direct model was dependent to a large extent on just-intime inventory management. y Adequate arrangements with carriers to ensure timely delivery of orders: Dell's average order-to-delivery time was six days. Dell had made arrangements with authorised carriers (American, Airborne, Conway, Eagle, First Air, FedEx, RPS, UPS and Watkins) to expedite deliveries around the globe. DI IL, FedEx and Bax Global were used extensively in the Asia Pacific region. y Operating costs.
y

Timing for entry to new markets was therefore essential given all the factors that had to be considered. However, the underlying motivating force at Dell was that, given the right timing and the readiness of the market, all countries/regions in the world would accept the direct model for selling PCs. The PC had become a commodity and the globalisation of the PC market would, in the future, be comparable to purchasing a can of Coca Cola or a pizza. In the past, major
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barriers for Dell have included government regulations, lack of human resources, inadequate telecommunications and transportation infrastructures, and unavailability or inaccessibility of parts. While planning for global expansion, the impact of the Internet explosion rippled through Dell. www.dell.com "Dell, the Company, seems to have been born and evolved with an anticipation of the Internet age." - Andrew S. Grove, Chairman, Intel Corporation "Our PC consumer shipments grew more than 100 percent in the quarter [ended 31 July, 1999], and about one-half of those sales were generated online, through www.dell.com." - Michael Dells Very early on Dell saw the advantages of the Internet and exploited them before others in the industry. For Dell, this new technology presented a medium through which it could get even closer to its customers and enhance its direct-sales approach. It was a logical extension to the direct model, making it even more direct. In June 1994, Dell launched www.dell.com. This was phase one of Dell's plan to link with its customers through the Net. The site presented customers with simple product and price lists, almost like an on-line catalogue. "Internet Benefits to Customers, Company Expanding; On-line Sales Reach $30 Million Per Day", Dell Computer Corporation, URL: http://www.dell.comicorporate/mediainewsreleases/99/990 8/17.htrn, September 1999.

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Since July 1996, Dell customers could configure and order a computer directly through Dell's Website. This was phase two of Dell's plan. Within a year, daily sales over the Net totalled over US$3 million [see Exhibit 6]. Dell was the first computer company to provide a comprehensive on-line purchasing tool. Phase three included on-line technical support, order status information and on-line downloading of software. Dell's electronic commerce strategy was beginning to take shape [see Exhibit 7 for the sitemap of www.dell.com]. It was developed to work seamlessly with the Company's existing systems, providing real-time pricing and order status. Its goal was to make the internal operations of the Company agile enough to respond to the ever-increasing and everchanging needs of customers. On average in 1998, Dell responded to over 120,000 technical support queries a week through its Website. Interestingly, 90 per cent of sales through the Net were placed by small businesses and consumers. Corporate customers chose to use the Website for gathering product information, order status and technical help rather than to place orders. For Dell, the benefits of the Internet were enormous. Eighty per cent of the consumers and half of the small businesses who purchased on Dell's Website were first-time buyers. Undoubtedly, www.dell.com brought in additional revenues. Providing product infonnation, pricing and technical support on line helped to lower sales and marketing costs. Basic customer service and technical support functions provided through the Internet helped to lower service and support costs. Dell estimated that 20,000 customers who would check their order status on-line would present savings for Dell of between US$6,000 to US$10,000 per week, and 30,000 software requests that could be downloaded on-line would save Dell US$150,000 per week.9 By mid-1998, all Dell customers had individual files of their system configurations on-line. Customers were able to take
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advantage of the very latest technology and immediate component price reductions. In addition, it offered 24-hour on-line service and support. It removed inter-company boundaries and achieved speed-to-market in ways that were not possible before. In April 1997, Dell established a new joint-venture leasing company called Dell Financial Services, which provided a range of flexible leasing options directly to Dell customers in the US and eventually worldwide. Its Internet offerings included more than 6,500 products from its Dell Ware catalogue. Dell's application of Internet technology to its direct model created a fully integrated value chain. It allowed a three-way "information partnership" with suppliers and customers by treating each player as a collaborator to improve efficiency across the entire supply and demand chain, thus sharing the benefits. For example, at Dell's manufacturing site in Ireland, uidets weft received via the Web and call centres, Doll would relay to its suppliers details of the components required, all the components were delivered to the site, and complete computers would be shipped out, all within a few hours. Customisation The Internet also provided great potential for enhancing customer relations and opened up new selling possibilities. Through its Website, Dell refined the services tailored to its customer segments. Dell offered capabilities, service and content tailored to the needs of its customers, including large commercial accounts, government, educational institutions, small/medium businesses and home buyers. To attract the corporate clientele, Dell created customised "Premier Pages" that allowed them to make purchases from the company's own Intranet. Microsoft was one company that made use of its customised Premier Page.
9

US Department of Commerce, (1999).

