Acer case about real strategic decisions
1. What accounts for Acer’s outstanding startup? What caused this company surpass numerous other Taiwanese PC companies? Acer surpassed numerous other Taiwanese PC companies due to its frugality, culture in their organization and definite market focus. The company’s CEO and their leaders strictly implemented their principles and upheld its mission to promote the application of emerging microprocessor technology. The company leaders promoted frugality as a significant business principle which can be seen in the business processes of the company. To attain their goals, the company seized each opportunity and provided an extensive array of services and products such as providing advice, trade-in, education and publication. The company ensured that they occupy space just as they needed. They guaranteed quick turnover by making sure their products are priced with low profits and evaded tying up their income with debt. The company wanted to evade redundant costs and able to take full advantage of their capital. Thus, their operations department ensured that cash collected are directly reinvested into the production. Shih gave importance to employee education and development by promoting that their employees should learn, train and develop and the managers are responsible in teaching their subordinates. Shih also encourage his employees to participate in the process of decision making. He believed that his employees will help him improve the company. The company ensured that their employees exert their best effort by offering them ownership. Lastly, Acer’s sales were increased without investing an enormous amount of capital through joint projects. With this, the company does not have to be anxious about losing its capital. As soon as the company decided to venture abroad, Shah opened in small markets to study and gain international experience first.2. After a strong decade, why did Acer’s growth and profitability tumble in the late 1980s? How appropriate was Stan Shin’s response to the decline? How do you evaluate Leonard Liu’s performance? The major reasons why Acer’s profitability declined in the late 1980s are overexpansion and the deficiency of professional management. Many of the new employees applied to gain Acer’s ownership without considering and understanding the culture of the company. Because of this, these new employees had difficult time managing the company. Aside from these reasons, the competitive dynamics in the market of personal computers is one of the external factors that helped pull down the company’s profitability. In response to the decline, Shin decided to step down as CEO and hired professional managers. This was considered a right decision to handle the continuing decline of company’s productivity. The company was under the management of the family thus there were no clear policies on management and communication. On top of this, the managers did whatever they wanted to do without having to worry about their responsibility and accountability in the company. Therefore, the company needed to establish a definite professional structure to address the problems and sustain the business. Liu has exerted substantial effort to get professional management structures, practice and systems to help address the problems of the company. He established company evaluation of performance and productivity to bring in sense of responsibility and accountability to their employees. He also created standards of communication within the company. However, despite all these efforts to help the company, he made a major error when he decided to obtain Altos. The company should have extended their joint ventures or any other methods rather than acquiring Altos..3. How effective has Shih been in rebuilding Acer in the early through mid 1990s? What do you think of his new business concept such as fast food model, Unload, Smiling Curve etc.? What do you think of his new organizational model such as Client-server, 21 in 21 etc.? Do you consider this to be a visionary framework for the company’s future competiveness or is it a mere random series of ill-conceived initiatives? Shin believed in the philosophy of Global Brand, Local Touch when he was reconstructing the company from what happened in the 1980s. This paved way to series of events in the company such as the joint venture with Computec which helped the company expand in Latin America and the launching of 21 in 21 strategy and Client-Server Organization. The company eventually gained profits after implementing the Fast Food Business Strategy and Chin-up concept which decreased cost and inventory of the company. The 2-3-1 concept also helped increase production and sales. The cost of logistic, inventory, importation and local manpower were decreased through Uniload. Shih also take consideration of the value added to their products through the smiling curve. For me, his view in business has advanced than those with other Taiwanese ownership. He recognized what to do to enhance the value by using the current resources. Client-server organizational model provided that each RBU and SBU can directly decide without consulting from the management in the head office. However, the weakness of this model is that the SBU can look for substitute distributors aside from RBUs since units are allowed to respond quickly to market demand. Both the smiling curve and the fast food concept proved that they can save cost and operational process. Since the PC industry is very dynamic and the product life cycle is short, each company needs to immediately take action to compete. The 2-3-1 system comes in helping the company execute new services and products at the right time.4. What action should Stan take on Aspire? (If you were Stan, what would you do?) Should he approve its continued development? Should he allow AAC to continue to lead the project? Should Aspire become a global product? If so, who should manage the worldwide rollout? If I were Stan, Shih, I would approve AAC to continue doing the project. There are a lot of factors contribute to the project.1. As anticipated in 1994, there is a growth of 3 million from 26 million people to 29 million thus opportunity of home computing should be increased as trend of working at home also increased.2. The company is prepared for the project as the company belongs to the top 10 PC manufacturers in the United States and in the world.3. There is an upward trend on use of internet thus use of multimedia system will also increase.4. The positive development of AAC and the increase of its profits meant that the Uniload system was helpful.5. Acer needed a replacement for Acros as the PC market is very dynamic. Shih should make us of AAC as a collection base. The setback about the coordination of RBU in the US and the SBU in Taiwan can be resolved by providing key personnel from Taiwan for the project. This could help the company save money from production costs. Also, by providing engineers from Taiwan, the company can ensure the same product quality and reduce coordination concerns between RBU and SBU. Since Aspire met the need of the customers, there is high possibility that the product will become global. Aspire is also reasonably priced and sensible product thus there would be high demand of the product.