Acer Group: Corporate Strategy and Challenges | Free Essay Example

Acer Group: Corporate Strategy and Challenges

Words: 607
Topic: Business & Economics
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According to the Acer group website, in 2006, Acer had 5,300 employees working for them in over 100 countries worldwide. Open employee communication among employees is encouraged which not only allows the company to understand employee concerns but also helps employees to find common ground and build lasting relationships. The website also claims to have suitable educational programs in place to improve employee productivity and company competitiveness, with a focus on ensuring employee work-life balance. According to the website, Acer meets the respective national labour laws with full compliance.

Since the performance of Acer depends heavily on the performance of its supply chain, according to SOMO (2009), there is a need for corporations to have extended corporate policies to improve supply chain responsibility. Although supply chain relationships are complex, Acer has sufficient stake in the supply chain to enforce improvements throughout the chain. For instance, in 2005, Acer had a 32.5% stake in Wistron Corp, which owned Wistron Infocomm located in the Philippines. Slob (2005) who conducted research for SOMO found that 30% of employees in Wistron Infocomm worked 72 hours per week and women have to work overnight which is against the Philippine Labour Code. If Acer really wants to improve its overall performance and gain benefits from vertical disintegration, it should start applying its corporate human resource policies across the supply chain.

The computer market mainly comprises of components, minicomputers, desktop, server, mainframes, operating system, and application segments. In the early ’90s, Acer embarked on an ambitious diversification strategy and focused on being a vertically integrated company, amassing as many patents as possible with the aim of developing its own brand. In an attempt to diversify into the computer component manufacturing market, Acer entered into a joint venture with Texas Instruments for manufacturing DRAM, a type of memory chip used in computers. Later Acer entered the minicomputer and PC server segment, with the acquisition of Counterpoint Computers and Altos respectively (Guerrieri et al, 2001).

Acer’s core strengths are in the PC desktop segment but its diversification strategy helped it grow in related markets from a small company into an international organization in a fairly short time. In the past two years Acer has made strategic acquisitions such as Gateway in 2007 and Packard Bell in 2008 all these again is related markets. However to further stimulate growth Acer has tried to enter non-related markets such as the gaming and phone industry. In 2008 Acer launched the Aspire Predator series for the gaming market (Acer group) and in 2009 introduced its Tempo line of smartphones running Windows Mobile (Whitney, 2009). All these strategic acquisitions are in line with the Acers goal of moving higher up the value chain by focussing on brand marketing.

Acer started out as a manufacturing company and in 1997 had production facilities in several countries besides Taiwan and was one of the few PC companies that had manufacturing capabilities to produce complete product lines (Tsai and Cheng, 2006). In the PC industry, the value chain typically involves research, design, manufacturing, sales/marketing, and after-sale service. Stan Shih the founder of Acer proposed the smiling curve which plotted the value chain of the PC industry on an XY axis.

According to this proposal, manufacturing has little value as compared to R&D and brand marketing. Acer has tried to separate its Original Design Manufacturing (ODM) business from brand marketing in an attempt to move up the value chain. From 2000 onwards, Acer has shifted from a purely manufacturing company to a company that focuses mainly on brand marketing. Implementing this supply chain strategy essentially meant vertical disintegration causing Acer to outsource manufacturing to contract manufacturers.

References

Acer Group, 2009. Employee Relations. Web.

Guerrieri, P. et al, 2001. The global challenge to industrial districts: small and medium-sized Enterprises in Italy and Taiwan. UK, Biddles Ltd. Web.

SOMO, 2009. Meagre improvement labour issues computer industry . Web.

Slob, B., 2005. Acer Incorporated SOMO: Center for Research for on Multinational Corporations. Web.

Tsai, T and Cheng, B., 2006. The silicon dragon: high-tech industry in Taiwan. UK, MPG Books Ltd. Bodmin. Cornwall. Web.

Whitney, L., 2009. Acer aims to overtake HP in notebook sales. Web.