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Typically, the company would receive its configured systems in about four days from the day of order. The on-line paperless purchase orders and electronic invoicing capabilities saved Microsoft an estimated US$1 million in procurement costs in the first year alone. Another large company estimated that it had saved US$2 million in technical support costs and another estimated 15 per cent savings from Internet procurement efficiencies. Later on, the Company introduced "My Dell" Web pages that were customised pages for small-business and home-office consumers. Realising the Full Potential of the Internet In August 1999, the Company reported sales of more than US$30 million in products each day over the Net. The Website attracted more than 25 million visitors per quarter and had unique Web pages for 44 countries in 21 languages. The Company had more than 27,000 customerspecific Premier Pages within www.dell.com. In June 1999, 70 per cent of Dell's Internet sales came through Premier Pages. By the end of 2000, Dell anticipated that half of its total business (sales, service and support) would be conducted on-line. The Internet had the potential to change the face of the PC industry. Dell aimed to assume a leadership position in Internet commerce, defining the Internet business model as an extension of the direct model rather than simply an adjunct to some reseller relationship. "... we enjoy the advantage of continuing to refine our model while others retrofit theirs." - Michael Dell" E-Support Direct "Our industry has generally neglected the customer. I want to take the customer experience to a whole new level." - Michael D c ll tt "Service is the new competitive battlefield in the infol __________________________utation technology
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industry ... The largest global enterprise customers are demanding more and better service and support from systems vendors." - Michael De1112 E-Support Direct was the fourth phase of Dell's electronic commerce strategy. The Internet improved the speed and flow of information at much lower costs. It was the natural tool for Dell to deliver the ultimate in customer experience, the direct-service model. In the early years of the industry it was driven by technological breakthroughs. As competition gathered pace, price became an increasingly significant driver of demand in the market place. For Dell, price and time to the market had become the huge differentiators. However, Michael Dell foresaw that building a business solely on pricing was not a sustainable advantage. Maintaining customer loyalty became a primary focus. This marked Dell's gradual evolution from a simple box-mover to a fully fledged service provider, yielding the powers of the Internet to build on the competitive advantages of the direct model. In 1998, Dell announced that it intended to focus on creating a new direct-service model for building the business of the future. In August 1999, Dell unveiled E-Support-Direct. The plan involved creating computing environments where a PC or server would be capable of maintaining itself. E-Support would provide tailored services designed to achieve higher "Dell Paves the Way for a New Level of Direct Economics and Customer Benefits", 14 April, 1997, URL: http://www.dell.com/corporate/mediainewsreleases /97/9704/14.htm, August 1999. II "What does No.I do for an Encore?", Newsweek, 2 November, 1998. 12 "Dell Joins with Unisys and Wand Global to Expand Service Offering for Global Customers", 11 May, 1998, URL: http://www.dell.com/corporate/mediaMewsreleases/98/ 9805/11.hrin, August 1999.
17
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levels of system uptime, streamline the customer support process and decrease the total cost of system ownership. Just as Dell had revolutionised the PC industry with its direct model and with www.dell.com, Dell intended to use the Internet to revolutionise the customer support experience. Internet-enabled support was to provide customised capability to easily automate and speed up the support process. These included Dell On-line Knowledge Base, Ask Dudley, Resolution Assistant and HelpTech. Support information was unique to each system and could be found at support.dell.com [see Exhibits 8a-8d for details of ESupport services]. Dell was named as one of 1999's Ten Best Web Support Sites by the Association of Support Professionals, a national body that examined industry support trends. Dell was the only PC vendor to win the award. In the same year, Dell was also awarded an "A" in Web Support by the CNET Editor's Choice for Service and Support. The Company also announced that it was leading the industry by resolving 80 per cent of technical support issues without despatching service technicians, much higher than the industry average of 27 per cent. Within the industry, there was growing consensus that the focus of business was shifting beyond the box-selling mentality. "The old model of making PCs is no longer viable." - Mr Anderson, IDCI3 Global expansion through the Internet, however, had its limitations. This was especially true for regions where Internet usage was still low in terms of population density. The Second-largest PC Market in the World "If we're not in what will soon be the secondbiggest PC market in the world, then how can Dell possibly be a global player?" - John Legere, President, Dell Asia Pacific"
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The PC market in the Mainland had seen rapid growth. [See Exhibit 9 for growth of China's computer industry between 1990-1996.] In 1996, PC vendors sold 2 1 million desktop PCs, notebooks and servers in China, an increase of nearly 40 per cent from the previous year. The total value of the market in 1996 was US$3.34 billion, an increase of over 20 per cent from the previous year. In three years' time, it was estimated that China's market size would be around 10 million PCs. The major Chinese PC makers, such as Legend, Founder and Great Wall, ranked within the top 10 in terms of PC shipments. All PC vendors competing in China sold through distributors who carried many brands. For example, Compaq had engaged 21 distributors at one point during 1996. In June 1998, the Market Information Centre (MIC) reported its prediction that by the year 2000, Mainland China's annual PC production would reach 7.6 million, making it the thirdlargest in the world after the US and Japan. Furthermore, if Japan's economic slump continued, China could take second place in global PC production. If PC shipments in China continued to grow at 30 per cent per annum (as it had between 1996-1999), China's PC market would surpass Japan's by 2004. Not even the Asian financial crisis had slowed down this growth. As at June 1999, China was the fifth-largest PC market behind the US, Japan, Germany and Britain. However, China and her PC market were characterised by a number of factors:
13

Ong, C., "Cruch Time for Resellers as Direct PC Selling Grows", South China Morning Post, 20 April, 1999. 14 Chowdhury, N., "Dell Cracks China", Fortune, 21 June, 1999.

