Acer Case Study

TABLE OF CONTENTS

1. Int Introdu roduct ctiion

2. Acer Acer’s ’s His Histo tory ry & Key Key Dat Dates es

3. Miss Missio ion n & Visi Vision on

4. Obje Object ctiv ives es of Acer Acer

5. Macro Macro Environ Environment ment Analy Analysis sis (PEST (PESTEL EL Analysi Analysis) s)

6. SWOT SWOT anal analys ysiis

7. Anso Ansoff ff Mat Matrix rix

8. Port Porter erss five five for force cess

9. Por Porter gen gener eriic

10. Segmenting, Segmenting, Targeting Targeting and Positionin Positioning g

11. Value Value Chain Chain

INTERNATIONAL BUSINESS CASE STUDY

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TABLE OF CONTENTS

1. Int Introdu roduct ctiion

2. Acer Acer’s ’s His Histo tory ry & Key Key Dat Dates es

3. Miss Missio ion n & Visi Vision on

4. Obje Object ctiv ives es of Acer Acer

5. Macro Macro Environ Environment ment Analy Analysis sis (PEST (PESTEL EL Analysi Analysis) s)

6. SWOT SWOT anal analys ysiis

7. Anso Ansoff ff Mat Matrix rix

8. Port Porter erss five five for force cess

9. Por Porter gen gener eriic

10. Segmenting, Segmenting, Targeting Targeting and Positionin Positioning g

11. Value Value Chain Chain


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12. Boston Boston Consultancy Consultancy Group (BCG) (BCG)

13. Attack Attack & Defense Defense Strategy Strategy

14. Corporate social responsibilities & Governance

1. Intr Introd oduc ucti tion on The Acer Group is a family of four brands -- Acer, Gateway, Packard Bell and eMachines. This Th is uniq unique ue mu mult ltii-br bran and d stra strate tegy gy allo allows ws each each bran brand d to offe offerr a unique unique set set of bran brand d characteristics that targets different customer needs in the global PC market. Today, the Acer Group still strives to break the barriers between people and technology. It ranks No. 2 for total PC shipments and No. 2 for notebooks, and has a global workforce of 7,000 employees. Acer grew worldwide while simultaneously minimizing its labor force by identifying and using marketing strategies that best utilized its existing distribution channels. Revenue rose sharply from US$4.9billion in 2003 to US$11.31billion in 2006 and 2009 revenue reached US$17.9 billion. The successful mergers of Gateway Inc. (2007) and Packard Bell Inc. (2008) by parent company company,, Acer Acer Inc., Inc., comple complete te the group' group'ss global global footpr footprint int by furthe furtherr strengt strengthen hening ing its its presence in the U.S. and Europe. (www.acer-group.com/public/The-Group/overview.htm) Acer’s product range includes PC notebooks and Desktops, servers and storage systems, monitors, peripheral devices, digital devices, LCD TVs and e-business solutions for business, Government, Education and home users. Acer today focuses on marketing its brand-name IT products around the globe. Wielding a profitable and sustainable Channel Business Model (CBM) Acer has been able to achieve sustainable growth worldwide. The model offers flexibility to adapt to changing global IT market trends, and involves collaborating with the industry's top-tier partners and suppliers. We expect the foundation of the CBM shall enable Acer to reach further success, minimize operating expense and enhance profitability. INTERNATIONAL BUSINESS CASE STUDY

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( www.us.acer.com/acer/about_us.do? www.us.acer.com/acer/about_us.do? LanguageISOCtxParam=en&ctx2.c2att1=2 LanguageISOCtxPara m=en&ctx2.c2att1=25&CountryISOCtxPar 5&CountryISOCtxParam=US&ctx1g.c2att92 am=US&ctx1g.c2att92=453&ctx1 =453&ctx1 .att21k=1&CRC=3529792491 )

2. Histor story y Phase: 1 - 1976-1986 : Commercialize microprocessor technology

In its first ten-year stage of development, Acer established a corporate culture based on the founders' firm belief in "the goodness of human nature." This belief was exemplified by the offe offeri ring ng of stoc stock k to all all empl employe oyees es.. Duri During ng this this stag stagee in Acer Acer's 's hist histor ory, y, the the compa company ny significantly contributed to the popularization of computers in Taiwan. Phase: 2 - 1987-1995 : Establish a leading brand and go global

