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Building an Asian Multinational
IntroductionAcer’s beginnings
Company created in 1976Capital stock: 25, 000 USDWorkforce: 11 employeesActivity: IT products distributor
IntroductionAcer: 30 years later...!
3 more brands belong to Acer Group : Gateway (2007), E-machines (2007) & Packard Bell (2008)
Capital stock: 805 million USD Workforce: 6, 000
Introduction
Introduction
IntroductionProblematic
How can we explain such a growth?
What is this Asian company’s business model?
SWOT Acer early 80’Strengths: Leader on the national market Low cost structure Visionary and charismatic boss Innovative and dynamic company
Weaknesses: No international focus (patriotic values) Lack of international expertise Low levels of brand recognition worldwide Lack of diversification (PC business) No component manufacturing
Opportunities: Business friendly home market (state incentives and skilled engineers) Emergence of the global market place High growth potential worlwide for PC’s and emergence of NICT
Threats: Highly competitive market with competitors having strong brand power Capital intensive industry due to high tech and short product cycles « Made in Taiwan »
Going International„Local touch, global brand“
Positionning/Product Strategy:
Acer has long positionned it-self as a follower (first assembling for OEM)
High quality but affordable products (innovative but seldom pioneer)
Progressive product diversification: focusing on value-added segments
Building a global brand
Going International„Local touch, global brand“
Production Strategy: Decentralisation
Centralized R&D and (large scale) manufacturing of value-adding components in low cost countries (economies of scale, low cost structure)
Decentralised assembling process, together with local marketing and distribution operations (low inventory cost, „just-in-time“)
Local politic of joint ventures and partnerships (good knowledge of local markets)
Going International„Local touch, global brand“
Management/Ownership strategy:
Decentralized and highly independant management (flexibility to demand)
Locally highered operationnal and managerial workforce (local expertise)
Participation of local shareholders: „21 in 21“
The client-server organisation
Going International„Local touch, global brand“
Going International„Local touch, global brand“
Brand-recognition problemTwo sub-problems:_The notoriety of well-established company_The bad reputation of Asian productsSOLUTION:Creation of an organization to promote
Taiwanese products and firmsAdvertisements campaigns to first destroy
the clichée of bad reputation and then make the Acer brand known.
Lack of international experienceManagers that had no experience at the
international and that do not speak EnglishA real problem for establishing offices overseasSOLUTION:Send just one manager and hire locallyBenefit from the local expertise, knowledge of
the market, of the environment, of the legislation, of the structures…
Encourage local investments to boost motivation and save on equity.
Price war and costs efficiencyEconomies of scale from the competitorsAttruition war with pricesSOLUTION:Fast Food Business ModelJoint ventures to compete more efficiently
with costs savings on components and distribution network.
Decentralize everything, give autonomy to the RBUs and SBUs
SWOT ACER 2009Strengths: Leader on the national market Leader on several markets and about to become N°2 worldwide in PC market. Efficient distribution network Innovative and dynamic company (R&D)Affordable high quality products
Weaknesses: Bad after-sales services The autonomy given to the RBUs and SBUs could eventually end up in a partial lost of control
Opportunities: Diversification in other segments or niches of the multimedia marketHigh growth market
Threats: Highly competitive market with competitors having strong brand power Capital intensive industry due to very short product cycles Fast changing environment
RecommendationsIT technology improves rapidlyPC industry requires offering the consumers
the latest technology in the shortest times
Relocate ACER’s factories closer to the markets in order to:
- Save logistic costs- Save time in production cycles- Possible adaptation of the products to the
markets
RecommendationsShareholders are key actors to finance
ACER’s projects. They need to be secured.
Pure Player strategy with focus on IT technologies
- PCs- Laptop- Smartphone
RecommendationsVertical integration strategy
ACER should establish ACER Stores in strategic
locations on each markets
- Master its brand image- Increase its margins
RecommendationsChina invests massively in Africa
Therefore ACER should benefit from this opportunity to clinch new deals there.Focus on public tender & equipment contracts
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