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Retail buyers only accounted for 10 per cent of sales." y The price of a PC was the equivalent of two years of a person's savings.16 y Chinese managers were becoming more and more techsavvy on their own. y The problem of software piracy in China was rife: Microsoft estimated that 95 per cent of the software used in Chinese corporations was stolen. y China's nationalistic politics made US companies in China vulnerable to the ups and downs of Sino-American relations. y The Chinese Government made no secret of the fact that national PC vendors would be promoted. y There remained the tensions between the immense economic opportunities in China and the constraints on business activity, including the shortage of skilled labour and the immature legal and institutional frameworks. y In 1995, PCWeek On-line reported in an article that "...building close and trusting relationships is critical to succeeding in China.' However, five years on, times had changed and many foreign companies in China were succeeding without having the connections. y The government required users of the Internet to register with the police when opening an account, and there was widespread belief that user activity was monitored by the government. Many commentators predicted that one of the key obstacles to future growth of Internet usage in China was the issue of government control. y The credit payment system: China's Ninth Five-Year Plan made it a priority to establish a series of "Golden" projects, one of which was the "Golden Card". This project was aimed at developing a nation-wide credit-card network that would also provide debit and electronic purse facilities in China. It was reported in 1997 that the smart cards were scheduled to be operational before the end of 2002, and that 250-300 million cards would be in use by then_tg China had embarked on the largest smart bank card in the world. Having said that, it seemed unlikely that
y

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the smart card would be readily issued to the average citizen, but mainly to corporate bodies and people of high social standing. On the Internet front, Chinese Internet usage was proliferating. Between 1997 and 1998, according to IDC, the number of Internet users increased by 71 per cent to more than 2 million. Analysts predicted that China would contribute the largest Internet growth in the first part of the 21 Century."

Dell in China Dell Takes the Direct Model to China In February 1998, Dell announced its intention to extend into the world's most populous country, China. Reporters and analysts told the Company that the Western concept would not work in China. China's regulation was that if goods were not manufactured in China they could not be sold directly in the Mainland. Hence in August, a new 135,000 square-foot facility was opened and a China Customer Centre (CCC) was established to produce, sell and provide service and technical support. The intention was to place the Company closer to its customers in markets that presented long-term potential. In the previous three years, Dell's
15

Chowdhury, (1999). Chowdhury, (1999). 17 Hamm. S., (1995). "Sound the Gong". PCWeek Online, URL: h :// .zdnercom/ pcweek/inside/0724/tgong.html, September 1999, 18 Tse, S., & Tsang, P., (Last Update 2 July, 1997) ''lnternet and WWW in China: All the Right Connections", AUUG95 & Asia-Pacific World Wide Web '95 Conference & Exhibition, URL: http://www.csu.edu.au/special/conferenceiapwww95/papers9 5/stse/stse.html, September 1999. 19 Tse, S., & Tsang, P., (Last Update 2 July, 1999).
16

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business in the Chinese market had grown steadily and sales of computer systems were through distributors. Xiamen was chosen for its ideal location, half way between Hong Kong and Shanghai on China's southeastern coast in Fujian Province. It was one of China's first four Special Economic Zones established in 1981. Xiamen was a rapidly growing city with a vigorous economy and a fully-modern infrastructure. It boasted of excellent highway connections to major cities in China and an efficient domestic airport. Furthermore, it had a number of reputable universities and over 20 per cent of Xiamen's population were graduates of higher education. The telecommunications network in Xiamen was excellent, providing over 1,000 telephone lines to the CCC. Through negotiations with the government, two power grids supplied electricity directly to the CCC. The CCC mirrored the manufacturing and professional functions found at the Asia Pacific Customer Centre (APCC) in Penang. The CCC allowed Dell to pass on the benefits of the direct model to its customers in China, including cutting out the costs of the distributors, being able to make-to-order within three to four days and providing upgraded systems to customers within a week. An order could be off the production line within two days. Most deliveries, using contracted carriers, were by road. Furthermore, 70 per cent of Dell's parts were supplied from within the Mainland through manufacturers who had global agreements with Dell. Quality was therefore not sacrificed. In August 1998, direct sales and technical support operations began in nine areas of China, including Beijing, Shanghai, Guangzhou and Xiamen. Through these locations, Dell covered over 80 per cent of the potential user population. The Company also launched toll-free sales and technicalsupport telephone numbers to provide immediate locallanguage assistance to customers. The Xiamen operation employed a little under 500 people. Around 200 were "outside sales" staff, engaged in door-to-door visits, looking after corporate customers, The balance worked at the CCC
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and included engineers, production staff as well as "inside sales" staff. The latter engaged in taking on-line and telephone orders. Staffing was a major challenge for Dell. It was difficult to find experienced direct sales people, because direct sales was a new profession in China. Despite this, 96 per cent of the workforce were recruited locally, the remainder consisting of management level staff who were mostly from Hong Kong. Over 60 per cent were university graduates. Another problem encountered in China was the bureaucracy and red tape involved in securing government contracts, the government and government-owned corporations being major customers in China's PC market. The negotiation process could be extremely lengthy while the teems of the contracts were often one sided and non-negotiable in any case. Dell's range of OptiPlcx desktops and Latitude notebook computers and PowerEdge network servers were made available to customers in all nine areas [see Exhibit 10 for a full list of Dell's systems]. Additional products and services were to be introduced in response to market demand and technology advancements. In fact, in April 1999, Dell introduced its award-winning range of Dimension desktops specifically targeted at home and small business customers. Contrary to popular belief, most of Dell's sales in China and Asia were not to consumers buying over the telephone. While many vendors were targeting the general market, Dell resolved to focus initially on corporate customers. It was, therefore, questionable whether a like-for-like application of the direct model could be achieved in China. This tactic rattled Chinese PC vendors such as Legend and Founder by nibbling into their most valuable client base: state-owned enterprises. Unlike the US market, where two in 10 PCs sold by Dell were to consumers, the consumer segment in China was very different. The price of a PC could