In 1987, Multitech formally became known as Acer, marking the start of Acer's efforts toward creating a strong brand name. During this second ten-year stage of development, Acer grew extensively and expanded both strategically as well as geographically. The company grew to be ranked 8th largest PC brand in the world. Phase: 3 - 1996-2000 : Offer fresh technology for everyone, everywhere

During the company's 20th anniversary celebration, the third stage of development was launched, including basic goals for technological innovation and simplification of operations. Top priority was placed on delivering the freshest, most affordable technology for the benefit of consumers worldwide. Phase: 4 - 2001-beyond : Transform from manufacturing to services


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Since the company's founding in 1976, Acer has evolved from a manufacturing powerhouse to a globally recognized computer brand, marketing world-class IT products and services. ( saowalakacer.blogspot.com/2010/07/about-acer.html )

Key Dates: 1976: Multitech International is founded by Stan Shih and four others. 1981: Multitech is renamed Acer, Inc. 1983: Acer begins manufacturing PC clones. 1988: Acer Incorporated goes public. 1991: Acer posts its first loss. 1994: Acer Computer International (Asia-Pacific distributor) completes its initial public offering (IPO). 1995: Acer is top selling PC brand in Mexico, Bolivia, Chile, Panama, Uruguay, Thailand, Philippines, and Taiwan. 1996: Acer expands into consumer electronics. 1998: Company reorganizes into five units. 2000: Acer restructures, breaking off several operating units; contract manufacturing spins off to become Wistron Corporation. 2003: Acer becomes the world's fifth largest PC maker. 2005: Stan Shih retires; J.T. Wang is named CEO and Gianfranco Lanci becomes president. (www.answers.com/topic/acer-inc )


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3.Mission & Vision The vision of the Acer Group to become “A leading branded company empowering and enriching people through innovation and customer care,” gets closer to reality when all of us contribute to the common purpose of “Breaking the barriers between people and technology.” ( www.acer-group.com/public/Sustainability/sustainability11.htm ) The new corporate mission statement is "Fresh technology enjoyed by everyone, everywhere." Fresh does not imply new but the best, namely, proven high-value, low-risk technology that is affordable to everyone, and has a long lifespan. Fresh also refers to innovation based on mature technology that is user-friendly, reasonably priced, and enjoyed by everyone, everywhere. ( www.brandingasia.com/cases/case1.htm ) Acer’s long-term mission is to break the barriers between people and technology. Our commitment to developing easy-to-use, dependable products that meet our customers’ needs has led to the creation of our unique Empowering Technology, designed to ensure that our customers receive the full benefit of each and every technological breakthrough. Empowerment through hardware, software and services – that’s the Acer brand promise. ( saowalakacer.blogspot.com/2010/07/about-acer.html )


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Organizational Structure

( www.acer-group.com/public/The_Group/organization.htm )

4. Objectives of Acer

The company’s goal (September 2009) is to become the world’s number one netbook vendor.

Acer group have developed over time with their own unique customer base, conserving therefore the individual identity and personality of each brand.

The objectives are clear: avoid brand overlapping and communicate coherently both internally and externally (to employees, the channel, end users and investors) while maintaining the identities of the companies unaltered and increasing the overall user base. "These recent acquisitions are strategic both in terms of business and market positioning. Acer, Gateway and Packard Bell are three distinct identities of a single group whose objective is to expand the variety of its product range. The three companies will integrate INTERNATIONAL BUSINESS CASE STUDY

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their own unique experience and abilities to offer a broad range of products that allow customers to find the right solutions for their uniquely personal needs." (www.acer.com/acer/news_detail.do;jsessionid=E15883A09FDE48BEB6E14EA6B7896276.public_a _14b? LanguageISOCtxParam=en&sp=page8e&ctx2.c2att1=92&kcond9.c2att193=15874&CountryISOCt xParam=AU&ctx1g.c2att92=122&ctx1.att21k=1&CRC=79693352 )

5. Macro Environment Analysis (PESTEL Analysis)


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The Macro Environment Analysis is the first step of a strategic analysis; it is also referred to as PESTEL analysis. Understanding the strategic position is concerned with identifying the impact on strategy of the external environment, an organizations strategic capability and the expectations and influences of stakeholders. Organizations exist in the context of a complex political, economic, social, technological, environmental and legal world. Changes in these PESTEL factors are more complex for some organizations than for others. How this affects the organization could include an understanding if historical and environmental effects, as well as expected or potential changes in environmental variables. Many of those variables will give rise to opportunities and others will exert threats on the organization or both. PESTEL framework helps to recognize how future trends in political, economic, social, technological, environmental and legal environments might impinge on globally and provide the broad data from which the key drivers of change can be identified. It also helps to understand the interconnectedness of the environmental factors.

