Acer Inc. is a leading multinational electronics manufacturer. It is based in Taiwan Acerland. One of the largest franchised computer retail chains in Taiwan is owned by the company. After HP and Dell, comes Acer in terms of being the largest computer makers in the world. Its product line-up includes desktop and mobile PCs these are also referred to as laptops.
The company also makes Personal digital assistants (PDAs), servers, displays, peripherals and e- business solutions for businesses, governments, education and home users.
The Acer history is really an interesting one. Initially, the original owner of the company was called Stan Shih who together with his wife Carolyn Yeh and a group of five others had founded the company in 1976. At that time it was called Multitech. After Tom Acer bought it, he renamed it to the Acer group company. (Prahalal, 1989)
The Acer Company began with a capital of $ 25,000 and eleven employees. At its initial stages, it only dealt in distribution of electronic parts and being a consultant in the use of microprocessor technologies.
It has its headquarters in Hsichih city, Taiwan. Tom Acer managed the company well and with time it started having dealings in other areas. Acer started focusing on branding business in 2002.
The company grew in size and expanded tremendously after reaching a decision of supporting the sales of its product lines through specific marketing activities, that utilize distribution channels effectively. (Luchs, 1996)
The Acer Company continued growing in size until it became really big.
The problem that it faced at this juncture is that its labor force contracted. The employees that had been hired initially could not be able to deal with the increase in the workload that the Company experienced that time.
Therefore other employees had to be recruited to be able to handle the workload efficiently. In 2002, the Acer group employed 39,000 people, supporting dealers and distributors in more than 100 countries. The performance of the Company made the U.S. get revenues of up to $ 12.9 billion that year. By the year 2005, Acer had employed 7,800 people throughout the world at the same time maintaining a global service network and sales. The U.S. continued getting an increase in its annual reviews from the Acer group.
In Europe Acer made an association with Ferrari Formula 1 Team and the former F1 team, Post Grand Prix in 2001. These Companies offer a popular line of LCD monitors and Premium laptops with Ferrari branding. Recently, Acer has announced that it will sponsor the Formula one team until 2008.And in doing so; it has broadened and strengthened its relationship with Ferrari. New Ferrari line of products has recently been introduced to North America, by the Acer Company. (Prahalal, 1989)
Acer has faced the challenge of competing in the first changing information technology industry. This has necessitated it to reformulate its corporate strategies and change its organizational structures three times since the early 1990s. The last two changes have occurred within a two-year period to overcome the emerging internal problems and respond to imminent external changes. I n 1990, it suffered a huge loss in the overseas investments.
The Company was questioned of its continued investment plans in the overseas where it was doing badly at the time. It was even criticized as moving very first. The shareholders and the employees did not offer much support to the company. The shareholders were very angry that the money they had so hard worked for was being lost to overseas operations. A solution had to be reached at, very first if the shareholders’ money was to be recovered.
The Company came up with a new strategy of “global brand, local touch”. This solved most of the problems that Acer was encountering at the time such as finance brand, name image, and management efficiency. In doing so, it rewrote the rules of the old tradition where multinational companies only went global instead of concentrating with the local market too. This made Acer become the number one Computer brand in Latin America, South East Asia and the Middle East. Acer Company faced the problem of establishing an effective Multinational management. It was too much for the Company to manage its businesses in other countries locally.
Therefore, the company was able to give up local efforts and in its place; it employed capable local executives for overseas operations. It was able to establish an effective management tool instead of quitting. This led to an office being established in the U.S. by the Acer group.
Acer has also at some point made losses by making acquisitions in the wrong way. The correct way was by following the thinking pattern, better known as the acquisition of counterpoint in 1987 and Altos in 1990. This was bad for the Company for it lost both talent and asset. The company had to pay goodwill and incur extra expenses. Fortunately for the company, both capital and workforce stayed with it to fight for the future. The management teams stayed to work for Acer, while the shareholders of Counterpoint and Altos, sold their stocks in exchange for cash. In the long run, the company was able to recover once more. (Jack, 1970)
When Acer Company was still small, its internationalization was relatively successful. It carried out its businesses without issues of inventory and credit lines. However, it had to extend credit lines and increase inventory when it expanded. This made it increase its operating cost and it also incurred bad debts and inventory caused by wrong forecasting. Acer slowly solved the problem by establishing its credit management system in countries where it has its operations.
The Acer group has numerous advantages and strengths that make it a leading computer manufacturing Company in Asia. First, it continues to tap the urge to become the boss by giving decision-making powers to local managers in Acer plants and offices around the world and letting them run operations like managers. This urge has kept the Acer Company strong in its operations as it is assured of effective management.
Secondly, Acer is unique in the fact that it has the willingness to give up control and majority ownership of its local operations. This motivates the growth of the Company, maximizing its profits ensuring that the Company runs successfully. Thirdly, the Acer Company has fresh technology for everyone. The Company ensures that the fresh technology it has is enjoyed by everyone, and everywhere. The Company’s Vision has strongly brought this out. This attracts many customers which translate to larger profits for the Company. (Prahalal, 1989)
The Company has also its weaknesses. The Acer Company cannot compete on its own in big markets. North America and European markets are dominated by “big guns” like Intel and IBM. These Companies are far much bigger than Acer. For Acer to match this competition, partnership and acquisition of other IT companies is a good alternative for Acer. The competitive advantage of Acer is gradually going away due too the introduction of internet .This has made the division of labor and capital disappear. The Company has to adapt to the changing world and develop new set of policies. (James, 1998)