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cost the equivalent of three months of a person's wages. The average consumer could not afford the investment and very few had a bank account let alone a credit card. If consumers wanted to buy a Dell PC, they would often visit the nearest Dell office to see one first. Alternatively, they could refer to Dell's Website or newspaper advertisements. Although Dell had stopped using distributors, retailers were purchasing direct from Dell and selling systems on to consumers at marked-up prices. Dell's customer groups were divided into three segments: Large Corporate Accounts (LCA): companies with 1,500plus employees. y Preferred Accounts Division (PAD): companies with 5001,500 employees. y Home and Small Businesses (HSB): establishments with fewer than 500 employees.
y

The segment in which Dell was seeing some repeat buyers was in the corporate accounts. Initially, resources were mobilised towards maximising face-to-face contact, establishing good customer relations and promoting the Dell brand on a personal level. This "relationship sales" strategy was required for the LCA and PAD segments to hone business deals. Some business deals were made through customer relationships and recommendations, while others were made purely through pricing advantages. Once trust and confidence were established, Dell expected that these segments would require less face-to-face contact and that more oideis would be placed through the telephone or cvcn through the Net, thus reducing Dell's operating costs. Within corporations, Dell targeted the IT managers who seemed to have some knowledge of the latest PC technology and knew what specifications were required for their companies. Within the LCA segment, four main industries or sectors accounted for 50 per cent of Dell's business: government, education, telecommunications and power, and finance/banking. Two-thirds of Dell's corporate customers in China were state-owned enterprises. Dell Asia Pacific had
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targeted for revenues in China to constitute approximately 10 per cent of global sales (representing 50 per cent of sales for the region) by 2002, making it the second largest PC vendor (in terms of volume) and possibly the largest supplier to LCAs. But to achieve this target, senior managers at the CCC debated the need to further segment the market to better serve their customers. In 1999, Dell ranked seventh in China [see Exhibit 11 for rankings in China's PC market in 1999]. Dell saw orders corning in from nearly 100 of the Mainland's biggest cities via the telephone, the Internet and from the sales staff, which was still the most common method of selling. In the fourth quarter of 1998, Dell's sales in the Mainland grew by 100 per cent, albeit from a small base. In the second quarter of 1999, Dell recorded year-on-year unit growth of 561 per cent. If Dell could sustain that pace of growth, it was anticipated that it would achieve sales of more than US$100 million in 1999. China On-line? However, just as Dell had been careful to identify the timeliness of making the transition from using distributors to using the direct model, so the timing and market readiness for electronic commerce had to be assessed from country to country. Dell anticipated that, whereas 50 per cent of its business (by volume) in the US would be conducted on-line within one to two years, this same target would be achieved in two to three years in Asia Pacific. [See Exhibit 12 for details of Internet usage in the US and Asia-Pacific.] The majority of Dell's business in Asia Pacific came from largeand medium-sized corporations. Dell's Website supported 16 country-specific sites for Asia Pacific, using three languages, including Chinese and Japanese.

