Acer Case Study Essay
Acer’s strategy has been described as “divide and conquer. ” Compare and contrast this to Lenovo’s strategy Acer is a global corporation headquartered in Taiwan. The company’s products include desktop PC’s, laptop PC’s, tablets, monitors, and smartphones. Acer is a brand of the Acer Group which also owns Gateway, eMachines, and Packard Bell. The Acer Group’s long-term mission is to break the barriers between people and technology through the creation of empowering hardware, software, and services (Acer Group – The Brands, 2013).
The company believes the four different brands provide the company with different characteristics that allow them to target different customer needs in the global market. Acer is currently ranked the fourth largest computer maker in the world. The company has over 8,000 employees and had sales of $15. 7 billion dollars in 2011 (Acer Group – Overview, 2013). Lenovo is anther global corporation that operates with centers of excellence versus a traditional headquarters model. The large centers of excellence are housed in the United States, China, and Singapore.
Lenovo is very similar to Acer as they too manufacture desktop PC’s, laptop PC’s, tablets, monitors, servers, workstations, and accessories. The company’s long-term mission is to become the leading personal technology company in the world (Lenovo – About Lenovo, 2013). Lenovo is currently the second largest computer company, has over 26,000 employees, and sales of $21 billion dollars (Lenovo – About Lenovo, 2013). Both Lenovo and Acer have enjoyed successes but have utilized different strategies in order to get there.
The Acer Group adopted a divide and conquers type of strategy while Lenovo has adopted the strategy of developing and succeeding locally before going globally. In both cases, each company struggles with worldwide recognition. In the case of Acer, they decided to try and improve their recognition through acquisitions of brands such as Gateway and Packard Bell. Lenovo also decided to improve recognition by acquiring IBM’s ThinkPad business. To say that one company is doing it right and the other is doing it wrong is not a simple decision to make.
Each company has a strategy that they are utilizing and both are seeing increases in sales and market share so they are doing something right within their own strategies. A person could make the argument that Lenovo’s strategy is better because they are ranked number two and Acer is ranked number four in PC manufacturing. A company could be successful with either strategy but I do believe if the company cannot successfully support their strategy it will ultimately fail. I think Acer’s divide and conquer strategy is good and their decision to acquire companies such as Packard Bell and Gateway helped support their strategy.
I also like the Lenovo approach that decides to master something in their home market before taking it globally. If I had to pick one strategy over another I would pick Lenovo’s. I think it’s better to put your best effort forward rather than spread out and hope multiple people in multiple places all put their best effort forward. This to me is a more conservative approach but it is the one I would ultimately choose in order to build my brand. I personally thought that Lenovo and Acer were more “generic” brands of computers even prior to working on this assignment.
When I was in the market for a laptop a year ago, I saw both Lenovo and Acer in the stores and stayed away from them because I never heard of them before so I assumed they were junk. No matter which strategy either company uses, they each have a significant amount of work to do in order to improve their brand recognition in the United States. Explain how the global markets-local markets paradox figures in to Stan Shih’s strategy for China The idea of thinking globally and acting locally is itself a paradox because the person or company trying to be global and think local is a product of their own culture.
That person or company must learn, understand, and interpret the culture in which they are trying to act locally in. China is the fastest growing PC market and Acer ranks fifth in the market due to poor recognition (White, B. , 2009). Acer decided to increase their sales training and increase their retail presence by as much as 30% in order to try and surpass companies like HP, Dell, and Lenovo. Determine what strategies Acer can apply to become the world’s third-largest PC Company behind Dell and Hewlett-Packard.
Acer ranked number four in worldwide PC sales for 2012 behind HP, Lenovo, and Dell according to International Data Corporation (IDC) (IDC, 2013). In order for Acer to become the third-largest PC Company and surpass Dell, Acer has got to increase sales in the United States and China. China is the fastest growing PC market as PC sales in China surpassed the United States in 2011 (Kan, M. , 2011). Acer is currently in the top three in China, but Lenovo is substantially ahead holding about 30% of the market share compared to Acer’s 10%.
In the United States, Acer did not even rank in the top five of PC sales for 2012 according to IDC. I believe Acer has a good strategy for operations, logistics, and supply chain which have allowed them to streamline their processes, drive out costs, and increase profitability. The company has made some strategic acquisitions of companies such as Gateway and Packard Bell, but it’s still not enough to surpass Dell. Their biggest issue is name recognition in both the United States and China.
As I stated earlier, I live in the United States and view the Acer products as inferior or generic when comparing them to other well known brands such as Toshiba, Dell, or HP. Acer must take a much more aggressive approach to get their name more widely recognized in each respective country. I’ve seen Acer PC’s in the store and they are price competitive but not too many people are going to buy a PC from a company they never heard of. I suggest that Acer must market their products in order to educate their target markets as to who they are, how long they have been around, and the type of quality product they produce.
I personally know after doing the research on this report, I would not hesitate to buy an Acer tablet or PC, but not enough of us are enrolled at this university to make a difference in Acer sales. 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.
I believe the biggest reason for this is that Acer put a stronger focus on the consumer market versus the business market. Companies such as Dell were much more focused on the business market during this time period while Acer was offering low priced PC’s to consumers. I also think Acer’s lean supply chain allowed them to enter the U. S. market with substantially lower prices than Dell or HP which gave them another edge over their competition. The idea that Acer can grow further share in the United States is something that I believe will be difficult.
Companies like Dell, Apple, and HP already have a strong presence in the United States and while the shift from desktop and laptop PC’s moves to tablets, I think this battle gets even more difficult for Acer. Tablet sales in the United States topped 40 million units in 2012 (Statista, 2013). Apple has proven to be king of the tablet market having sold 30 million iPads out of the 40 million total tablets sold in 2012 (Statista, 2013). Recently we have seen other companies such as Samsung and Microsoft emerge with new innovations in the tablet market.
In addition to the new innovations, we have seen prices drop. This is another disadvantage to Acer. While Apple will never drop prices to Acer’s levels, Acer would have to demonstrate to the masses that their tablets are superior to Apple. At this point in time, I just think Acer is far too behind these companies in order to gain further market share in the United States in the tablet market but I do believe they will see slight increases in the laptop PC markets due to their pricing strategy.