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Case study of Acer Introduction Acer is a Taiwan based multinational electronics manufacturer which produces a wide range of products

including desktops and laptops, personal digital assistants (PDA s), servers and storage , displays , peripherals and e-business services for business, government, education and home users(Miller, 2009). It is now the second biggest player in the world following HP and ahead of Dell. Its slogan is "empowering people." However, the company went through many hurdles and adversities during its development. Founded as Multitech International Corporation in 1976 by Stan Shih, the company was conceived by many as another "Taiwanese PC cloner" (Mathews & Snow, 1998). In the mid-1980s ,the company changed its name to Acer (Latin for "sharp, acute") and began to implement a series of robust global strategies which Shih hoped would push the company onto the international business arena such as acquiring American computer firm and hiring former Chairman of IBM's software development laboratories in California Leonard Liu (Mintzberg, Lampel, Quin & Ghoshal, 2003). This strategy has letter proved to be a failure since the company saw a decline in 1990s. At this time, Shih began to re-engineer the company, carrying out series of organizational and strategic changes include the fast-food business model, the client-server organization structure and Shih's "21 in 21" vision. Such initiative has brought Acer great success. However, there is still much to be done for Acer to leap from world-class manufacturer and regional-market leader to global player (Temporal, 2001), this paper will take a review of the development of Acer, analyze its global strategies, in additional, the paper will describe how the literature on Cultural differences and their impact on management practice and can assist an understanding of the challenges facing corporations like Acer. Situation Analysis In order to better understand the situation of Acer, two methods have been used. One is SWOT analysis which examines the internal and external factors affecting the growth of the company. The other is the PEST analysis, which illustrates the environment in which the company is developing. SWOT Analysis Strengths Acer was one of the first Taiwanese firms to develop its own brand for international market; it has much experience in shifting from assembling to selling its own brand. Shih has succeeded in keeping his team of experienced Acer executives, and in retaining his reputation as one of the Taiwan's entrepreneurial visionaries. To strengthen competitiveness, the company has enhanced efficiency, cut costs and scaled down the organization by setting up independent business units, planning a new global business model, downsizing, diluting shareholdings, and the

development of the "fast food" style logistics and assembly structure (Mintzberg, Lampel, Quin and Ghoshal). Acer has built its international capacity by using joint ventures. For example, as it has been shown in the case, Acer has built joint ventures with MBB, a subsidiary of the German Daimler Benz group on hybrid electronic firm. In 1995, Acer also had joint ventures with partners in Thailand, Indonesia, India, Mexico, Brazil, Chile, Argentina and South Africa. By forming joint venture with local partners and encouraging local shareholders to invest, the company has managed to integrate global talent and capital reserves and finally increased its competitiveness in global market. Acer has always been putting constant emphasis on R&D which has led to many innovative products. For example, it launched its legendary Micro Professor MPF-1 and MPF-2 in 1981 which were designed and used as a training computer for learning Z80 assembly language (sbprojects.com, 2009). By constantly investing on R&D, the company had enjoyed a net profit grew by 43% per year from 1984 to 1988. Acer has adopted the flexible "client service"business mode which can harness basic human motivation for mutual support. Acer offered opportunities for committed talent from anywhere regardless of their backgrounds and introduced a flat hierarchy, with middle management involved in decision-making process. Weakness The resources available for Acer are slim. For example, people's perceptions for products made in Taiwan are "low quality" and "low price". Without a strong brand name, it is difficult for Acer to open global market. Its earlier strategies including the acquisition of Counterpoint, an American producer of multi-user system. Such practice has drained the company of US $ 100 million. The company suffered from the lack of managers with international experience. Opportunities The IT industry in Taiwan was dynamic and cost effective with much US educated and local Chinese talent, and tremendous production capability to support new technologies. The labor cost in Taiwan is low. Taiwan engineers earned about half of their counterpart in the US. And it is now moving to even lower cost manufacturing bases as it is opening plants in Philippines, Malaysia and China. Acer had benefited from Taiwan's aggressive government loans and enjoyed tax advantages and government funding for innovation R&D. Acer was the leader in distribution in developing countries and targeting a top five position in the US and top ten in Europe (Mintzberg, Lampel, Quin and Ghoshal, 2003),. Threats

Cultural differences posed communication hurdles for the company to localizing management abroad. In the early days of Acer, the company lacked presence in foreign market and had little understanding of what was needed to establish a sound presence overseas and of the knowledge on legal systems in foreign countries (Mintzberg, Lampel, Quin and Ghoshal, 2003). Competition in global IT industry has been strong. Acer is competing with some of the big players in the global market such as IBM and Compaq. For example, Compaq had realized the advantages of local production and opened a few offshore sites. PEST Analysis Political Factors The political factors have a huge influence upon the regulation of businesses, and the spending power of consumers. The political of Taiwan is rather stable and the world situation has been peaceful and sound in recent years, which is good for Acer's development. The Taiwan government had many preferential policies for the development of the company including tax advantages and government funding. Economic Factors The state of a trading economy in the short and long-terms is crucial to the growth of business. This is especially true when planning for international marketing. China's World Trade Organization (WTO) accession on trade and economic relation across the Taiwan Strait. According to a simulation done by Zhi Wang (2003) of George Mason University, it predicted 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." Social Factors: 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. Taiwan's reputation has been manufacturing low-ended products. Technological Factors 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 (Cooper and Kleinschmidt 1987). Many NPD studies in the literature adopt the taxonomy developed by Miles and Snow (1978, p.29) for

