Acer Inc_Taiwan's Rampaging Dragon
Transcript of Acer Inc_Taiwan's Rampaging Dragon
LOGOArab Academy
For Science and TechnologyGraduate School of Business
DBA Program
Acer, Inc: Taiwan’s Rampaging Dragon- Case Analysis -
www.acer.global.com
Mohamed El AnwarAbir:Presented by
www.acer.global.com
ContentsContents
Acer, Inc History and BackgroundAcer, Inc History and Background1
Competitive EnvironmentCompetitive Environment2
3 Case QuestionsCase Questions
Acer, Inc Internal EnvironmentAcer, Inc Internal Environment-- SWOTSWOT
3
4
RecommendationsRecommendations5
٢ 18 June 2009
Acer’s Current SituationAcer’s Current Situation6
www.acer.global.com
Phase Phase 11
Phase Phase 22
1976 1976 –– 19861986
1987 1987 –– 19951995
Background & HistoryBackground & History
Building The Building The FoundationFoundation
Establish a Establish a leading brand leading brand and go globaland go global
٣ 18 June 2009
www.acer.global.com
19811981
First commercial product: First commercial product: the the ““MicroprofessorMicroprofessor” ” computercomputer
19861986Tenth AnniversaryTenth Anniversary
Birth of the “Dragon Dream”Birth of the “Dragon Dream”Huge expansion abroad & doubling Huge expansion abroad & doubling salessales
Phase Phase 11: : Building the FoundationBuilding the Foundation
19761976Mission: Mission: “to promote the application of the “to promote the application of the
emerging microprocessor technology.”emerging microprocessor technology.”MultitechMultitech founded with founded with 5 5 people and $ people and $ 2525..000 000 & & Stan Shih Stan Shih as CEOas CEO
19781978
Targeting smaller neighboring marketsTargeting smaller neighboring markets(Asia, Middle East and Latin America)(Asia, Middle East and Latin America)
the the ““MicroprofessorMicroprofessor” ” computercomputer
٤ 18 June 2009
www.acer.global.com
1987
1990
1992
�� First Crisis (losses)First Crisis (losses)
�� Stan Shih Stan Shih
Phase Phase 22::
Establish a leading Brand & go GlobalEstablish a leading Brand & go Global
1989
1990
�� Leonard Liu CEOLeonard Liu CEO
��Joint venture with Joint venture with Texas InstrumentsTexas Instruments
�� 88% layoffs% layoffs
�� Altos Acquisition Altos Acquisition for $for $9494MM
�� Stan Shih Stan Shih reclaimed CEOreclaimed CEO
�� First reengineering First reengineering
�� MultitechMultitech became became ““Acer”Acer”
�� Acer went PublicAcer went Public
�� 88thth largest PC largest PC brand in the worldbrand in the world
٥ 18 June 2009
www.acer.global.com
PC Industry DynamicsPC Industry Dynamics
PC IndustryPC Industry
19761976 Apple and Altos are founded
�� Increased frequency of the consumer Increased frequency of the consumer upgradesupgrades
�� Technological advances Technological advances in inputsin inputs
�� Productivity Productivity accelerationacceleration in manufacturingin manufacturing
�� Powerful computers become Powerful computers become cheapercheaper
�� Growing penetration of Growing penetration of personal computers personal computers in consumer and in consumer and business marketsbusiness markets
�� Growing interest in the Growing interest in the InternetInternet
Concentration Concentration rate in U.S. rate in U.S. 3434%%
٦ 18 June 2009
19761976 Apple and Altos are founded
19811981 IBM launches PC with MS-DOS
19821982Compaq establishedIntel 80286 microprocessor
19851985 Intel 80386 microprocessor
19861986 Compaq's first 32-bit PC
19871987 Microsoft Windows 2.0
19881988 Intel 80386SX microprocessor
19901990 Microsoft Windows 3.0
19941994 Apple PowerMacs launched
Short product life cycle, Short product life cycle, high growth and fast high growth and fast changing environmentchanging environment
Requirement of local Requirement of local responsiveness in different responsiveness in different marketsmarkets
www.acer.global.com
Case QuestionsCase Questions
1.1. What action would Shih decide about the Aspire What action would Shih decide about the Aspire product? Would he give the Aspire project the green product? Would he give the Aspire project the green light?light?
2.2. What are the pros and cons of allowing Acer What are the pros and cons of allowing Acer
٧ 18 June 2009
2.2. What are the pros and cons of allowing Acer What are the pros and cons of allowing Acer America AAC to design and market the Aspire? Is America AAC to design and market the Aspire? Is the organizational structure appropriate for this the organizational structure appropriate for this action?action?