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Dell: Selling Directly, Globally

Part of the problem was that the Chinese were uncomfortable with credit card sales, especially of high-price-ticket products that could not be viewed before purchase. Many resources had therefore been invested in door-to-door sales calls to corporations. The operating costs were obviously higher for Dell in China than in, say, Europe or the US, where the majority of sales were placed through the telephone or online. Until China caught up with the West in terms of Internet penetration and credit card usage, the costs of enforcing the direct model would continue to take a tidy chunk out of Dell's earnings. Furthermore, these limitations would restrict the potential reach of the direct model. Some large corporations in China had Premier Pages. These preferred to buy through the Net as it was convenient and fast. While the majority of customers could buy through www.dell.com, there were limitations. Payment had to be made by credit card, cheque or telegraphic transfer. Apart from large corporations who were given credit facilities, other customers had to pay up-front. This created complications and delayed the ordering process. Also, access to the Internet was expensive, and only senior executives were granted usage. In 1999, Internet sales accounted for less than two per cent of total sales in China, compared to 25 per cent worldwide. Undoubtedly, the future potential for Internet growth was huge. However, the timing remained uncertain. So far, only Premier Pages and DellWare had been launched on the Net. Copy-Cats "Yes, we're using Dell's direct-selling model when we target Chinese government companies or multinationals in China." - Mary Ma, Chief Financial Officer, Legend2 Competition in the Mainland PC market was intense. Legend, the government-backed company, remained in number one position and looked set to remain there for a
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Dell: Selling Directly, Globally

while yet. All the major vendors, such as IBM, Hewlett Packard and Compaq, were vying for position, while a growing number had established manufacturing plants in China. Still others felt the best way to do business in China was to form joint ventures with local companies (e.g., Digital and Founder). Dell was hoping that its experience and knowledge with the direct model, particularly with the leadership it had in on-line direct-selling, would give them a clear run in the medium term at least. However, with the insignificant volume of on-line sales in China and the simplicity of the direct model, it was only a matter of time before the competition would try to beat them at their own game. Legend announced to Fortune Magazine that it was rapidly adopting the just-in-time delivery model, selling directly to its corporate customers and being able to cut costs and reduce inventory holdings in the process. [See Exhibit 13 for details of Legend's sales growth.] Compaq, on the other hand, opted to selectively adopt the direct model. In May 1999, the company announced that it had slashed its US distributors from 40 to four to cut costs, in an attempt to better manage inventory and as a positive step towards applying the direct model. In China, however, Compaq continued to sell through distributors and valueadded resellers. "The US is a whole different market and it requires a different model to be efficient. Here in Greater China, we will continue to be committed to our channel partners." - Tony Leung, Marketing Director Greater China, Compaq'
2u

Chowdhury, N., (1999). Ong, C., "Compaq Axes US Retail Outlets, but Keeps China Plan", South China Morning Post, I I May, 1999.
21

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Dell: Selling Directly, Globally

However, in June, Compaq cut its list of resellers in Greater China from 30 to 10. In July 1999, Mr Leung conceded that "The trend to go direct is inevitable...". But unlike the Dell direct model, Compaq chose not to bypass its resellers. Instead, the "partner-direct" model linked Compaq to its partners' systems so that orders could be input from its customers online. In this way, access to customers would not be limited, said Compaq's chief executive. In June 1999, IBM announced that it would open a new assembly plant in Shekou at the end of 2000. This was a joint venture between IBM and Great Wall. Being the second-largest PC vendor after Legend, IBM hoped that the new facility would help to reduce inventory holdings to less than four days. While IBM had announced that it would apply the direct model to its North American market, company officials commented that it would take some time before the direct model would be adopted in Asia, where 80 per cent of its PCs were sold through traditional channels Talking about the potential for taking their business on-line, an IBM official said: "We have to look at market readiness. The environment here is different from the one in the US. And Asia-Pacific is not as comfortable right now with e-commerce the way the US is."" IBM reported Internet sales of US$3.3 billion in 1998, and the company anticipated that this figure would grow to US$10 billion for 1999. In the midst of a tense PC market in China and bearing in mind that Dell's three golden rules (disdain inventory, listen to customers and never sell indirectly) were not to be broken, Aaron Loke was to report to the Asia-Pacific regional head office on the strategy for expansion. Could
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Dell: Selling Directly, Globally

the direct model take Dell to the number two position? Was the target for on-line sales realistic and how could this be achieved? Was Dell to be a box-seller in China or was there a demand for services and support? How should Dell pursue its on-line global strategy?

Ong, C., "Crunch Time for Resellers as Direct PC Selling Grows", South China Morning Post, 20 April, 1999. 23 Ong, C., "Asia Not Affected by IBM Direct-Sales Plan", South China Morning Post, 13 April, 1999.

22

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EXHIBIT US AND WORLDWIDE ND 2 QUARTER, 1998

PC

1 SHIPMENTS

Top Five Vendors, US PC Shipments Rank Vendor 2nd Qtr, 1998 Shipme 1 Compaq 1,157 2 Dell 1,143 3 IBM 511 4 Gateway 623 5 Hewlett628 Others 3 ,9 5 2 All Vendors 8,014

Mar ket Shar 14.4% 14.3% 6.4% 7.8% 7.8% 4 9 .3 % 100.0%

Top Five Vendors, Worldwide PC Shipments Rank Vendor 2nd Qtr, Mar 1998 ket Shipme Shar 1 Compaq 2,819 14.0% 2 Dell 1,818 9.1% 3 IBM 1,573 7.8% 4 Hewlett1,239 6.2% 5 NEC/PBNEC 1,295 6.5% Others 11,333 56.4% AllVendors 20,077 100.0% Notes: y Shipments are branded shipments and exclude OEM sales for all vendors. y Data for NEC/PBNEC includes shipments for Packard Bell, NEC, NEC Japan, NEC China and ZDS. y Data for Compaq includes shipments for Compaq, Digital Equipment and Tandem.

