Acer, Inc. Taiwan's Rampaging Dragon

¶ … Acer began as an electronics company in 1976 and quickly grew to one of the largest makers of PC's in the world. The Taiwanese company embraced a business model that was starkly different from the traditional Chinese business model in which managerial controlled was prized. Instead Acer embraced a corporate culture that thrived on getting new ideas and input from employees and using these ideas to develop new products and services. For several years the company grew rapidly and as a result new managers were hired and brought into the fold.

However these managers were hired from outside of the company and although these new managers were learned in an area of international business and they did not understand the corporate culture of Acer and as such the climate of the began to change. In the midst of this the expansion of the company continued but the company was also experiencing financial difficulties, caused by a dilution of stock price, entry of other PC makers into the market which caused a decline in market share and a decrease in profitability.

In addition "Projected 1989 results indicated that the overextended company was in a tailspin. Earnings per share were expected to fall from NT $5 to NT $1.42. The share price, which had been as high as NT $150, fell to under NT $20 ("Acer, Inc.: Taiwan's Rampaging Dragon")." To assist the company in remedying this issue Leonard Liu was brought into the company as the new president.

Liu was an executive who had worked at IBM and he attempted to change the organizational structure of the company by holding mangers accountable for their individual business units. However the company continued to suffer financially and in 1992 Liu resigned. Key Issues: The key issues involve the ability of the AAC unit to remain profitable if it is decided that the Aspire project will go forward.

A major marketing issue has to do with the ability of AAC to get a product to market with the multimedia design and aesthetic design that will be able to compete with other PCs also coming to market. This is a challenge because the other companies producing PCs have established brands. As such the Aspire computers would have problems in the area of differentiation. Stan Shih: The CEO of Acer has a difficult decision to make as it relates to the implementation of the Aspire project.

Although the company has been successful in the past, this particular business unit, AAC, has struggled in the area of turning a profit. AAC is not as stable as some of the other business units and as such Shih is having difficulty determining whether or not the Aspire project should be implemented. Mike Culver: Responsible for the Aspire project.

As head of the AAC unit of the company Culver saw the need to alter the design of PCs so that they could be differentiated from PCs that people used at work. Culver has good ideas but the case study indicates that there are many criticisms leveled against the Aspire project. These criticisms are mostly present because the AAC business unit just began to turn a profit again after three years of not doing so.

With this understood the project is viewed as being too risky for the company to implement. Define the Problem. The overall problem has to do with the management of the company and the response that management had to the initial expansion of the company. Over the years the company has attempted to adapt to the changing nature of the industry. However, ACER has experienced great difficulty in this attempt because of the management structure of the company.

When the company was small this issue was not as apparent but the growth of the company brought these issues to light. The loose structure of the company became an impediment to the productivity and success of the company. The company did not have the proper plans in place so that the company would have the needed mechanisms in place to ensure that expansion could take place without causing the financial tailspin of the company.

Because the company was distracted by the depletion of its profits it was not able to concentrate on predicting trends which placed the company at a competitive disadvantage. In several instances the company missed out on being the first to introduce products to market or the products that were released were antiquated and therefore did not sale well. Alternative Solutions: Correcting the problems at hand could be a difficult endeavor.

The following are some alterative solutions to dealing with the problems that ACER faces: Establish a better management approach: Although the approach developed by Liu has shown some promise and success, the approach needs to be taken more seriously and enforced at every level. Failure to do so will lead to great confidence and stability amongst managers and employees this stability is needed if the company is to remain successful in the future.

The pros of implementing this solution are that the company will be better equipped to handle the pressures of the market and to compete in a manner that can be meaningful and successful. The disadvantage of this is that older employees that have certain skill sets may have problems with such changes. Take the Plunge: At this point the company cannot afford to be careful. In doing a it is very likely ACER will miss the opportunity to enter the multimedia market.

The company must be willing to take risk, while also realizing that these risk are appropriate and a necessary aspect of managing the company. The pros of this solution is that the company will have a product on the market ha t is consistent with products being developed by competitors. This means that the company will have the opportunity to go head to head with its competitors. The cons of implementing this solution involve the.