Acer Case

Acer. Inc | Taiwan’s Rampaging Dragon | 9/26/2012 | How would you account for Acer’s outstanding start-up? What caused this company to outpace scores of other Taiwanese PC companies? Acer is a company that was founded by Shih, his wife and a couple of other people. It was founded in the 1976 and the electronic market at that time was still small. This time cellphones where not yet even invented so the market was pretty good for a starter. This is I believe one of the reasons why Acer’s startup was outstanding.

One of the other many reasons is because of their willingness to try everything that came their way. They dared to do everything, from providing engineering to publishing trade journals. They were not hesitant and were very hungry to succeed. Acers CEO Shih was also a very charismatic leader, transferring very important philosophies to his employees hence creating a strong foundation. He paid his employees modest salaries and offered them equity. The employees in turn felt a sense of ownership and this had a very good impact on their performances.

They were very loyal and followed Shih’s leadership. Shi did not only offer key employees equity but also delegated substantial decision-making responsibility to them. Empowering his employees in such a way only made them more loyal and committed to the company. Shih also believed and valued his employee’s education and created an environment where people were ready to learn and improve themselves. Joint ventures also cut down costs and developed good relationships with suppliers. The whole work environment was like a family and everyone there was very comfortable and happy.

When employees are happy, the company’s customers are also happy. All of these reasons and more made Acer then known as Multitech outscore the other Taiwanese PC companies. After a strong decade of growth, why did Acer’s growth and profitability tumble in the late 1980’s? How do you evaluate Leonard Liu’s performance? Acers was founded in the mid 70’s and at that time the market was small. At the end of the 80’s there was a lot of competition and Acer had to struggle with these forces. Its competitors were producing PC’s at very low prices and Acer had to match that.

One of the other reasons why Acer struggled is because it had expanded rapidly. This growth caused a shortage in management and some outside help ‘Paratroopers’ had to be brought in. Because of Acers overseas expansion these newcomers were supposed to help with the transition since they knew something about the international market. This however caused confusion in the company because of the culture clashes. The family culture was intruded by outside cultures and the working environments were no longer splendid. As mentioned before, happy employees lead to happy customers.

Unhappy employee’s in turn lead to unhappy customers. Acer was also struggling financially. Expansion needs resources and these were not available. In order to solve this Acer had to go public and create equity by selling its stock on the market. As if this was not enough, Acer also had to deal with rebranding. This took up a lot of Shih’s valuable time. I look at Leu in different ways. First of all; he was just a man given a big responsibility and was trying to do the best he could. Some of his transformations were in the long run effective.

He reorganized the company and this was very effective. Leu also gave some responsibility to the managers for the outcomes of their work, this made them work harder and they were careful in their decision making. However this changed the whole atmosphere in the company, the culture was changing and this was not appreciated. Culture is something one cannot change overnight but Leu tried to do that and it backfired. He tried to change everything overnight and this was never going to work with a company like Acer that was happy with their current culture and comfortable with it.

Leu also spending a lot of money did not help and employees in the end lost faith in him. How effective was Shih in rebuilding Acer in the early/mid 90’s? What do you think of his new business concept (“fast food” model, Uniload, Smiling Curve, etc. ) and his new organization model (Client-Server, 21 in 21, etc. )? Is this a visionary framework for Acer’s future competitiveness, or a random series of ill-conceived top-down initiatives? Shih came back with some lessons learnt. Some of which came from Leu despite him leaving in a bad way. He found Acers organization was better and this helped him achieve his goals.

He brought in new philosophies which lifted up the company and he communicated his ideas to Acer employees making sure they got the message and then acted upon it. The philosophy like ‘fast food businesses’ helped Acer to lower its costs and in the end make more profits. I believe through these philosophies Shih managed to get the attention of its employees and the message was therefore well communicated. Despite these strategies being vague I believe they were visionary. Acer needed to be redeemed to its old position and be given back its power. Its employees needed to be encouraged and be motivated to work.

These strategies did the trick and created a turnaround for Acer. As Stan, what action would you take on Aspire? Should he approve its continued development? Should he allow AAC to continue to lead the project? With all of the changes Acer underwent, I would say Aspire was a good innovation and it is a chance not to pass. Aspire is a revolutionary innovation and if Shih lets it go, it will go to his competitors and he will loose out on a good opportunity. Him blessing this innovation will mean that he does what he preaches. He was always encouraging his employees to use their knowledge and skills and do something innovative.

This was a chance to prove that he would support those innovations. I also think since AAC came up with the innovation they should be the ones to lead the project. This may even be an opportunity for Acer to expand deeply into other regions. Should Aspire become a global product? If so, who should manage the worldwide? Of course Aspire should go global!!! If the product is successful in one region they could try it in other regions and see how it performs there. In my opinion Taiwan should manage it because it is after the mother company and they have more experience in managing new products.