Business Strategy and Market Share at Acer - Case Study Example

1. Acer, which is a leading manufacturer and marketer of notebooks as well as desktop PC, is being credited as a company that generated a heavy sales turnover of around 11.3 billion as of the year 2006. It is of utmost importance to mention that the company was able to generate such a high sales turnover only on the lines of certain strategic changes that were inculcated in the company by the end of the 90’s. It has to be mentioned that during the period of 1995 -97, the company faced a declining market share in the United States. An analysis of the company revealed that the fall of market share in that particular region can be attributed to the strong competition arising from the local brands. This finding resulted in the change of focus for the company from the US market to the growing market of China. Also, it needs to be mentioned that during the year 2001, the inclusion of mainland China in the WTO resulted in the eradication of limitations in regards to investment of foreign nature. This provided significant amount of momentum to the new focus of Acer. Also, the factor associated with low cost skilled manpower that is available in the Chinese markets ended up in providing strong potential for growth. It is of considerable importance to state that while concentrating on the process of altering the focus of the company, the top management realized that the key to achieving growth in the foreign markets is highly linked to the factor of attaining significant strong point in the local market. Talking more specifically in regards to what has been desired as the ‘divide and conquer approach of Acer’, it can be said that the company’s top management assumed that by gaining the economies of scale in the local market of China, it will develop an upper hand in regards to developing more innovative products that will help the company to strengthen its position in the local market as well as develop an edge in regards to capturing the international market (Electronic Business Asia, p .34). 2. It is of considerable importance to highlight the fact that the paradox related to the company’s focus on the global and local markets is part of company’s long terms strategy. It is relevant to mention that during the middle of the 90’s period, the company was facing issues of depreciating sales in the markets of the United States. Significant analysis by the company in regards to the causes associated with the slowdown in sales resulted in a strategic change of the company. The top management of Acer realized that for the purpose of entering the foreign markets of United States, it is very essential to develop a significant strong hold in the local Chinese market, which can be viewed as the company’s home turf. Also, the management realized that by catering to the local market, Acer will be able to leverage significant advantages in regards to economies of scale, which will thus make it viable for the company to focus on the process of introducing innovation to its products (Keegan and Green, 2009, p. 80). Finally in a closing note, it can be specified that the company realized that by adding innovation to its product offerings, Acer will be able to squeeze out significant edge in regards to the offerings of the local players of the US market, thereby making it possible for the company to achieve a high sales turnover from the market of the United States. 3. It has to be said that the company faced depreciating sales in the period of 1995-97, which resulted in fall of market share in the United States. As a counter measure, significant amount of strategic changes were introduced within the company’s business process. As a part of the strategic change, the market focus of the company was shifted to the local market of China, which is fast growing in nature. By trying to cater to the market of China, the company Acer tried to leverage the benefits associated with economies of scale, as well as tremendous availability of high skilled yet comparatively cheap manpower. The company also analyzed the factor that by developing a strong hold in the local market, the computer manufacturing company will be in a better position to introduce the factor of innovation, which will act as a strong differentiating factor for the company’s products in the markets of the United States (Keegan and Green, 2005, p. 80). It is i important to state that the company also concentrated on resolving the brand issue that is associated with the quality of products manufactured in the region of Greater China. Talking on the lines of making strategic acquisition in the foreign market, it has to be said that the company acquired the US based company Gateway. Finally, it can be said that with a switching of the top management in the recent times, the company has the potential associated with the process of achieving the third position in regards to the world’s PC market. 4. It needs to be highlighted that the Taiwan based company faced tremendous competition from the local PC makers in the markets of the United States in the years of 1995-1997. This resulted in the steady loss of market share for the company for the US market. However, the company has achieved a successful turnaround in the recent times, and as of the year 2006 generated strong sales of around $11.3 billion. It can be identified that the key to this successful turnaround is the strategic changes related to image makeover of the Chinese products, Acer’s revaluated focus in the marketing and distribution of China. It also needs to be mentioned that the company’s strategy to introduce product innovation, while attaining economies of scale also resulted in boosting the company’s success rate in the market of the US. Now talking in regards to the future prospects associated with the US market, it needs to be highlighted that the factor of economic downturn needs to be taken into account. The downturn will lead to fall in consumer spending and will thus create the market for low priced, yet high quality products. Since, Acer has achieved the leading position in Europe because of the low priced products, hence, it can be said that the company has the ability to generate leadership in the US market in the upcoming days. Reference Keegan, W.J., and Green, M.C., 2009. Global Marketing. India: Dorling Kindersley Pvt. Ltd. Electronic Business Asia, 2001. Electronic Business Asia, Volume 12, Issues 7-12. Cahners Asia Ltd. Keegan, W.J., and Green, M.C., 2005. Global Marketing. India: Prentice Hall Read More