3.3. What are the changes needed in AAC to meet the What are the changes needed in AAC to meet the challenge and enhance the challenge and enhance the transnationalizationtransnationalization of of Acer?Acer?
www.acer.global.com
Acer’s Internal EnvironmentAcer’s Internal Environment
•• ““Global Brand, Local Touch”Global Brand, Local Touch”-- The The 44thth WayWay
•• ““21 21 in in 2121””
•• Specific Advantage: Specific Advantage: High quality product at a High quality product at a “less“less--thanthan--premium” pricepremium” price
•• ““UniloadUniload” ” Concept Concept –– easier assemblyeasier assembly
•• ““Fast Food”Fast Food” Business ModelBusiness Model
Outsourcing Assembly “Smiling Curve”Outsourcing Assembly “Smiling Curve”
٨ 18 June 2009
www.acer.global.com
Stan Shih’s Smiling CurveStan Shih’s Smiling Curve
SBUs:Speed
RBUs: Flexibility
9
Speed Scale
Flexibility
Foundation of Client-Server Model
٩ 18 June 2009
www.acer.global.com
Acer’s SWOT AnalysisAcer’s SWOT Analysis
Opportunities:Opportunities:�� Growing IndustryGrowing Industry
�� Increasing trend to working at home in Increasing trend to working at home in
US marketUS market
�� Rapidly growing interest in the InternetRapidly growing interest in the Internet
�� Emerging global multimedia desktop Emerging global multimedia desktop
marketmarket
�� Enlargement of retail businessEnlargement of retail business
Strengths:Strengths:�� Strong Corporate CultureStrong Corporate Culture
�� Strategic alliances for further expansionStrategic alliances for further expansion
�� Building Brand name business. Building Brand name business.
�� Employee empowermentEmployee empowerment
�� Employee ownership,Employee ownership, delegated accountabilitydelegated accountability
�� Encouraging employees ideasEncouraging employees ideas
�� Taking corrective actions (reengineering)Taking corrective actions (reengineering)
١٠ 18 June 2009
�� Enlargement of retail businessEnlargement of retail business�� Taking corrective actions (reengineering)Taking corrective actions (reengineering)
�� Strong financial position (except for Strong financial position (except for 19901990--19921992))
Threats:Threats:�� Periods of shrinking Demand Periods of shrinking Demand
�� New marketing and distribution New marketing and distribution
channels conceived by the competitorschannels conceived by the competitors
�� Fierce PC business competitionFierce PC business competition
Weaknesses:Weaknesses:�� Paratrooper managers who were not adapted Paratrooper managers who were not adapted
with Acer's culturewith Acer's culture
�� Acer's limited capital resourcesAcer's limited capital resources
�� Growing too fast while ignoring the evolution Growing too fast while ignoring the evolution
of the PC industryof the PC industry
�� Existing coordination problemsExisting coordination problems
�� Corporate cultural difference with merged Corporate cultural difference with merged
firmsfirms
www.acer.global.com
Acer’s Financial Position (Acer’s Financial Position (19761976--19941994))
١١ 18 June 2009
www.acer.global.com
AcerAcer
a well-positioned global company that overcame . 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.
١٢ 18 June 2009
www.acer.global.com
•• Establish Network Integrated organizational Establish Network Integrated organizational structure structure
•• Continue on ClientContinue on Client--Server ModelServer Model
•• Promote coordination between BusPromote coordination between Bus
RecommendationRecommendation
•• Initiate Aspire on regional rollout starting Initiate Aspire on regional rollout starting with the launch in the US with the launch in the US
•• AAC’s ownership of the Aspire projectAAC’s ownership of the Aspire project
•• Form crossForm cross--BU project management teamBU project management team
•• Share resources and transfer knowledge between Share resources and transfer knowledge between BUs.BUs.
