Acer Competencies in Manufacturing - Essay Example

Running Head: Acer Acer of Acer Competencies in Manufacturing Acer is one of the largest manufacturers of personal computers and computer components. It is the world’s third largest PC manufacturer. It also produces mobile computers, network servers and personal computers. More than thirty countries have given Acer a global ranking. It produces a wide variety of products like mobile and desktop PCs, servers, storage devices, LCD monitors and high definition TVs. Since 2000, Acer has focused on branding business. Acer currently has thirty nine thousand people employed supporting dealers and distributors in more than one hundred countries. Revenues for 2007 were eleven billion dollars (Everatt 2, 1999). One of the key competencies of its manufacturing strategy has been to spent huge sums of money on research and development. Acer tends to follow the model of Japanese technology firms. They use innovation to create value in the design and production of cutting edge products. Innovation is a key competency of its manufacturing power. Dedicated towards becoming consumer oriented, Acer has focused on developing consumer electronic products with wide range of uses and applications. It adds value by enhancing the consumer perception about the benefit and value of a product. Acer products are designed to be consumer friendly, accessible, comfortable and designed for specific consumers. Research and development remain the major competency of its manufacturing operations. It aims to create internet products and software to improve its global competitiveness. Another key feature of Acer has been the reorganization of its organizational structure in 1998. Each member company is given independence while working together to take advantage of the organization’s technological resources. Some corporate functions have been centralized to manage the group more effectively. Brand image has been critical to the success of Acer inside the computer industry which is dominated by giants like IBM. Acer products are positioned according to the higher ends of markets. Inside Japan, the company priced its products at the same level which Japanese products are sold. Sponsorship of the company at leading events like the 1998 Asian Games have also created a strong brand image. For European markets, Acer has transformed from a Ferrari sponsor to the exclusive computer for Ferrari. The successful launching of Ferrari notebooks has pushed the brand image of Acer to high levels in Europe. Brand building was the key manufacturing competency of Acer which resulted in the creation of new products. The decline of the PC industry in the late 1990s prompted Acer to develop components for PCs while exploring fresh opportunities in semiconductors, communication and consumer electronics. Its branding strategy has been transformed into a new business model which comprises of a single company and brand with many vendors, products and business partners (Mckern 25, 2003). Another successful competency for Acer’s manufacturing capability is the formation of joint ventures in foreign markets. This was done to establish distribution systems and market the products in local countries. The advantage of using domestic partners has been to facilitate the knowledge of the local market and engage in promotion activities. Products were adapted according to the local market. A local touch was also achieved by creating global network of independent Acer companies owned by local investors and run by local employees. This strategy has helped in expanding the local industries and shifting the creation of computer to local markets. China and Acer’s global manufacturing strategy The rapid growth of China as a major economic power has been due to the several macroeconomic and microeconomic reforms introduced by the government to develop a modern economy. China’s economic development has helped the world economy. Acer’s decision to explore mainland China was the need for a local market which would provide the company with resources to compete in the global market. Another advantage was that Acer had adequate knowledge of mainland China. Another advantage of China is its local workforce who could be used to work at Acer’s manufacturing sites. A manufacturing operation China would be beneficial for the company as it could expand in the huge market for new or existing products. The availability of cheap labor is one of the key attractions of China in Acer’s global manufacturing strategy. The government of China has favorable policies which have transformed it as a production centre for most global companies. China is an attractive market for Acer because of its economic growth, increasing wealth index and improvements in technology. China’s exports have contributed to the phenomenal economic growth of global companies. Acer’s entry into China would be beneficial for establishing joint ventures to establish distribution systems. It would also help local partners be responsible for the marketing and promotion of products in the Chinese market. China has a huge population with a relatively low number of PC owners. This would be beneficial for Acer as it would allow it to capture the Chinese market (Temporal 47, 2000). Acer’s policy of giving autonomous status to its local companies in mainland China would be owned by local investors and managed by local employees. This would allow international and local distributors to promote Acer computers to local buyers in China. It would also facilitate the transformation of Acer into a major global player by global expansion of its manufacturing operations. China has a qualified workforce of some nine million graduates which would be beneficial for Acer. The company could also invest in training and strengthen the skills of workers in China. The nation’s abundant pool of low cost labor is the number one reason for Acer to invest in an offshore destination. The labor cost of China is lower than that of India by an estimated ten to fifteen percent. Acer is a global leader in the manufacture of computers, consumer products, computer accessories, semiconductors and communication products. Its manufacturing competency has been based on a successful brand image strategy. It has spent huge amounts of money in research and development of new and innovative products. Another key feature of Acer’s business growth is the decentralization of its organizational structure into autonomous companies with control of key corporate functions by the head company.   References: McKern, B, 2003, Managing the Global Network Corporation, Routledge, London. Temporal, P, 2000, Branding in Asia: The Creation, Development, and Management of Asian Brands for the Global Market, Wiley, Singapore. Donna Everatt. (1999). THE ACER GROUPS CHINA MANUFACTURINGDECISION. Ivey Management Services. 2 (3), 1-14. Read More