Source: International Data Corporation, Q3 1999.

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EXHIBIT DELL'S BUILD-TO-CUSTOMER ORDER Start Here with the Customer Dell customers communicate and buy from Dell in three ways www.dell.com Voice-to-voice Face-to-face

Just-in-time Inventory Dell receives only the materials it is immediately ready to use and only those specified as desirable to that particular customer

Custom-Designed Computers The Traveler is a sheet that contains all of the customer's unique configuration information. This document travels with the system throughout its Kitting Based on the Traveler, all internal parts and components required to make the system are picked and placed into a tote Build-to-Order A team of workers uses the kit to assemble and Testing and System Integration Systems are then extensively tested using Dell diagnostics. Standard or custom

Boxing, Shipping and Delivery The build-to-order cycle takes less than five hours
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EXHIBIT DELL COMPUTER FINANCIAL YEARS ENDED 1995 1998

3 CORPORATION

US$ millions/ Financial YearEnded Percentage of 29 Jan., 1 Feb., 1 Feb., 28 Jan., 29 Jan., net revenue 1995 Operating Results 1999 1998 1997 1996 Net revenue 18,243 12,327 7,759 5,296 3,475 Gross margin 4,106 2,722 1,666 1,067 738 Operating income 2,046 1,316 714 377 249 Net income 1,460 944 518 272 149 Net revenue by - Desktops 64% 71% 78% 81% 87% - Enterprise 13% 9% 4% 3% 5% - Portables 23% 20% 18% 16% 8% Non-system net 7% 9% 10% 11% 12% revenue, percentage of total

Portables 23%

Desktops 64%

nterprise 13%

Net Revenue by Product Line for year ended 29 January, 1999

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Dell: Selling Directly, Globally

Source: UR L: http://www.dell.com/...financials/financialSummReport.htm, August 1999.

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EXHIBIT DELL

COMPUTER

4 CORPORATION

US$ millions/ Percentage of net revenue

Financial Year 29 Jan., 1999 1 Feb., 1998

69% 24% 7%

Ended 28 Jan., 1996

66% 28% 6%

1 Feb., 1997
68% 26% 6%

29 Jan., 1995
69% 27% 4%

Net revenue, by region - Americas

- E u r o p e - Asia-Pacific & Japan

68% 26% 6%

Americas 68%

REVENUE BY REGION

Net Revenue by Region for year ended 29 January, 1999 Source: URL: http://www.dell.com/...financials/financialSummReport.ht m, August 1999.

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EXHIBIT DELL'S RANKING ACHIEVEMENTS

No.1 supplier of PCs to the US corporate market segment (2Q 1997) No.1 supplier of PCs to the US federal, state and government market segment (2Q 1997) No.2 for shipment of PCs to large and medium businesses worldwide (2Q 1997) No.3 supplier of notebooks in the US (June 1998) No.3 supplier of servers worldwide (1998) No.2 supplier of servers in the US (1998) No.1 supplier of workstations in the US (1998) No.1 supplier of PCs in the UK (1999)

DELL'S ACCOLADES OF INDUSTRY AND BUSINESS AWARDS

y

y y

The "Readers' Choice" award for Overall Service and Reliability, Fortune Technology Buyer's Guide The "Readers' Choice" award for Service and Reliability for both desktops and notebooks, PC Magazine No. 1 in Web-based support, Computer World The "Reliability and Service Award" for work PCs, home PCs and notebooks, PC World Highest customer satisfaction rating for servers, desktops and notebooks from industry analyst firm, Technology Business Research "Delivering the Best Return on Investment to Shareholders" award among the Fortune 500 (1994) The "Most Admired Companies" award since 1995, Fortune The "Best Performing Information Technology Company" in the world award, 1998, Business Week Top performing stock among the Standard & Poor's 500 and Nasdaq 100 in 1996 and 1997, and top performing
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US stock on the now Jones World Stock Index Note: This list is not conclusive Source: "Dell Redefines the Low-cost Consumer PC Market", 15 June, 1999, URL: littp.//www.dell.cono/corporatc/media/newsreleases/99 /9906/15.htm, August 1999; "Major Publications, Independent Surveys Declare D ell a Winner, 16 December, 1998, URL: http://www.dell.com/corporate/media/newsreleases/98/981 2/16.htm, August 1999; Dell Direct World Access: Dell Management (M. Dell), URL: http://www.dell.com/corporate/acce...1 mgnt/offcceo/mdell/mdellbioj r.htm, August 1999.

