The general trends and strategy of the industry and the strategy of Acer will be compared and contrasted briefly. Reasons for Acer's growth and some recommendations for the strategic direction of Acer will be discussed. Towards the end of the paper the success and the factors that accounted for Acer's success will be put in the picture.
There are more than a dozen PC manufacturers who lead the computer industry. In such a competitive environment only that manufacturer can survive who has got competitive edge over its competitors. When Acer first entered the PC industry, there was already fierce competition in the industry. Price cutting was the major trend in the 1990s, instead of differentiating their products from others, the players in the industry indulged into price wars.
Technology in the PC industry was changing rapidly; observing competitor's moves and strategic responses to those moves were changing the global PC industry. Strategic direction of most of the producers of PC at that time was to design their own PC and sell it through their distribution channels according to the demand forecast. As the existing players in the industry were in the business for several years now, they marketed their product with competitive price and fresh technology. And now after so many years in the market of notebooks and PCs, Acer is able to reduce its costs to levels beyond that of Dell and HP. It was able to do this because it distributes the products through only retailing and e-tailing, while others use direct selling and corporate selling. Acer has also outsourced its manufacturing and assembly to reduce costs. Now Acer has competitive edge of price over its customers and Acer is following price cut strategy to win over Dell and HP.
Acer is a Taiwan based company, and as all Asian produces inherited cost advantage over the companies based in Europe and US, Acer also had advantage of lower costs because of availability of labor, no heavy taxes from government and no propriety laws. The first product that Acer started producing was Microprocessor I, then after a few years it established a new company which manufactured and supplied computer parts to other companies in the industry. Acer wanted an independent brand name; to achieve it, Acer established a retail computer chain too. With a retail chain of its own and a parts supplying company under its brand name, Acer eliminated any dependencies on other firms.
Acer's success was driven by product innovation; it started producing new technology ahead of IBM. The Acer's OEM business Acer Peripherals Inc. was of a huge advantage to Acer in the global market. Acer could speed up the deliveries of PCs and cut cost of its PCs because it was producing the parts itself. While Acer was self-dependent, other companies in the industry such as IBM and Compaq were getting their supplies from Acer Peripherals. Through its innovation and self-dependency, it created competitive edge in the form of fast deliveries and lower costs, and by 1990 it became 13th largest manufacturer of PCs.
In the beginning, Acer was cunning enough to not confront global PC producers such as IBM and Compaq, and it mainly marketed its products in Europe and Asia. But in late 1980s it entered the US market and partnered with two companies to establish the