ACER and the launch of the Aspire:
« global brand, local touch »
ADAM BenoîtDE SALINS Arthur
KAZIHISE Nina LysetteLOU Liandi
MORIN ClémentSQUALI Rhita
From a centralized global strategy
Strategic Business Unit TAIWAN
Product Development
Assembly Marketing Sales
5 Regional Business Units
(Acer America )
Late 1980s: ACER’s Chain-value restructured because of price drops and tougher competition
Manufacturing
Upstream activities Downstream activities
The New organizational structure in 1992
ACER group SBU (Taiwan)
Acer AmericaRBU 1 RBU 2 RBU 3 RBU 4
Assembly center 2 (Malaysia)
Assembly center 1 (Singapore)
Assembly center 3
Supplier S3
S2
• Independence of RBUs • More autonomy in decision making and product development • Decentralization of activitiesGOAL: flexibility and responsiveness« Client-server Model »
• Outsource low-value activities (assembly) to external contractersGOAL: Gain efficiency and economies of scale
Product
• Global Integration axis: Capacity to coordinate the firm’s value chain activities accross
the world to gain economies of scale and efficiency
• Local Responsiveness axis: Capacity to create products and processes which meet local
markets needs
The global integration and local responsiveness Framework
Global integration
HIGH
LOWLocal
responsivenessHIGH
ACERPC INDUSTRY
• Global competition• Uniform technology• Standardized products• Value-chain activities spread around the world
• « Global brand »:• assembly centers• standardized
processes• « Local touch »:• Autonomy of RBUs• Local needs
A mix between global integration strategy and ability to meet local needs
Make Acer a global brand with Aspire
Shih’s vision: develop a product with global aspiration:“ To offer products with distinguished brand characteristics that target
different customer needs in the global PC market” (acer.com)
Shih agreed to give Culver entire autonomy on this Aspire Project
1994: Michael Culver AAC Product manager uses the opportunities offered by the “client-server model” to launch the Aspire Home multimedia PC (first time product development outside SBU)
After good results, return rate increases (15%), market shares go down, profit is negative
Problems with Aspire in the USA and globally
Aspire based on market analysis for one particular country (USA)
AAC had no competencies in designing and developing products
No fit between global brand strategy and local mix marketing• No global pricing strategy: premium (Europe) to low cost
(Taiwan)• No global product position: fashion (Singapore), basic
entry level computer (Taiwan), multimedia PC (USA)• Localized and inefficient promotion
STRATEGIC ISSUES
Lack of communication between employees
• No knowledge sharing and communicaton between AAC and SBU (US launch). Expertise on the product = AAC
• No communication and trust between the RBUs for the global launch.
• « Not invented here » syndrom: SBU engineers frustrated because have no idea of how to design the product. They feel they have only become components suppliers
• Too many people to deal with for Culver (70 contacts) Difficult to oversee the project
MANAGERIAL ISSUES
An organizational structure with multiple boundaries
Too much independence for AAC and lack of transparency with SBU.
No reports or cooperation between SBU and AAC on the project (no control from Acer HQ)
Lack of coordination tools to prevent easily solvable technical problems (Sub-assemblies components incompatibility)
AAC’s product would have to be modified to suit RBU’s local markets (Ex: Hong Kong Chinese version, phone software…)
Each RBU must work on specific solution for the product (costs time and money)
ORGANIZATIONAL ISSUES
Rethinking Acer’s global strategy
New segmentation: Seeing the hard implementation of a global marketing strategy for Aspire, Shih decided to segment the market differently according to single appliances:
Games FamilyBusiness Internet
Electronic stores Office stores
The market position is universal and marketing mix easily global. Avoids confusion for the consumer.
Malls
New pricing strategy: low entry-level price range to compete with price cuts by competitor Compaq
Reorganizing management roles and responsibilities
Autonomy to the RBUs: Lack of control over activities and coordination between HQ and subsidiaries!
Taiwanese engineers sent to AAC so that they feel responsible of the product design during the Aspire launch in USA
Taiwanese managers were sent to AAC and created 3 teams:
Customer Services program
Manufacturing Improvement
Strengthen US market
GOOD RESULTS with AAC turning profitable again
Go back to more centralization and coordination from Taiwan?
Promoting coordination between AAC and Taiwanese SBU managers is the top priority
Go back to Taiwanese-based efficient organizational culture
More centralization without cutting entrepreneurial initiative
Global integration and coordination brings efficiency. Local empowerement brings flexibility and creativity
Necessary to balance both aspects
Strategic Recommendations
Can Acer be at the same time a global brand and a major supplier?
The faillure of Aspire shows:• The inability of Acer to mix both businesses • The highly-ressources consuming aspect of the computer
market
We suggest:• Either a spin-off of one of the two activities to focus on a
core business• Either a complete restructuring to enhance the product
division within the company
To conclude, we « guess » Shih should follow its idea of becoming a global brand
Strategic recommendations
Furthermore he should try to go further from a global strategy to a transnational strategy with high global integration and high local responsiveness:The only way to take advantage of economies of scale and be adapted to every local market
Keep marketing Aspire locally, but define a global positionning of the brand (middle-price computers)
Looking at opportunities for creating XCs• It would allow Acer to position itself both on the middle-
price and low-price computer market
Acer today? Was Shih right to remain stubborn on his positions?
Acer’s motto on its website: « empowering people » Kept this client-server model with autonomy and freedom of initiatives.
Currently (2009) the world’s No. 2 total PC and notebook player SUCCESS in setting up a global brand
THANK YOU!
ANY QUESTIONS?