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EXHIBIT DELL'S WEEKLY 1997

6 DAILY ON-LINE SALES AND TECHNICAL SUPPORT VOLUMES

1" Qtr 1997 2nd Qtr 3rd Qtr 1997 tith Qtr 1997 Sales per US$1 m US$2 m US$3 m US$3 m++ Tech. 30,000 45,000 60,000 120,000 support/ queries Visitor 213,000 225,000 250,000 400,000 s sales per 0% 5% 10% 17% outside

Source: US Department of Commerce, "The Emerging Digital Economy", 15 April, 1998, URL: http://www.ecommerce.gov/emerging.htm, August 1999.

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EXHIBIT www.dell.com SITEMAP

C01011420 SioaiS

DHome/Hcrne Office G Small Business D Business 10Federal Government Heahhcare G Higher Education G K.12 Education G State & Local Govt

D Large Business > 400 G Small Business < 402 P Home/Home Office G Government G Education

HP

D Dell Member Senaces D Member Information Center

PADDDCTS

G Desktop Notebooks Seners & Storage G Workstations G Software & Add-Ons

C O I P O I A T L

D About Dell P Careers D Press Releases I> Investor Relations P Research & Derelopmen1 D Privacy Practices n.ii
Q UMW

, r i t Y q c a T
J

: f0 N ict , _ _ _ _ _ _ _ _ _ _ _

P System Specific Support Pages

G Self Diagnostic Tools G Component & Software Support File Library D. Frequently Asked Questions Service Parts P Dell Web Talk
72

,,singfPC

Sereces Disposal
.

Lu,torn integration
:.....t) MA N ISF E D M IM S

G Search

Refurbished Systems

cownct ________________ Contact

CONLACT

WOREAVADI
eat

1n ,9 Doi , , pur e. co , r , y ,

SUSICAI ATE MAP seaccee PRODACID STORE right, reaserk, , T 0 , 0 0 5 0 U 0 0)

O r 0 i0. 0 0 +. 0. ,0

11; !drAdr.:

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Dell: Selling Directly, Globally

EXHIBIT DELL COMPUTER E-SUPPORT SERVICES

8A CORPORATION

1DOLL SUPPORT TROIA:4E3 KNOWLED COMMUN neiLuAk D Ask Order Status DE-Nail Dell Svslem Dudley! D Idenlificalion DEell Contact Hole Knowledge Dell Service In 11111111 .11261...11 a = 13 EIZIE=111 11006013 11111111 1 91000 1 For US nystornera only. '''psatelb.t 1999 De0 Computer Carporatien, Oil nehts reserved. (Terms of Use) Online arivetv orectlees

lanyeri

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EXHIBIT DELL

COMPUTER

8B CORPORATION

4e C=1111E=IN IEL,Ez-111 WANT INSTANT ANSWERS? Duicaisrvil Just type in your support question and click "Ask" , ,, 111141, O n e c om p le t e a n d e o n . * s e n t e n c e 0 0 1 g iv e id b a n s
,

r e s u lt s . f o r e x e m p la r "W it t d id m y C D, RO M s t o p v o t n g y

c he e k m t s po le n g e y t e k, ev es te r o r o lo e y .

Tics on Asking

? a k a a p ea k a t v h a t m a t t : ov a t e a r e a s k in g n u e t a v r i g h t n o v g

o w do I i ns t i l l N i c r o do f I o f f i c e 2 0 0 0 7

egge Puede...Ono Ml r ig hts "perv ert

e tto d ev d ro f MOP* , 3 44 41- 00 11

smote.

O t t ." f _

E-SUPPORT SERVICES For etwomers ,419110tIt 1999 Dell Computer Corporation, All rights reserved, (Terms o f WO) QjNine Plnes, Rrastions

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EXHIBIT 8C DELL COMPUTER CORPORATION E-SUPPORT SERVICES

IF YOU ARE LOOKING TO... Obtain answers to common questions asked of Dell Technicians.
J r_t type in olr Deor.olood deoero, Glens ut,too and )o,rr Dell so

R:See stop by oleo omtrocopos riooroosirro issues with e your Der siorme tad out in or:quo r,r recent 0 Ser ph :55 wep D ell
Order Upgrade and Reolsx.eir ort carts for your Dell system, Review technical information on Dell supported components,
peripherals and ADiliiVatP. (1.1anth. AMINS611. PoriphatAix et)

1.91Arsrati
esearch & lopment Selected Vendor Supped Sites

Receiveandfaxtechnical and troubleshooting documents directly from our site, what our Dell engineers are saying shod the latest degree Get quick access to online support from other vendors in the industry Review the various plans Dell has to offer

Servire Corrects

sw various contracts Dell has to offer e the

pr e details shoat this serece and support pins for IS Is

Transfer ownership of your Dell system using online Mires Visrt Gigabuys.comto Ind peripherals, upgrades, and accessories for your Dell system.
men only.
IrPOY4b:C.,
al l

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reserved,

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LI

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Dell: Selling Directly, Globally

EXHIBIT 9 GROWTH OF CHINA'S COMPUTER INDUSTRY BETWEEN 1990-1996

6 E 24 8

70 60 , 5 0 140 ____ 28. .0 30 ____ 'V 1 7. 638

9n

50;96
39.56

10 _ 0 1990 1993 1994 1995 1996

Source: Buchel, B., & Raub, S., (1999), "Legend Group and the Chinese Computer Industry", Asian Case Research Journal, Vol. 3, Issue 1, May 1999, p. 51.