١٣ 18 June 2009
www.acer.global.com
BU
BU
Integrated Network fits Acer StructureIntegrated Network fits Acer Structure
GlobalGlobalEfficiencyEfficiency
LocalLocalResponsivenessResponsiveness
١٤ 18 June 2009
Acer CEO
BU BU
BUBU
Worldwide Worldwide InnovationInnovation& & LearningLearning
Knowledge Knowledge TransferTransfer
www.acer.global.com
Acer’s Global StrategyAcer’s Global Strategy
Benefit of National ResponsivenessBenefit of National Responsiveness
LowLow HighHigh
global Integration
global Integration 1 3
LowLow
HighHigh
Benefit of
Benefit of
global Integration
global Integration 1
2
3
4
Initial StageInitial Stage
١٥ 18 June 2009
www.acer.global.com
Benefits of Economic Benefits of Economic IntegrationIntegration
•• Strong cost control is Strong cost control is critical to maintain critical to maintain
Benefits of National Benefits of National ResponsivenessResponsiveness
•• Aggressive pricing for Aggressive pricing for maintaining a market maintaining a market
Acer’s Global Strategy (Acer’s Global Strategy (condcond’)’)
keys to Acer’s successkeys to Acer’s success
critical to maintain critical to maintain profitability with onprofitability with on--going going price competition (Economy price competition (Economy of Scale / Scope)of Scale / Scope)
•• Investments in the stateInvestments in the state--ofof--thethe--art manufacturing art manufacturing facilities for unit cost facilities for unit cost reduction reduction
maintaining a market maintaining a market share share
•• Adaptation to market Adaptation to market changes changes
•• Inventory and Inventory and manufacturing capacity manufacturing capacity managementmanagement
١٦ 18 June 2009
www.acer.global.com
•• IntegratedIntegrated NetworkNetwork organizationalorganizational structurestructure isiscriticalcritical toto AcerAcer bothboth forfor marketmarket responsivenessresponsivenessandand globalglobal efficiencyefficiency..
•• NetworkNetwork coordinationcoordination betweenbetween BUsBUs isis essentialessential forforAcerAcer asas aa trulytruly globalglobal companycompany..
ConclusionConclusion
AcerAcer asas aa trulytruly globalglobal companycompany..
•• Acer’sAcer’s corporatecorporate cultureculture isis thethe keykey toto thethe successsuccessofof suchsuch aa globalglobal companycompany..
•• StanStan Shih’sShih’s leadershipleadership isis requiredrequired forfor thethetransitiontransition periodperiod..
١٧ 18 June 2009
www.acer.global.com
Update in Update in 1995 1995 –– After Aspire LaunchAfter Aspire Launch
•• Aspire became the world's most popular Aspire became the world's most popular multimedia PC.multimedia PC.
•• Acer Computer International Ltd. launched Acer Computer International Ltd. launched •• Acer Computer International Ltd. launched Acer Computer International Ltd. launched IPO in Singapore.IPO in Singapore.
•• Total revenues jumped to US$Total revenues jumped to US$5 5 billionbillion
١٨ 18 June 2009
www.acer.global.com
Current Situation Current Situation 20072007--20082008
�� CurrentCurrent missionmission:: "Empowering"Empowering People,People, EmpoweringEmpoweringTechnology“Technology“
�� OnOn AugustAugust 2727,, 20072007,, AcerAcer announcedannounced plansplans toto acquireacquireUU..SS.. basedbased rivalrival GatewayGateway IncInc.. forfor USUS$$710710 millionmillion..
�� AcerAcer IncInc.. 20072007 preliminarypreliminary financialfinancial resultsresults:: ConsolidatedConsolidatedrevenuerevenue USUS$$1414..0606 BillionBillion withwith 2525%% growthgrowth
Acer is ranked in Acer is ranked in 20072007::##1 1 -- EMEA (Europe, Middle East and Africa) in mobile computing solutionsEMEA (Europe, Middle East and Africa) in mobile computing solutions
١٩ 18 June 2009
##1 1 -- EMEA (Europe, Middle East and Africa) in mobile computing solutionsEMEA (Europe, Middle East and Africa) in mobile computing solutions##1 1 -- LCD’s in Western EuropeLCD’s in Western Europe##1 1 -- Taiwan in desktop computing solutionsTaiwan in desktop computing solutions##2 2 -- Taiwan in mobile computing solutionsTaiwan in mobile computing solutions##3 3 -- U.S. overall LCD shipmentsU.S. overall LCD shipments##3 3 -- Taiwan in server solutionsTaiwan in server solutions##3 3 -- Latin America mobile computing solutionsLatin America mobile computing solutions##2 2 -- WorldwideWorldwide mobile computing solutionsmobile computing solutions##4 4 -- Worldwide desktop computing shipmentsWorldwide desktop computing shipments##3 3 -- Worldwide overall PC shipmentsWorldwide overall PC shipments##6 6 -- Worldwide server solutionsWorldwide server solutions##4 4 -- Canada overall PC shipmentsCanada overall PC shipments##4 4 -- Canada mobile computing solutionsCanada mobile computing solutions##6 6 -- U.S. desktop computing solutionsU.S. desktop computing solutions
Acer estimates to Acer estimates to achieve #achieve #3 3 worldwide in worldwide in 2008 2008
www.acer.global.com
Acer's Current Organizational structureAcer's Current Organizational structure
٢٠ 18 June 2009
LOGO
www. acer.global.com