Mba International Strategy Acer Case R&D China Decision

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ACER GROUP’S R&D STRATEGY
THE CHINA DECISION

 Position the PC & Acer’s strategy  Back to 1998 !

 12 years old is another age in PC industry !  Internet – Speed Experience using… 56 Kbits modem ! – No ADSL

 1st iMac
– 1800€

 Average PC
– – – – – PC Pentium II 333 MHz (x10) Disque Dur 5 Go (x50) 64 Mo de Mémoire (x40) Windows 98 (+4th generation) 1500€ 2

PC Industry : Value Chain & Key Figures
Semiconductors • Microprocessor • Memory • WLAN Radio Hardware Components • HDD • Motherboard

PC Platform Design

Support & Maintenance

Software

PC Platform Assembly

Sales • Direct Sales • Distribution • Retail

PC Industry : Value Chain & Key Figures
Retail & Distribution 15%

• Microsoft - Monopolistic ? • Intel is facing only one concurrent (AMD) • Retailers and distributors very large and powerful

PC Makers 10%

Microsoft 40%

Other Components 25% Intel 10%

Leaves very little in the value chain for PC makers to work with !!!

Acer: Company profile
Taiwanese company founded by Stan SHIH - is one of the leading manufacturers of IT hardware product in the world. Key facts • Market leader in 13 countries,Top-5 in more than 30 nations globally. • World Top-10 most popular brand

Mission statement: “fresh technology enjoyed by everyone, everywhere" Innovative organizational structure and management approach were implemented to achieve globalization:

21 in 21 strategy • 21 publicly listed companies in the 21st century  performance driven by entrepreneurial mindset. • Strategic Business Units (SBU): R&D, manufacturing of component and products. Ensuring coherence and profitability. • Regional Business Units (RBU): Local sales and services operations, ensuring local responsiveness Client server structure • global efficiency and ability to transfer knowledge across the company Fast food business model

• achieving the mission while building competitive advantages

fast food business model
SBU (R&D)

ODM / Component

RBU

Assembly hub
Transnational Local

Distribution Channels

Global

Value chain design

Outsource freshest components manufacturing. Assemble just in time and worldwide at closest to local market. Global brand and Local Touch in Sales and service

Competitive advantages

Speed: among the shortest TTM of the industry.
Cost effectiveness, minimizing inventory. Maximizing value delivered to the customer

fast food business model
SBU (R&D)
ODM / Component RBU Assembly hub
Transnational Local

Distribution Channels

Global

Stan SHIH "Smile Curve” :
• Focus on the higher value contributing activities of the value chain. • Strong R&D activity sustained with massive investments. • Brand management, distribution and service. Global competition Local competition

PC Industry / Acer - Geographical scope of competition
Semiconductors

Pressures for global integration

high

PC Platform Design (ACER) Hardware Components Sales (Direct / Dell) PC Platform Design (HP, Dell) PC Platform Assembly (HP, Dell) Sales (Distributor) Support & Maintenance PC Platform Assembly (Acer)

weak

Sales (Retail / Apple Store) weak high

Pressures for local responsiveness

THE CHINA DECISION

Why invest in R&D?

THE CHINA DECISION
What about a R&D move in China?
HUMAN RESOURCES ECONOMY Highly skilled engineers

Penetrate the huge Chinese Market

(Lab = precursor for the inevitable deeper presence in China) CULTURAL CULTURAL FINANCE Knowledge of the culture and understanding of the Chinese people needs No language barrier between Taïwan and China Relatively inexpensive labor cost better competitiveness the

ECONOMY Local responsiveness improves customization of the products to the local demand

 THE CHINA DECISION
What about a R&D move in China?

legal

• Transfer to indigenous mainland technology firms

Politic
Cultural
Personal contribution:

• Restriction for transportation • Direct investment in China is...
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