MULTINATIONAL BUSINESS STRATEGY (INT700) ACER, INC: TAIWAN’S RAMPAGING DRAGON – CASE ANALYSISCevdet KIZIL (Graduate MBA) Southern New Hampshire University Multinational Business Strategy (INT700) – Prof. Aysun Ficici October 5, 2004 Manchester, New Hampshire Organizational Strategy International Strategy Analysis of International Expansion Recommendations i ii 1 3 4 5 . II.Table Of Contents Title Page Table of Contents I. IV. III. Secondly. The employees were also trusted and had decision making responsibility. decreasing inventory costs. importing electronic components. Related to this issue. Another strategy was to price the high-tech products with a low margin to ensure turnover. Thirdly. offering technological training courses. By implementing that strategy. the business developed by following various ways like providing engineering and product design advice to local companies. the company tries to take advantage of every opportunity. Additionally. Acer had a decentralized management style giving employees a lot of freedom without implementing tight controls. This unique organizational strategy is composed of several factors.ACER. That strategy lets Acer to be a very creative and innovative firm. . They were able to provide suggestions and ideas as well as having ownership in company. For example. First of all. publishing trade journals and producing new products like the mini-computers. reducing the assembly time and lowering the labor costs. since the beginning of its life. Acer instituted a strong norm of frugality. Organizational Strategy Acer has a special organizational strategy which helped them in the past and is still helping them to excel in the global business arena. Acer gave a lot of importance to receive cash payment quickly and avoid the use of debt. INC: TAIWAN’S RAMPAGING DRAGON (CASE ANALYSIS) I. the company saved a lot of money having fewer offices just enough for the needs. the employees were highly valued in Acer. before planning to produce the Aspire model. Using this strategy. . One other strategy of Acer was to always keep good relations with suppliers. This was again a very beneficial strategy. think and develop. Acer representatives and the project teams talked to consumers. This principle was later referred to as “Acer 1-2-3”. Acer was able to learn that customers wanted a choice of colors. In the company. distributors. so the team decided to offer this model in grey and emerald green. Next. Acer was able to compete against big companies when it had a small scale. In other words. Finally. because Acer had an exact knowledge and idea about the customers’ tastes and preferences. This strategy also encouraged the employees to learn.Also. Acer experimented with joint ventures as a way of expanding sales. Implementing the mentioned strategy helped Acer to capture the knowledge of those regional markets and increasing sales without the risk of hiring more people or raising more capital. the company had a family-like atmosphere where the relationship between the managers and the employees was very nice. Acer had the strategy of gaining customers by giving them a great value. visited computer retail stores and held discussions to brainstorm the new product’s form. they did market research. before producing a PC. For example. dealers. Following that. They were followed by the employees and the shareholders in the second and third places. partners and investors. customers always came first. For instance. Finally. Taiwan headquarters was the server that used its resources to support client business units. Likewise. The advantage of this strategy was that Acer’s business units could leverage their own ideas or initiatives directly through other RBUs or SBUs without having to go through the corporate center. Acer always chose the aggressive method for international markets. Acer had a joint venture partnership agreement with its Mexican distributor.II. in the times when the company was weak compared to the global giants. Third. The company produced new products. the firm also implemented the joint venture partnerships strategy in international markets like they had in their domestic regional markets. headquarters provided help and did mediate. International Strategy One of Acer’s leading international strategies was that. the firm targeted smaller neighboring markets that were of lesser interest to these big firms. This strategy was ideal since the combination of these smaller markets was huge and enabled Acer to improve when they had fewer resources. According to this strategy. purchased properties and acquired new companies rapidly and by taking risks to go further in the overseas markets. it didn’t dictate or control. the client server organizational model was another unorthodox strategy implemented by Acer. Computec. . Thus. Later. Singapore and Thailand. .III. the response to the company’s promotional letters was poor. in the beginning. the company took a place in Europe for the first time. Malaysia. it was able to establish partnerships with dealers and distributors in Indonesia. Acer established a marketing office in Dusseldorf and a warehouse in Amsterdam. Finally in 1986. But Acer never gave up and continued to try and at the end. Acer expanded to new international markets in Middle East and Latin America with the help of a growing number of new products. Besides. Unfortunately. Analysis of International Expansion The first international attempt of Acer (at that time named Multitech) started by targeting smaller neighboring markets that were of lesser interest to the global giants. the firm also supplemented the commission-based purchasing unit it had previously opened in the United States with a fully-fledged sales office. That’s the second reason why I think Acer should not go for this investment. it’s best for Acer to defend its recovery rather than going too aggressive at the moment. another painful problem will be that each international market will want to redesign the product and marketing strategy for its local markets. In addition to this factor. the cost will higher in great quantities. because all the company’s engineering and production expertise is located in Taiwan. This was the last frightening factor leading me to the mentioned conclusion. Finally. thus avoiding any potential scale economies. My third reason is that. There exists a great risk. Because the bad scenario has just been getting positive and such a move can really make things complex. yet still the return of this investment is very uncertain. Recommendations In my opinion. the development resources are limited which increases the risk to a maximum. So. before Acer.IV. We should also take it into consideration that the overall cost of the Aspire project will be really high. it will be very hard to coordinate the development and delivery of the Aspire model. That’s also another great weakness of Acer which affects my decision. the company is developing too fast without adequate control. Fourth. the competition is high in the market and Acer’s rivals are also about to launch their own multimedia home PCs – with a high probability. From my point of view. .
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