Political Factors

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The World political matters such as affecting the spending power of the people will be having a major influence upon the regulation of Acers business as it has become a popular international brand. Because IT related products are none to essential commodities at the time of making priorities at the times economic crisis.

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The political situation of Taiwan has also been challenged due to the high influences from Chinese government due to acquiring some of the Taiwan territories back to main land China which might be directly effecting on Acer which originated from Taiwan. Because Acer has manufacturing plants in China as well and China has become very important market base for Acer as well.

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Due to higher growth in Acer might impose trade barriers by USA & Europe for Acer in order to protect the local brands in the region.

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Based on China’s accession agreement with and World Trade Organization (WTO) accession on trade and economic relation across the Taiwan Strait, predicted is that "China will likely emerge as one of the world's largest manufacturing centers as it integrates into the world economy. Taiwan will likely become an upstream supplier for China's massive manufacturing production and gain more economically by further integrating its economy with China via a "Greater China" free-trade area (FTA) after its WTO entry. It will further reduce the cost of vertical integration among manufacturing industries across the Taiwan Strait and enable both China and Taiwan to become stronger competitors in the global manufactured goods market." INTERNATIONAL BUSINESS CASE STUDY

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Economic Factors 

Currently Acer has a large manufacturing base in china and which the overall cost has reduced which will help to become a status of cost leaders in IT & peripheral industry.

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Due to multi brand strategy most of the products are manufactured in the same region which will help to improve the lead times & reducing the cost of transportation. Also this will be a right approach to ever changing market requirements.

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Due to large scale manufacturing at Acer, has the privilege of higher bargaining power with its suppliers at the time of purchasing essential raw materials. Also due to buying power Acer can demand on suppliers for shorter lead times on accessory supply which also directly supporting to enhance speed of availability of the goods in the market. Hence the sales will be better and also easy to become market leaders with the reliability.

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Inflation, currency depreciation and appreciation of certain economies will affect the product sales.

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U.S. Dollar (USD) accounts constitute 90% of Acer’s expenses compared to 20-25% of its revenue, so the company benefits from a depreciating USD. Since mid 2008, the Taiwanese dollar (TWD) has appreciated markedly against the US dollar. The Euro (EUR) accounts for 40% of Acer’s annual revenue, so an appreciating euro would benefit the company’s bottom line.

Social Factors:

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Being a Taiwan product; Acer might be challenged by customers who have negative mindsets at reliability on Taiwan brands than their own regional brands.

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Acer has become market leader in providing low cost Lap tops might bring an impact on status in upper and middle customer segments.

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The social and cultural influences on business vary from country to country. It is very important that such factors are considered. For a multinational company like Acer, cultural difference influences the growth of the company greatly.


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In order to maintain the ethical standards of the organization, it is very must important that organization runs with good HR practices. Also it is Acer’s responsibility to consider in having alliances with social complained partners.

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They can have a negative impact on developed market and also can gain higher growth revenues in European market.

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Since the Europeans are more in to Green products they might reject some of Acer products, where Acer should look in to protection of products which are dying due to this reason. Certain cultures don’t accept cheaper products. Ex: Walmart in Germany

Technological Factors

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Technology is vital for competitive advantage, and is a major driver of globalization. It is especially true for IT industry whose growth is by a large extend dependent on technology innovation and advancement. And Acer's innovation strategy has a significant relationship with cross-functional cooperation and NPD (new product development) performance. For innovation strategies have proved the importance of NPD development. Consumers might be confused by the firm's too wide range of products. The global IT landscape is ever changing with new products and inventions being introduced every day, the competition facing Acer are ever fierce.

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Competitors can copy Acers technology and they can have a second move advantage making better products.

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Acer as an Asian high-tech company can produce newest, niftiest gadgets to the market where there more demand to high-tech fashion.

