Dell in Brazil

1. Why did Dell decide to invest in Brazil? Dell decided to invest in Brazil because of its strategy to expand internationally. Dell had operations in many countries but did not have any manufacturing plants in Latin America, which was the fastest growing market for computers. Brazil was the ideal place for its manufacturing plant in Latin America because it presented a huge potential market for Dell since it was Latin America’s largest country with over 170 million people. Dell felt that the only way to dominate and become effective it the Brazilian market was to have its own manufacturing plant in Brazil. In addition, Brazil contained high import tariffs which would cut away at Dell’s profits if it had to export products from the U.S. into Brazil. Also attractive was Brazil’s membership in Mercosul. This would be beneficial for Dell because any company producing 60% of a product in a Mercosul country would be exempt from all tariffs when exporting to other countries associated with Mercosul. These countries associated with Mercosul included Argentina, Uruguay, Paraguay, Chile, Boliva, and Brazil. Therefore, Dell would have an advantage when exporting its products from Brazil to any of these other Mercosul countries.

2. What were the pros and cons of the five short-listed states for Dell’s investment in Brazil? Why did Dell select to invest in the state of Rio Grande do Sul? The 5 short listed states for Dell’s investment in Brazil included Sao Paulo, Rio de Janeiro, Parana, Rio Grande do Sul, and Minas Gerais. Some of the pros that were common in all of these states were adequate levels of education, a sufficient pool of qualified labor, a steady supply of electricity, and sufficient telecommunications and transportation infrastructure. Beginning with the pros for Sao Paulo, this state contained the largest market for personal computers in Brazil due to its large population. It also had a huge supply of skilled labor. Sao Paulo