Acer Strategy free essay sample

Porter (2008) notes that strategy is about obtaining and maintaining a competitive advantage. The Acer organisation realised the need to capitalise on skills, technologies, knowledge and other capabilities which were not a part of their organisation and employed strategies which sought out complementary companies with which to form mergers or acquisitions. In its initial stages, the Acer Corporations strategic focus was not on competing in existing markets with the global leading PC manufacturers, but on entering relatively uncompetitive markets like Europe and Asia. To enter the US market, Acer adopted a strategy of acquisitions and acquired Gateway and Packard Bell. Porter (2008) is strongly critical of the creation of mergers as strategy. He notes that while a merger is a step which is adopted to move an organisation to obtaining a unique position in the market, it cannot be considered a strategy in itself. With acquisitions and mergers in the PC industry, it means that there is a reduction of product choice being brought to the market and that this would mean that consumers have reduced choice. We will write a custom essay sample on Acer Strategy or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page For example, in the PC industry if mergers and acquisitions cause manufacturers to produce PCs with the same features, it means that consumers technically may be worse off. So although market share may be increased, your customers are liable to become less loyal and more prone to seek out competitors products especially if the costs are lower than your. This school of thought therefore suggests that having a strategy is more socially beneficial to your stakeholders. Porter (2008) goes on to suggest that strategy is about innovation in the way a company competes to maintain its market share globally. With the acquisition of Gateway and Packard Bell, the Acer Corporation was engaging in what can be defined as horizontal integration. This meant that they employed a strategy based on growth, which is realised through the acquisition of similar companies in the market. This therefore ensured that some of Acers main competitors were eliminated while allowing it to gain access to new markets. In the PC industry the fighting of battles amongst competitors can leave them drained financially, and also in terms of human resources, skills and knowledge. Todays industry players have learnt that there must be some measure of collaboration in order to maintain and increase their market share. Acer Corporations collaboration with Texas Instruments and China Development Corporation is a result of such collaborations and can be defined as a strategic alliance. If pursued correctly strategic alliances can create greater value for customers and other stakeholders simply by the sharing of costs, skills, knowledge and technology. Even though the PC market can be described as being aggressively competitive, such alliances can be advantageous to both entities. In terms of competition, resources should be concentrated in those areas where an organisation is assured that there are definite advantages. It should however be noted that for these alliances to work, there must be advantages for both partners. Acers management also needed to boost the companys image internationally. Since Taiwan had an image problem (i. e. being associated with low end, cheap goods), Acers management made the strategic choice to disassociate the company with its Taiwanese origins and the associated image meant that the company would not be associated with having sophisticated technology like their competitors. Even though management agreed that companies in Asia, when compared to those in the US, had lower costs and were better equipped and prepared to respond to changes in the market more rapidly, there was the problem of not being able to communicate this effectively. Acer therefore set out to pursue a strategy which would create for them what was described as a global brand image. One such strategy was the change of name from Multitech in 1987 to Acer. This new name was shorter and thought to have a more global reach, while embracing the qualities of the company. In effect this was the dawn of the companys new corporate identity. Because the company in its early years did not have the financial resources of its competitors there was a concentration on their strengths (small, flexible, aggressive local manufacturer) while building its brand. Acer employed strategies to be cost-effective while being consistent and producing high quality, innovative products. The company obtained this by being the first to the market with technological breakthroughs which would have gained it attention via the media. The companys overseas strategic alliances also served to increase awareness of the Acer brand. During the course of time and with the increased availability of financial resources, their advertising strategies became more aggressive. Acer also invested in their human resources. Their efforts to become a more global organisation meant that their alliances and acquisitions created cultural and communication problems. For example, non-local employees at times found it challenging to understand the Acer organisational environment while the process of the decentralisation of duties caused bottlenecks in the critical decision making process. Some of the cultural differences such as the Taiwanese practice of job-rotation made it difficult to form relationships with their colleagues overseas. To address and overcome these problems, Acer began to send more of its Chinese managers overseas to train local management. Acer also chose to adopt an industry leader perspective in the Mexico and South African markets. In 1996 Acer had a 32% market share in Mexico, selling 1 out of 3 computers. Its joint venture with Computec Co. allowed them to capitalise on the gap between the corporate market and other low quality products for private consumers. The market gap between home and small businesses was filled by after careful market research and a proactive approach. Another industry leader strategy in the Mexican market was the local assembly of computers which allowed the company to keep its prices low. This along with the building of their products locally gave them a competitive advantage over their competitors who would bring completed products to the market. Acer was able to respond more quickly to the needs of the market while not stocking obsolete parts like their competitors. The company also broke tradition and quoted the prices of their products in pesos as opposed to competitors who quoted in dollars ($). This ability to be flexible and respond quickly to the market was a major competitive advantage. With reference to the evolution of the global competitive landscape for personal computers outlined in the case study, describe and discuss the analytical frameworks that Acer might employ to inform its strategy planning. In your discussions, you should identify any limitations of the analysis methods you select. The evolution of the global competitive landscape for personal computers is characterised by the entry of many market players, the rapid changes in technology, competitive forces and the strategic responses to those changes. One of these major changes was the significant reduction in prices for the products. To inform its strategic planning, Acer may employ a PESTLE analysis of its environment. Political Acer needs to be aware of the political climate of those companies in which it conducts its business. It needs to be aware of the governmental stability and taxation and trade regulations.