Legal Factors

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Acer has been brought to lawsuit by its rival HP due to infringing its patent including power management in notebook. Hence legal clashes of this nature are not uncommon in this area of IT due to technological over laps. Hence this a high cost expenditure.


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There can be situations that governmental actions on anti-trust and market power issues such as Monopolistic situations.

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Lawsuit could be bought under Acer due to technology from competition to hold their growth.

6. SWOT analysis Strengths 

Laid back approach of Acer shows patience. - In 2000 Acer began the transformation to marketing and service of IT products. Since that time Acer has strengthened their corporate competitiveness by adopting a unique Channel Business Model, which allows firm control of brand name, marketing, technology and products, global logistics, and service capacity. The model also permits better


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understanding of consumer demand and profit sharing among partners. As a result, Acer ranks the world's fourth largest PC brand in 2005, and is working aggressively to secure third place by 2007. Competitive advantages lie in its brand management strength, extensive global sales, marketing network, system implementation, and IC design. Acer's global expansion and diversity has spread its subsidiaries throughout the world. "The group was operating 80 offices in 38 countries around the world, employing more than 16,700 staff from 50 different nations". Furthermore, it has "joint ventures with local partners...to develop into a publicly traded local company in various different countries while maintaining a global brand" Flexibility allows market penetration faster than the competition. Acer is flexible because it acts in many different countries depending on specific characteristics, and it is able of satisfying demand by using national suppliers. "The flexible client server business model...responding to the trend toward increased dispersion and local autonomy". Furthermore, its subsidiaries constantly update relevant market information with the aim of acting when new products or market changes are required. "This structure allowed for faster decision making". Faster decision making can mean short turnaround time. "The turnaround time from idea to market dropped to only one or two months" "The high turnover aided Acer in achieving a 34% return to equity". Thanks to this, Acer can offer the newest products before any other company. Acer's flexibility also lies in the products that they market and service. Acer is the largest manufacturer of mobile phones in Taiwan. Acer has many innovations like the Aspire One laptop that let the user connect to the net almost anywhere with 8 hours of battery live. Acer presented the Tempo Smartphone series in 2009 to compete in the lucrative mobile phone market. Acer main factory is located in Taiwan which has low-cost labor and distribution advantage in the US market and Asian market. Acers price its products with low competitive prices to compete with the strong rivals and acquire the low-priced laptop market share.

Weaknesses 

Inexperienced international managers and cultural differences between its national and international staff lead to inadequate access to distribution centers. "Outsiders sometimes found difficult dealing with the intricacies of Acer's organization" and "People from advanced countries tended to feel they knew better than headquarters".

Image of Taiwan as low-cost, low-end product manufacturer was damaging to the INTERNATIONAL BUSINESS CASE STUDY

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name and image of Acer. Taiwanese industry is perceived as not as a quality products supplier. For instance: "Taiwan's reputation is for low-end products", "Consumers could not believe a Taiwanese company was capable of sophisticated technology" and "Made in Taiwan" had a low quality and low price perception . This affects company's quality image. The company is still suffering from low brand awareness in the US despite its topten position. Contributing to the low brand awareness, Acer might confuse consumers with too broad of a range of products. The PC, laptop and mobile phone markets are extremely competitive and require frequent innovations to keep up or exceed the customers’ expectations. The laptop customers expect new functions and improved computing power at least once every year. Innovations and changing market demand needs strong and flexible supply chain to execute the successful innovations and deliver them to the market before the competition.

Opportunities 

Improve Acer's brand name awareness. The company is in a good position for creating a well-known brand name in all its markets because it has developed structures throughout the markets. "The use of joint ventures to build international capability . . . and help raise awareness of the Acer brand". Using its broad product base puts Acer in a good position because of the current convergence of the computer and consumer electronics markets. Rebranding will help Acer to improve brand name awareness. Example: Lenovo The company's structure is arranged for a possible return to its roots . Even thought the company wants to direct its strategy towards being an international IT distributor, it has the option to come back to its origins if the situation is bad. "...Acer always retained the option of returning to being a supplier of components and systems sold by the big brand names". The strength of Acers size and flexibility will allow the company to adapt to the rapidly changing computer industry. Acer had competed on delivering a reliable PC’s and laptops at a competitive price. Similar market entry model would be useful to enter the eBook Reader market and the iPad market. Acer would be a good competitor in the eBook Reader market and had the ability to enter a new market of acquire an existing manufacturer. Acer was successful in acquiring Gateway, emachines and packard bell. This success will help Acer to integrate its existing assets or set up new manufacturer to producer eReders or similar products that does iPad functions. Acer can also compete in the Asian market by using its low price model. The Asian market is huge and would consume many of Acer’s products if marketed well.