innovation strategies have proved the importance of NPD development. Consumers might be confused by the firm's too wide range of products. The simple design of AcerBasic was easy to copy. The global IT landscape is ever changing with new products and inventions being introduced every day, the competition facing Acer are ever fierce. Global Strategy There was a key global strategy that had been involved in its global expansion: international strategy, which was manifest in its "fast food business model." By implementing an International strategy, value is created from the transfer of home developed products to new foreign market. As the product is the same, development is at home. Marketing is localized, and so may be manufacturing, but there is little adaption of the product or its marketing to local conditions. Control of this stays at home. As it has been shown in the case: "components were prepared in a large mass manufacturing facilities, and then shipped to assembly sites close to local consumers. Retail buyers of Acer computers were guaranteed with the 'freshest ingredients-the latest technology-because Acer made them itself and sped them from Taiwan and Malaysia to its assembly sites." Such practice has helped Acer to standardize its product quality, tailor individual products to suit the need of individual customers and reduce inventory cost. It has also reduced the turnaround time from idea to market to only one or two months. By doing so, Acer was turning over its inventory more than seven times per year, making it one of the most efficient PC manufacturers of that time. This strategy id implemented for several reasons: 1. The IT industry is ever changing and bears the characteristics of high-technology, especially at the beginning of the industry's development; reducing cost was different where differentiation on non-price factors was more important. 2. Most of Acer's competitors were based in high-cost location, which gave Acer low cost pressure. 3. During that time, the level liberalization of the world trade and investment environment was low. However, this strategy became obsolete with the development of IT industry which is associated with a need to reduce cost. It also carries multiplication of manufacturing facilities, with the attendant issues of higher operating cost of supervision of quality. So gradually, Acer is shifting to a transnational strategy. In this process, Acer need to develop its experience curve and location economies while carry its competence to local economies and take note of local pressure to develop there. It is Difficult to pursue due to its conflicting demands. It requires business to simultaneously: Achieves low costs. Acer is moving to lower cost manufacturing bases such as Philippines, Malaysia and China. Differentiates across markets. The new mission statement for Acer is "provide fresh technology to be enjoyed by everyone". It means that Acer is dedicating itself to provide the best innovative, user-friendly and affordable technological products.

However, building an organization capable of supporting a transnational strategy is a complex and challenging task. In order to customize its marketing and products to the region, Acer adopted the "client server" model in responding to the trend toward increased dispersion and local autonomy. Cultural differences Cultural differences have a strong influence on international activity. For multinational companies like Acer, the literature on cultural differences is vitally important. According to Huff and Smith (2007), who are both professor of marketing and international business: "as organizations expand globally, they must find ways to accurately and fairly appraise the competency of managers from a variety of cultures". In the article "Managerial Competency Appraisal: A Cross-Cultural Study of American and East Asian Managers", Chong explores the managerial competency appraisal process using the MAP (Managerial Assessment of Proficiency) instrument published by Parry, (1992). Focusing on global strategies and management approaches from the perspective of people and culture allows business to understanding challenges they are facing as they are competing globally. For example, Acer' s acquisition of Counterpoint and Altos. Both acquisitions have backfired due to an insufficient understanding of cultural differences. This is because we are living in a world which is more and more globalized. "Most world trade either originates-or is purchased-in North America, Europe and the Middle East, and Japan and the Pacific Rim. To succeed in these markets, sales managers and sales teams need to understand how such factors as geography, culture, technology, and legal systems impact on business".(Gasconne, 2009) Cultural differences also have great impact on management since differences in work-related factors exist across a very wide range of cultures such as managing experiences and the evaluation to the situation which influences the decisionmaking. For example, Leonard Liu, who was the former chairman in IBM, organized the acquisition of Altos, wanted to build the foundation in the US, but ended up draining the company of US$100m. Compared with the management strategy of Leonard Liu, the philosophy of Shih is very different, just like the cultural differences between China and American. Acer's management motivated employee with the theme of dragon dream, which is of obvious Chinese characteristics. Shih's dream was to resurrect the greatness of Chinese nation, which had been repeatedly told to Chinese children. It is very different from the American style of business culture. An understanding on such vision may help the other companies, for example, competitors of Acer, to better understand what kind of challenges they are facing. Also ,besides the inaccurate assessment about the company situation and wrong prediction of the market, according to A.Kadir Varoglu(2009), The differences in national cultures create misperceptions, misinterpretations including categories and stereotypes, misevaluation that result in significant communication problems for management practice. It is especially true when it comes to the human resource management. Since culture influence recruitment process and practices, selection

process, training process, the performance appraisal and management process, and on compensation and benefit systems(Stone et. al, 2007). Conclusion Proper global strategies and a sufficient consideration of cultural differences are crucial for the survival of multinational companies like Acer. To compete globally is no easy thing. While Acer is going to gain a pretty strong foothold on the computer market in the global market thanks to Shih's vision, it is also planning to launch new products such as TV. While Acer's major revenue is likely to be still generated from PC selling, I believe that such new steps will open even wider market for Acer to deliver on new frontier in the new century.