Over the recent past, the global market has been characterized by a very high level of competition. This has been characterized by a very high level of competition. In particular, the market for computers and electronics, in general, has been increasing over time. This competition has increased as a result of the high rate of entry by new marketers. Therefore, there is a need to have an effective strategy for an organization to compete successfully in such a market.
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Despite the high level of competition, there are just a few major competitors in the market. These include Dell, Hewlett-Packard, Acer and Lenovo among others. These organizations control the largest share of the market. Over the past, Acer has managed to top in Taiwan and other markets through the sales of computers manufactured and marketed under its brand.
Acer’s strategy has been described as “divide and conquer.” Compare and contrast this to Lenovo’s strategy. As already noted, Acer has recorded a high level of performance through a remarkably high level of sales. However, the company has experienced serious problems in its effort to venture into the American market. For instance, the company’s market share in the American market fell from 15 percent to 5 percent between 1995 and 1997 (Keegan & Green, 2011). A similar case is to the European market. This is because the local market players are very strong and have already established strong brands. It, therefore, becomes difficult for the company to venture in such a market.
The divide and conquer strategy is a strategy that implies that it is easier to defeat a small group of rivals than one large group. According to this strategy, therefore, it is easier for an organization to win in a market with a smaller number of competitors than in one characterized by a large number of competitors. In China, Lenovo controls the largest fraction of the market and Acer is determined to overcome the company.
To expand its market share, Acer acquired the U.S. based company Gateway (Keegan & Green, 2011). This move led to a swift upward trend in performance in the global market. Towards the end of the year 2007, Acer was the world’s third PC marketer. This was to expand its operations and activities to other markets. To expand its market share, Acer implemented strategies that positioned them in a better position than that of its major rival Lenovo. Initially, the company was faced with many problems posed by poor recognition of the brand. Consumers questioned the reliability and the quality of the company’s products since the brand was poorly developed by then.
By acquiring Gateway which is based in the United States, Acer managed to develop its brand name at a higher rate. This is because the acquired company’s brand had already developed in the market. This also reduced the number of competitors the company was going to face. The acquisition of an American company also helped Acer to overcome the trade barriers.
To increase its market share, Lenovo acquired IBM Thinkpad notebook business, which significantly contributed to improving the performance of the organization globally. Similarly, this helped the company in overcoming the trade barriers in the market. The company also managed to use the IBM logo to market its products in the market. This had a significant impact in expanding its market share.
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Explain how the “global markets-local markets” paradox figures into Stan Shih’s strategy for China
Stan was convinced that Acer was not supposed to be the opportunity that remains unexploited. He proposed that the company should take the advantage of operating in its local market. This is because the company, for instance, can be able to reduce the operational expenses. It is easier for and to operate in a market that shares the same characteristics as the one that has different culture and a different consumer buying behavior. In China, the company managed to enjoy these advantages. The company also enjoyed the access to the local suppliers. This increases operational efficiencies hence reducing the operational costs both in the short run and the long run.
Determine what strategies Acer can apply to become the world’s third-largest PC Company, behind Dell and Hewlett-Packard
For the Acer to become the world’s third-largest PC Company, there is a need to come up with necessary strategies. There is a need to have effective strategies that will help the company expand its market share both in the local and in the foreign markets.
Over the past, Acer has recorded a remarkable performance which has resulted from various situations. For instance, the acquisition of Gateway helped in the development of the company’s brand in the United States. This is one of the major factors that have contributed to the company’s success. Another factor which has promoted the performance of Acer over the past is the introduction of the notebook product. This also had a major role in promoting the performance of the organization.
Although the organization could come up with a new product, it did not do that because this required the company to make a substantial investment. Therefore, the company had to apply other ways of expanding its market share (Acer Group, 2009). Since mergers have presented a recommendable performance to Acer, the company should consider acquiring a higher global market share through mergers and acquisitions. These methods can easily help the company in expanding its market share. For instance, Acer managed to defeat its close competitor Lenovo.
Even before the current economic crisis deepened, growth in the U.S. PC market had begun to slow down. Despite strong competition from Dell and Hewlett-Packard, Acer’s U.S. market share increased from 1 percent in 2004 to 3.3 percent by the end of 2006.
Analyze Acer’s prospects for gaining further share in the United States
It has been observed that even during the economic hardships, Acer recorded a positive change in its market share. Despite the competition that the company faced from the top world PC marketers Dell and Hewlett-Packard, the company’s market share in the United States increased from 1% to 3.3% towards the end of the year 2006 (Keegan & Green, 2011). This performance can be attributed to the competitive advantage, which the company enjoyed during the time. The competitive advantage enabled the company to enjoy unique advantages which contributed to increasing its market share.
During the economic downturn, consumers are not able to afford most of the things. In other words, consumers tend to cut down their consumption (Miller & Stafford, 2009). During the economic downturn period, the level of computer buying and upgrading functions decreased significantly. However, Acer managed to maintain a high level of sales because it offered lower prices to the consumers who were becoming more and more financially suppressed. Acer was applying the consumer-centric kind of business that helped the company to attract a significant number of consumers during this period.
Acer Group. (2009). Acer Incorporated 2008 Annual Report. Web.
Keegan, W. and Green, M. (2011). Global Marketing. New Jersey: Prentice Hall.
Miller, R and Stafford, A. (2009). Economic Education for Consumers. Mason, OH: Cengage Learning.