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Threats 

The laptop and PC market are extremely competitive. There is a possible expansion barrier due to Acer's philosophy to spread its shares throughout all its subsidiaries and partners; the company could have problems of expansionism. "Taiwan enforced strict protectionist barriers against outside capital...no foreign institution permitted to own more than 7.5% of a listed company in Taiwan". Lose of company's control is a negative consequence of Acer's share philosophy and the company's chief could lose control. "Without majority control some questioned whether he (Shih) could maintain his hold over the group" Increased competition due to the movement toward disintegrated computer components. "North American and European markets are dominated by "big guns" like Intel and IBM - and Acer cannot compete on its own in these markets". The risk of substitute in the market is high because the competition is always developing new kinds of technologies which can be a substitute of the current products. This creates a high awareness among the companies that want to produce the newest products in the shortest time. Threat could be dyeing pc market and the mobile devices are becoming more powerful and more faster and trying to imitate pc technology


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7. Ansoff Matrix INTERNATIONAL BUSINESS CASE STUDY

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Ansoff matrix was used to identify the strategic direction of Acer Inco. Identification of possible development directions build on an understanding of an organisation’s strategic position. Development directions are the strategic positions available for an organization, in terms of products and market coverage. Significance of this matrix is that in practice, a combination of development direction is usually perused if organisations are to develop successfully in the future. (Johnson, Scholes & Whittington; 2005).

Strategy Development Directions; Ansoff’s Model (Source: Johnson, Scholes & Whittington: 2005)

According to the Ansoff matrix Acer has used three strategy development directions. 

Market Penetration – Concentrates on protecting and building an organisation’s current position (Johnson, Scholes & Whittington: 2005).

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Product Development – is where organizations deliver modified or new products to existing markets (Johnson, Scholes & Whittington: 2005). In 1996 the company expanded into consumer electronics, introducing a host of new, inexpensive videodisc players, video telephones, and other devices in order to boost global market share. Gianfranco Lanci announces that Acer will launch 4 new smartphones & a series of "Internet Devices" by the end of May 2010 which will run version 4.0 of its Shell user interface


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Market Development - is where existing products are offered in new markets (Johnson, Scholes & Whittington: 2005). At present Acer has penetrated the Australian, Indian, EMEA region & North American market by maintaining subsidiaries & in some countries by acquiring businesses. In Australia Acer has become the 3rd largest PC vendor & it has achieved the countries highest overall market share in notebook PC & tablet PC sales.In North America they acquired Altos Computer systems, Texas instruments` mobile computing business & became the 4 th leading notebook manufacturer in USA. New mobility market example: every sales person who carries a laptop can be replace by a mobile.

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Diversification – is a strategy that takes an organisation away from both its current markets and products and enters into a new market with new products (Johnson, Scholes & Whittington: 2005). Available information does not indicate any strategic developments by Acer focused on ‘Diversification’. But Acer could have used Packard Bell to diversify as PB was into electronics & plasma TV.


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8. Porters five forces analysis

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Bargaining power of consumers: (HIGH)

There is a high bargaining power for the consumers due to rising demand and rapid growth in IT industry. Market is growing from netbook to smart phones and now tablets. Acer is having end to end marketing strategies where it identifies the exact customer needs, and using its knowledge and skills to exceed their expectations. 

Bargaining power of suppliers: (VERY LOW)

A feature of the markets which Acer operates is the necessity for co-operation with suppliers of technologies such as operating systems and micro processors. Currently they are adhering to a channel business model that involves first class suppliers, where they share the profits among partners. But their bargaining power is very low due to procurement. 

Threat of substitutes: (MEDIUM)

Countries such as India are manufacturing similar products for low price which can be used as a substitute for Acer’s products. But customers who seek for good quality products want go for low price products. Therefore threat of substitute is in medium level. Substitutes can be mobile phones, mobile devices, play stations, and satellite TVs.


