Case Analysis – Acer, Inc: Taiwan’s Rampaging Dragon
Stan Shih founded Multitech, now known as Acer, in 1976. Empowered by Shih’s vision and management style, the company grasped every opportunity that came its way. It grew from a 11-employees company to a 5000 employees company in no time. The company, however, after generating profits for years, went through the painful professionalization of its management. Change in the competitive dynamics in the PC market coupled with the internal management problems faced by Acer resulted in the incurring of substantial losses. As Stan Shih resumed his role as CEO in 1992, after the board had unanimously declined his resignation, he had the responsibility to rethink Acer’s management philosophy, the organizational model and the underlying business concepts. The most important decision that Shih was about to take – a decision that could make or break the brand image of Acer, was whether or not he should allow the loss making regional business unit of Acer – Acer America Corporation, to go ahead with the initiative of launching a new product and also ensuring the product’s global rollout.
ACER UNDER STAN SHIH
Under Stan Shih, Acer had certain Organizational philosophies that triggered its growth not only in the local market but also acted as a catalyst for sales growth globally. Stan Shih was aware of the capital constraints that Acer faced and to make optimum utilization of the resources available became his primary objective. He leveraged the principal of frugality describing it as “a poor man’s philosophy” to improve Acer’s gross margins. Ensuring and advertising the importance of receiving cash payment quickly and avoiding the use of debt was important to maintain the liquidity. The Acer 1-2-3 principle laid down by Shih broadcasted the importance of Customers, employees and shareholders in that order of priority. Contrary to the principle of tight personal control...
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