Dell Case Study
DELL’S DILEMMA IN BRAZIL:
NEGOTIATING AT THE STATE LEVEL
MRKT4030, Tues CE
Summer 2010, 6/23/10
In the case study Dell Computer Corporation is trying to negotiate a deal in Brazil to build a manufacturing plant in their country. Keith Maxwell, SVP of Worldwide Operations and his site coordination team took several trips to Brazil. They visited five of the twenty-six states in Brazil. When the team went to Brazil they were looking for specific qualifications to maintain their rapid growth such as, an attractive market, security, well educated population, low tax reduction, qualified personnel to work in the plant, electrical energy, and excellent telecommunications info structure. Dell needed to keep in mind that the Brazilian states all compete amongst each other to offer the lowest possible taxes even though, the average taxation is 12%. These states offer at a lower taxation rate with other incentives like, free land to build the plant on, as well as loans with lengthy grace periods and low interest rates. After visiting the five different states Sao Paulo, Minas Gerias, Rio de Janerio, Parana, and Rio Grande do Sul, Dell realized they each had different organizational structure and style. Rio Grande De Sul was mainly chosen after working with Polo’s investment promotion agency because they understood Dell’s specific needs. Dell’s executives had all the information they needed. Their final decision was to operate in Rio Grande do Sul. This was because of the financial incentives the government of Rio Grande do Sul offered, and their understanding of Dell’s unique requirements. However, before construction could start for building the plant there was a major set back because of a political climate change. A new governor, Olivio Dutra was appointed. He campaigned against granting benefits for foreign international companies coming into their states and getting ‘special treatment,’ such as excellent incentives. Keith Maxwell and his
NEGOTIATING AT THE STATE LEVEL
MRKT4030, Tues CE
Summer 2010, 6/23/10
In the case study Dell Computer Corporation is trying to negotiate a deal in Brazil to build a manufacturing plant in their country. Keith Maxwell, SVP of Worldwide Operations and his site coordination team took several trips to Brazil. They visited five of the twenty-six states in Brazil. When the team went to Brazil they were looking for specific qualifications to maintain their rapid growth such as, an attractive market, security, well educated population, low tax reduction, qualified personnel to work in the plant, electrical energy, and excellent telecommunications info structure. Dell needed to keep in mind that the Brazilian states all compete amongst each other to offer the lowest possible taxes even though, the average taxation is 12%. These states offer at a lower taxation rate with other incentives like, free land to build the plant on, as well as loans with lengthy grace periods and low interest rates. After visiting the five different states Sao Paulo, Minas Gerias, Rio de Janerio, Parana, and Rio Grande do Sul, Dell realized they each had different organizational structure and style. Rio Grande De Sul was mainly chosen after working with Polo’s investment promotion agency because they understood Dell’s specific needs. Dell’s executives had all the information they needed. Their final decision was to operate in Rio Grande do Sul. This was because of the financial incentives the government of Rio Grande do Sul offered, and their understanding of Dell’s unique requirements. However, before construction could start for building the plant there was a major set back because of a political climate change. A new governor, Olivio Dutra was appointed. He campaigned against granting benefits for foreign international companies coming into their states and getting ‘special treatment,’ such as excellent incentives. Keith Maxwell and his