Arab Academy

LOGO For Science and Technology DBA Program

Graduate School of Business

www.acer.global.com

Acer, Inc: Taiwan’s Rampaging Dragon

- Case Analysis -

Presented by: Abir Mohamed El Anwar

 www.acer.global.com

Contents
1 Acer, Inc History and Background

2 Competitive Environment

3 Case Questions

4 Acer, Inc Internal Environment-

Environment- SWOT

5 Recommendations

6 Acer’s Current Situation

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Background & History

Phase 2

Phase 1 1987 – 1995

1976 – 1986

Establish a
leading brand
Building The and go global
Foundation

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Phase 1: Building the Foundation

1986
Tenth Anniversary
Birth of the “Dragon Dream”
Huge expansion abroad & doubling
sales
1981
First commercial product:
the “Microprofessor
Microprofessor”
” computer
1978

Targeting smaller neighboring markets

(Asia, Middle East and Latin America)
1976
Mission: “to promote the application of the
emerging microprocessor technology.”
Multitech founded with 5 people and $ 25
25..000 &
Stan Shih as CEO

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Phase 2:
Establish a leading Brand & go Global

1992

1987

First Crisis (losses)

Stan Shih

Multitech became 1990
reclaimed CEO
“Acer”

First reengineering

Acer went Public

8th largest PC
8% layoffs
brand in the world 1989
Altos Acquisition
for $94
$94MM

Leonard Liu CEO

Joint venture with
Texas Instruments
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PC Industry Dynamics
 Increased frequency of the consumer upgrades
 Technological advances in inputs Concentration
 Productivity acceleration in manufacturing rate in U.S. 34%
34%
 Powerful computers become cheaper
 Growing penetration of personal computers in consumer and
business markets
 Growing interest in the Internet PC Industry
1976 Apple and Altos are founded

1981 IBM launches PC with MS-DOS

Short product life cycle,
high growth and fast 1982
changing environment 1985
Compaq established
Intel 80286 microprocessor
Intel 80386 microprocessor

1986 Compaq's first 32-bit PC

1987 Microsoft Windows 2.0

Requirement of local Intel 80386SX microprocessor
1988
responsiveness in different
1990 Microsoft Windows 3.0
markets
1994 Apple PowerMacs launched

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Case Questions

1. What action would Shih decide about the Aspire

product? Would he give the Aspire project the green
light?

2. What are the pros and cons of allowing Acer

America AAC to design and market the Aspire? Is
the organizational structure appropriate for this
action?

3. What are the changes needed in AAC to meet the

challenge and enhance the transnationalization of
Acer?

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Acer’s Internal Environment

Touch”-- The 4th Way

• “Global Brand, Local Touch”
• “21 in 21
21”
”
• Specific Advantage: High quality product at a
“less--than
“less than--premium” price
• “Uniload
Uniload”” Concept – easier assembly
• “Fast Food” Business Model

Outsourcing Assembly “Smiling Curve”

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Stan Shih’s Smiling Curve

RBUs:
SBUs:
Flexibility
Speed
Scale

Foundation of Client-Server Model

9
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Acer’s SWOT Analysis

Strengths: Opportunities:
 Strong Corporate Culture  Growing Industry
 Strategic alliances for further expansion  Increasing trend to working at home in
 Building Brand name business. US market
 Employee empowerment  Rapidly growing interest in the Internet
 Employee ownership, delegated accountability  Emerging global multimedia desktop
 Encouraging employees ideas
market
 Taking corrective actions (reengineering)
 Enlargement of retail business
 Strong financial position (except for 1990
1990--1992
1992))

Weaknesses: Threats:
 Paratrooper managers who were not adapted  Periods of shrinking Demand
with Acer's culture  New marketing and distribution
 Acer's limited capital resources channels conceived by the competitors
 Growing too fast while ignoring the evolution  Fierce PC business competition
of the PC industry
 Existing coordination problems
 Corporate cultural difference with merged
firms
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Acer’s Financial Position (1976

(1976--1994)
1994)

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Acer

a well-positioned global
company that overcame
.
crisis rapidly with Stan
Shih’s visionary leadership.

Shih's leadership added to

Acer success through the
new business models and
management especially
after crisis.

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Recommendation

• Establish Network Integrated organizational

structure
• Continue on Client-
Client-Server Model
• Promote coordination between Bus

• Initiate Aspire on regional rollout starting

with the launch in the US
• AAC’s ownership of the Aspire project
• Form cross
cross--BU project management team
• Share resources and transfer knowledge between
BUs.

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Integrated Network fits Acer Structure

Local BU Global
Responsiveness Efficiency

BU BU
Acer
CEO

Worldwide Knowledge
Innovation BU
BU
Transfer
& Learning
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Acer’s Global Strategy

Benefit of National Responsiveness

Low High
global Integration

1 3
High Initial Stage
Benefit of

2 4
Low

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Acer’s Global Strategy (cond

(cond’)
’)
keys to Acer’s success

Benefits of National
Benefits of Economic
Integration Responsiveness

• Strong cost control is • Aggressive pricing for

critical to maintain maintaining a market
profitability with on-
on-going share
price competition (Economy
of Scale / Scope) • Adaptation to market
changes
• Investments in the state-
state-of
of--
the--art manufacturing
the • Inventory and
facilities for unit cost manufacturing capacity
reduction management

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Conclusion

• Integrated Network organizational structure is

critical to Acer both for market responsiveness
and global efficiency
efficiency..

• Network coordination between BUs is essential for

Acer as a truly global company
company..

• Acer’s corporate culture is the key to the success

of such a global company
company..

• Stan Shih’s leadership is required for the

transition period.
period.

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Update in 1995 – After Aspire Launch

• Aspire became the world's most popular

multimedia PC.

• Acer Computer International Ltd. launched

IPO in Singapore.

• Total revenues jumped to US$5

US$5 billion

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Current Situation 2007-

2007-2008

Current mission
mission:: "Empowering People, Empowering
Technology“

On August 2727,, 2007
2007,, Acer announced plans to acquire
U.S. based rival Gateway Inc.
Inc. for US$
US$710 million.
million.

Acer Inc
Inc.. 2007 preliminary financial results
results:: Consolidated
revenue US$
US$14
14..06 Billion with 25
25%% growth
Acer is ranked in 2007
2007::
#1 - EMEA (Europe, Middle East and Africa) in mobile computing solutions
#1 - LCD’s in Western Europe
#1 - Taiwan in desktop computing solutions
#2 - Taiwan in mobile computing solutions
#3 - U.S. overall LCD shipments
#3 - Taiwan in server solutions
#3 - Latin America mobile computing solutions
#2 - Worldwide mobile computing solutions
#4 - Worldwide desktop computing shipments Acer estimates to
#3 - Worldwide overall PC shipments
#6 - Worldwide server solutions
achieve #3
#3
#4 - Canada overall PC shipments worldwide in 2008
#4 - Canada mobile computing solutions
#6 - U.S. desktop computing solutions

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Acer's Current Organizational structure

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