Acer Case Study

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1. The Acer company was founded as Multitech in 1976. The culture at the beginning was very close-knit, flexible and promoted delegation along with a focus on employee training. In 1983 the self-brand PC was launched and the company started venturing into international markets. A target of $5B sales was set under the dragon dreams paradigm and triggered various decisions culminating in acquisitions, alliance with foreign partners and distributors, and floating offshore companies. The launch of the 32-bit PC, beating IBM to market attracted immense OEM demand. Acer brand was registered and an IPO was floated to raise funds for fueling the global expansion. The rapid growth was met by a shortage in human capital and new external hires were brought in which raised resentment amongst the old timers and led to high employee turnover. The expansion policies to achieve gains via acquisitions were floated but in reality did not turn out worthwhile in the end and results were dismal. Dell with its direct selling model along with Packard Bell established themselves as the competitors and margins shrunk as a result.

Shih stepped down as the president and Leonard Liu, a senior executive from IBM, was appointed as the CEO and the chairman of AAC. In his reign, Acer acquired Altos which escalated Acer’s losses in due course. A new management approach was implemented and accountability of the P/L was enforced. A more robust organizational structure was in place. SBU and RBU were defined and new RBUs were setup. There was a tight control for costs and non-performing employees were laid off. This move was resented by the managers and precipitated half-hearted implementation of the new directives.

Acer at this point faced a number of intra-organizational issues. To resolve those Acer first and foremost required a global strategy that emphasized economies of scale and offered greater opportunities to utilize innovations developed at the corporate level. Second, exerting strong centralized management control over all local-market operating practices which was also indispensable. Third, a detailed SWOT analysis and a thorough due diligence would have helped in better decision making and synergy when it came to corroborating JVs and alliances to expand globally and retain growth. The focus should have been on creating a sustainable competitive advantage instead and maintaining a fit with its environment.

Fourth, the company had to implement better internal processes to achieve efficient coordination and effective communication along with seamless integration of business units for their operational and functional activities. Fifth, result oriented resource and knowledge sharing systems were required in order to develop a viable supply chain mechanism to mitigate political and social capital concerns. Sixth, the change in the status quo should have been accompanied by a potent change management framework, which could have created a shared understanding and a “buy-in” of the common vision. This coupled with better incentive structures would have reduced the attrition rate and enhanced the performance across BUs and for the company overall as well.