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Threat of new entrants: (LOW)

Threat of new entrants seems to be low, since initial capital requirements are high and PC business requires high technical understanding. And brand identity plays a main role in PC business. Customers seek for popular brands in order to avoid crashes in their computers. 

Industry Rivalry: (HIGH) Industry rivalry seems to be high, since the market which Acer contend is high competitive. Acer’s main rival is Lenovo, which is a multinational/ globalizing technology corporation that develops, manufactures and markets desktop, laptop and netbook personal computers, drivers, IT managements software, and related services.


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9. Porter’s Generic Strategy

According to Michael Porter’s Generic Strategies Theory, there are three main generic strategies, Cost Leadership, Differentiation and Focus. Focus is again subdivided into Cost Focus and Differentiation Focus as depicted in the diagram below.

Porter illustrates that SBUs can accomplish competitive advantage by differentiating their products and services from competitors or through cost leadership. Furthermore, the SBU could target a narrow segment or adopt an industry wide competitive scope. Hence it is imperative for a SBU to craft a unique and valuable position by which the SBU can attain competitive advantage in the market. Therefore the SBU should adopt a strategy in consideration with the macro environment, the industry and its core competences. The formation of a “fit” among the activities of the company is of paramount importance for a SBU’s success. The foundations of competitive advantage or to gain a market edge are derived through differentiation and cost. Cost leadership speaks about how an organisation gains advantage with a lower cost base and economies of scale in comparison to its competitors. Differentiation is created by making your product or service unique and different to that of your competitors. Nevertheless Porter’s explanation stresses that a SBU should make a choice between differentiation and cost leadership, if not it will be “caught in the middle”. This concept has given rise to criticism over the fact that Porter’s hypothesis lacks flexibility and there is an evident middle ground between the strategies Acer now sells 13.4% of the world's PCs, ahead of Dell's 12.4% but far behind HP's 21%. On Feb. 9 the company reported its biggest quarterly profit in almost three years, with earnings up 25% to $109 million. Shipments increased 28%, well ahead of the industry INTERNATIONAL BUSINESS CASE STUDY

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average of 15%, as consumers flock to Acer's inexpensive offerings. It's already the leader in netbooks—the small, low-cost machines it launched in 2008—and it's neck and neck with HP for all portable computers. Let others take the lead on the newest, niftiest gadgets and stay focused on the basics of churning out quality computers at low cost. "I cannot waste resources," Acer Chairman J.T. Wang says. When it comes to launching the latest innovations, "We can be No. 2. It's O.K. with us." That's why Acer let a Taiwanese rival, Asustek, make the first move in netbooks. Once the machines proved a hit, Acer swooped in and became No. 1. Acer's operating margin in the fourth quarter was 2.95%, an improvement from 2.24% in the third quarter but far behind the 4.71% of HP's computer division. Worries about profitability have helped push Acer's Taipei-listed stock down 13% since a Jan. 15 high, vs. a drop of 10% for HP and Dell. The company is strongest in sales to consumers, using four brands to cater to various segments: eMachines for those who focus mainly on price, Gateway (in the U.S.) and Packard Bell (Europe) for the middle tier and Acer for technophiles. In November Lanci began rolling out a new line of servers—bigger, more robust machines used by companies for data storage, number crunching, and network management. By yearend, Lanci expects servers to account for about 4% of Acer's revenue, offering margins that are roughly double what the company earns on PCs. Lanci predicts that the new servers, plus additional staff devoted to corporate sales, will quickly pay off. Acer is developing a Kindle-like e-Reader, laptops running Google's Chrome operating system, and devices to compete with Apple's iPad. In 2009 Acer launched its first smartphones. Lanci expects to sell more than 2 million of them this year, and by 2013 he aims to get 10% of revenues from smartphones. Soon Acer will open an Apple-like app store offering programs to run on these new gadgets. As all kinds of new devices hit the market, Lanci says, he's less concerned with dominating the PC business and more interested in being the leader in electronic gadgets of all kinds. "The industry is going to change a lot in the next five years," Lanci says. "To become No. 1, we need to continue to focus on mobile...the smartphone is just the beginning of the story." ( http://www.businessweek.com/magazine/content/10_10/b4169058662305.htm )

In conclusion they are in to Cost leadership and however in analysing the strategy of Acers there is a stronger link associating the Company with Porter’s differentiation strategy as opposed to a cost leadership strategy.


