Mba International Strategy Acer Case R&D China Decision
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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