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EXHIBIT DELL COMPUTER PRODUCT LIST

rff Tc.) lalortwear OS 110:16,07 :roc. vie

10 CORPORATION

S rChrtiee or Calk w

.1teo.WWW-ef 41.

W O U S T I C I O NS

DIM NSIONK) Penormance and value come standard with thete versatile desktops for the home and lie airier P Dimension Product Line Quorum P Compare Current Dimension Models Side by Side

DELL PRECISION' WORKSTAT IONS A paired partner for the prefessidnal who needs high-end video and amazing PC and PD graphics. P Pf9tIS1611 Product Line Cverirew P Compare Current Precteion Models Side by Side P Dimension, Optiliffer ur 'ffiorkStation? Which one is rightfur you? OPTIPLEXO Industry.standard, dependable managed PCs designed for reliability and compatibility in networked eriaircnenent s. OptiPlok Product Lino Overierow P Compare Current OpliPlex Models Side by Side SOCTW
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INSPIRON" Inspiren notebooks deliver/di-inPOWEttt GOV& Let a PerwerEdge sewer service your network needs. P PowerEdge Product Line Cannier: P Inlemat Caching Appliance Side by Side Comparisons , Workyrzup Framers Enterprise Servers

LATITODEV Durable notebooks that POW ERVA UL1' . A high.perfortra nce storage solution for business.driti cel environments _ (SCSI subsystems, fibre channel & tape backup) P Pokkonenablt Product Line Cr/owlets.

DELLWARE O From software and Dell Services Intl can talp prorid. arc AO, the addiont you nsee, on time and on tudlet !tom teas no no witnrs Inttosiim Isamotogyco nAltin to adallaton.ar d mo,1! P Mt. Dpentianage 60.1.1snego ovt., man. genrnt!oiut.e nn fat 0411 4.14, pr. Arm 09 &ape systcrgshnip a hmer the total 351 CI.Pttellf Ana rravolla 'ohm osilloility for our surkmvs. P more Corpor
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Dell: Selling Directly, Globally

litsora end DoArkprnot Wartatlie EtTESSEIMIEMIMICE=MillIEE02211117E1ME=11 I `. Deo Ws, put, vyht5reserv.rec (T,mr, ruf en )

ate Inhuma tion P

Year testy

NPAL11.01 . WOILDIMS11.91tE4

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Dell: Selling Directly, Globally

EXHIBIT RANKINGS IN CHINA'S PC INDUSTRY IN 1999

11

Ranking l' d Legend 2"d IBM 3'th Hewlett-Packard 4th Founder 5th Great Wall 7 Dell Others Total

Q2 1999 208,841 82,330 71,287 67,920 38,755 27,955 706,863 1,203,95

Mark et 17.3 6.8 5.9 5.6 3.2 2.3 58.7 100.0

Ranking 1 ' d Legend 2" IBM 3rd Hewlett-Packard 4d) Com 5th th paq 11 Dell Others Total

Q2 1998 117,468 66,944 61,500 56,04 5 7,340 671,875 1,023,551

Mark et Share 6.5 6.0 5.5 4.1 0.7 65.6 100.0

Source: International Data Corporation, Hong Kong

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EXHIBIT INTERNET USAGE IN THE US AND ASIA-PACIFIC

12

Internethosts Hosts/1, (199 000 7) People United 11,829,141 45.8 Japan 955,688 7.7 Australia 707,611 40.2 New 155,678 44.5 Korea 123,370 2.8 Taiwan 40,706 1.9 Singapore 60,674 21.7 Hong Kong 48,660 8.4 Malaysia 40,533 2.1 Indonesia 10,861 0.06 Thailand 12,794 0.22 Philippines 4,309 0.07 India 4,794 0.005 China 25,594 0.02 Country

Number of Internet 54,680,000 7,970,000 3,350,000 210,000 155,000 590,000 150,000 200,000 90,000 60,000 80,000 40,000 40,000 70,000

Users/1, 000 People 212.0 64.0 190.3 60.0 3.5 27.6 53.6 34.5 4.7 0.3 1.4 0.6 0.04 0.06

* 1996 for New Zealand, Korea, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia, Thailand, the Philippines, India and China.

Source: Dedrick, J., & Kraemer, K. L., "Competing in Computers in the Network Era", in Asia 's Computer Challeng: Threat or Opportunity for the United States and the W orld?, Oxford University Press, 1998, p. 288.

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EXHIBIT

13

12000

12000-

8000 Rmb billion 6000

r- t\I C O 0 ) 0 ) 0 ) 0) 0) 0)

a )

0 )

U) 0 ) as

LEGEND'S SALES GROWTH

Source: Buchel, B., & Raub, S., (1999), "Legend Group and the Chinese Computer Industry", Asian Case Research Journal, Vol. 3, Issue 1, May 1999, p. 59.

48