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10. Segmentation, Targeting and Positioning 

Market Segmentation is “The subdividing of a market into distinct and increasingly homogenous subgroups of customers, where any subgroup can conceivably selected as a target market to be met with a distinct marketing mix”.

Acer worldwide map

( http://www.acer.com/worldwide/ )

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Market Targeting is after evaluating different segments the company now must decide how many segments to serve – target market selection. This depends on the market attractiveness. Market attractiveness could be measured:

1. Price sensitivity of the segment 2. Potential loyalty 3. Likely cross spend 4. Growth potential


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(www.acer-group.com/public/Investor_Relations/pdf/Acer_Q3_2010_Investor_Conference.pdf )

Market Positioning is way the product occupies the consumers mind in relative to competitive products. Involve in implanting brand unique, benefits and differentiation in customers mind. Positioning refers exclusively to a mental concept.

“Positioning is the act of designing an offer so that it occupies a distinct and valued place in the minds of the target customers” – Kotler


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11. Value Chain Analysis This evaluates the capabilities embedded in organizational processes. Value chain is simply a diagram illustrating the various value-added processes/activities that occur inside a business. The firm’s margin depends on its effectiveness in performing these activities efficiently, so that the amount customers are willing to pay for these products/services exceed the cost of these activities in the value chain.

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Primary Activities

In analysing the value chain of Acers’ operations, outbound logistics, marketing and sales and services are the dominant primary activities.


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Primary activity

Description

Pick up freight management, provision of packaging materials, data wiping Inbound logistics and sanitisation, asset and customer label removal, standard op erating environment reinstallation, secure product destruction & disposal, testing and full asset reporting and services for end-of-lease/life, multi branded IT products.

Operations

Outbound logistics

Marketing and sales

Service

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Breaking the barriers between people and technology that targets different customer needs in the global market by offering unique set of multi brand products which reach high customer satisfaction. Company encourages partners and suppliers to join Acer in an efficient supply chain and service network that provide customers with competitive pricing, fresh technologies, and quality service. All the marketing and promotional events by Acer are conducted in accordance with local statutes and regulations. And by combining its corporate brand images: "prompt," "teamwork," and "efficiency," Acer also acts as a longstanding sponsor for many elite sports organizations from around the world. Acer became International Olympic Committee (IOC)'s worldwide partner in computer facilities. Treating customers with respect and decency, while focusing on service, quality and value. Dedicated to helping people improve their lives through technology and delivering first class products and services. Strive to help consumers better understand on products and services provided, while opening up multiple channels of communication to acknowledge their input and demands.

Support Activities

The main support activities of Acers’ comprises of infrastructure, human resource management and technology development.

Support activity

Description


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Human Resource Management

Technology

Infrastructure

Acer understand that "People Matter," and with that in mind, Acer devoted to creating a healthful, quality workplace, organizing many recreational and self-improvement activities, and offering a number of welfare programs. Employee feedback is instrumental in improving corporate performance. Acer endorses an open door policy that allows employees to speak to their supervisors anytime; they can also voice their opinions and needs via a proper channel. “Fresh technology enjoyed by everyone, everywhere” The latest technology to cater for today’s workloads and to scale up to tomorrow’s focusing on customers’ need, keeping solutions simple and innovative, and able to solve real life business issues Acer Group offers exceptional solutions, to meet today’s demanding business requirements, delivering a series of server products flexible enough to be easily repurposed for future use and investment protection

Acer has created an organizational structure, which helps it to meet the rapidly changing market needs in this ever-changing industry.


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12. BCG Matrix (Product Portfolio Method) The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long term value creation, a company should have a portfolio of products that contains both high growth products in need of cash inputs and low growth products that generate a lot of cash. It has two dimensions: market share and market growth. The basic idea behind it is that the bigger the market share a product has or the faster the product’s market grows the better it is for the company.

Placing Acer products in the BCG matrix results in four categories in a portfolio of the company: Product

Business

Market share

BCG Position

Growth Rate


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HIGH

HIGH

STAR

HIGH

HIGH

STAR

LOW

HIGH

CASH COW

LOW

HIGH

CASH COW

LOW

HIGH

CASH COW

HIGH

LOW

QUESTIONMARK

HIGH

LOW

QUESTIONMARK

HIGH

LOW

QUESTIONMARK


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HIGH

LOW

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LOW

QUESTIONMARK

LOW

DOG

Stars (high growth, high market share)

Use large amounts of cash and are leaders in the business so they should also generate large amounts of cash. Frequently rough in balance on net cash flow. However if needed any attempt should made to hold share, because the rewards will be a cash cow if market share is kept. 

Cash cows (low growth, high market share)

Profits and cash generation is high, and because of the low growth, investments needed are low. Keep profits high. Foundation of the Acer Company 

Dogs (low growth, low market share)

Avoid and minimize the number of dogs in the company. Beware of expensive ‘turn around plans’. Deliver cash, or liquidate. 

Question Marks (high growth, low market share)

Have the worst cash characteristics of all, because high demands and low returns due to low market share. If nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog. Either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash.


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Acer Question Marks products can improve the market share by using their brand name and channel distribution strategies. The BCG matrix method can help understand a frequently made strategy mistake: having a one-size-fits-all-approach to strategy, such as a generic growth target or a generic return on capital for an entire corporation. Acers’ cash cows business units are often allowed to reinvest substantial cash amounts in their businesses which are mature and not growing anymore. Dogs Business Units even worse, investments are made now and then in hopeless attempts to “turn the business around”. As a result of all Question Marks and Stars Business Units get mediocre size investment funds. In this way they are unable to ever become cash cows. These inadequate invested sums of money are a waste of money. Either these SBUs should receive enough investment funds to enable them to achieve a real market dominance and become a cash cow (or star), or otherwise company is advised to disinvest and try to get whatever possible cash out of the question marks that were not selected.


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13. Attack & Defense Strategies There are number of strategies which a company is able to adopt in order to increase the sales & to protect their market share in the face of competition. Acer Inco. has followed many attack & defence strategies to overcome the competition



Attack strategies (Market Share)

This is the process of taking over smaller firms in the market place, in order to build up market share. Acer approached this strategy by acquiring Gateway (US computer maker) for US$710 million. Takeover doubled Acer’s market share by 5.2% & were able to sell 18.6million PC` in USA. In 2008 Acer was able to purchase 75% of Packard Bell. By this they were able to gain foothold in Europe & attack their competitor Lenovo. 

Defence strategies

Mobile defence This involves a company keeping on the move through innovation, market expansion & diversification into new market places. Acer was able to open up subsidiaries in Australia, India, EMEA region & also acquisitions such as, Atlos computer systems & Texas instruments` mobile computing business in USA. By this Acer was able to increase their market share globally.


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14. Corporate Social Responsibilities & Governance Since its establishment, Acer was driven to work in the spirit of "what is taken from the community is used in the interests of the community." In its pursuit of becoming the world's number one, Acer gives back and reaches out to the people by organizing many community-centric causes its operating bases around the world, or via both the Acer and Gateway Foundations. And to inspire Acer staff to partake in social outreach, the Acer Volunteer Team was founded, and Volunteering Service Leave instituted in 2009, so that Acer employees can reach out to a greater number of people in need of help under the auspices of the company. In 2010, Acer is to launch a Digital Opportunity Project to assist more disadvantaged groups in excelling in digital technologies by means of designated educational programs. A share platform is set up within the company so that more members in the Acer family can enjoy success stories of Acer's international subsidiaries in the outreach program, while sparking more ideas to encourage community participation. Here's a closer look at the three missions of Acer Foundation: Research and develop technology and management: through cooperation and international exchange between industry and academia, Acer aim to upgrade production, enhance international competitiveness of corporate Taiwan, and promote Taiwan's experience on the international stage. Cultivating talents: Company established two personnel training centres - Aspire Academy and IC Design Academy. These institutions integrate many years of Acer Group's accumulated experience in business management and information technology, and introduce first-rate management courses and teachers from the E.U. and U.S. On the one hand, these academies provide long-term training to personnel required for corporate internationalization in the Asia region. On the other hand, they provide an opportunity to cultivate the talents of E.U. and U.S. region corporate personnel dispatched to the Asia Pacific region.


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Reward and promote service: Acer promote public welfare activities by rewarding academic or corporate research in information technology and business management. Long-term rewards and promotion of deeds that comply with Acer Foundation objectives are necessary to broaden the effects on society.


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Acer Case Study

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