With more than 120 enterprises in 44 countries, supporting dealers and distributers over 100 countries, 23,000plus employees around the world excl Taiwan, , US$500million operation in OEM manufacturing, Concentrating on the 3E market- education, entertainment, e-commerce with all its abilities Acer truly made itself a Global Organization, in 1997. Working with Acer Operating independently, yet working together was one of the features of the Acer Group. Decentralization in organization allowed the Acer employees to become responsible in decision making process.
The senior management however tried to preserve the concept of “Symbiotic common interest”, assuaging any difference of opinion and consolidating them, and keeping up the centralized core. The Acer group had a long term vision to transform as a high-tech global corporation, hence taking a smart step to enter foreign markets by allying with the local distributors, retailers, suppliers, Managers, labor etc. Every region has its own need in case of electronics; Acer kept up to the local needs and customized their products accordingly.
A local touch was achieved by Acer with every person associated with be it the customer or supplier or its own employee. The Acer aimed at expanding its manufacturing globally, by setting 17 plants in different countries. However it faced the difficulty in transportation of the materials or assembled parts due to various custom restrictions in each region. Different countries applied ISO regulations independently. Certain times these made it difficult for the Acer to continue the traditional way of working as they had planned.
The most affected area was the inventory at the global level. It was difficult to predict the inventory level in the market with rapid changes happening around, moreover the product supply was far away. It was now necessary to set up a centralized kitchen to each production unit to reduce the freight and material handling costs. Hence it adopted the ‘Fast Food Model’, wherein the perishable and non-perishable goods were handled and transported separately as per their need. The inventory turnover was however now reduced to half once the fast food was implemented.
Each production unit now had its assembly plant, developed R&D, which helped them in shortening the time and cost of component production to delivery. The quality of service they provided was of the foremost importance. Exploring Chinese Mainland Acer wanted to secure a firm footing in the niche market. After suffering the losses in 1996-97, Acer realized that to win over the large markets it has first capture the smaller surrounding the larger ones. The big markets like Japan and USA had so many competitors trying to find its place that it was impossible for Acer to step in or sustain.
However Acer tried entering USA, facing a big time loss. This Failure motivated the Acer to apply the “Go” Game philosophy of the WAR. Capture the villages to win over the cities. Hence seeing immense scope in the mainland Acer had plans to set up the unit in the Mainland. The Acer Group assumed that being aware of the Chinese culture and ethics would make them easy to establish in the mainland, however the reality was not very pleasing. Initially the political issues between china and Taiwan since the World War II were the major concern.
Neither did Taiwan Govt. allowed the invasion of Acer in China mainland, nor was China willing to welcome the setting of Acer in the mainland. However, later after few years in 1998, Taiwan opened its port for Chinese materials; china was still reluctant to do so. Every exchange of goods happened via the south port of china which increased the freight cost. The manager at Acer still thinks moving to china is a good decision as the political issues seemed to be sorting out to some extent as well the WTO granting them membership.
Moreover he assumes to see immense resources which could ascend them to their destination. Yet again, there stood another problem the human resources. Though Taiwan and China are closely related traditionally both share complete different work cultures and ethics. The labor in china though was cheap; no guarantee was given about the reliability. No family bonding, no tax incentives, nothing worked. Moreover, the Taiwanese workforce, whether the manager or labor was reluctant to relocate; reason- safety issues, status and standard of living, higher level of education in Taiwan, ocial living which were genuine! Finding reliable, efficient, skilled work force another major issue Acer has to deal with. Discussion China is emerging country in manufacturing. It possesses abundant resources that could catalyze the success of any growing manufacturing industry. The case study indicates about the plans of Acer as well the problem they are facing implementing it. The sales exhibit shows the drop downs of the company during 1996-97. Reason: move to bigger markets in its first step rather taking smaller ones.
Hence capturing the niche is surely a wise decision. China has immense resources in terms of land, workforce, etc. Major PC manufacturers now realized the advantages of moving the plants to china, being among the first ones and nearest ones, Acer should not leave the opportunity of growing, for some hurdles across their way. •The Acer groups seems to lack with the international expertise from the previous experiences, networking is important in supply chain;they should associate with the locals to understand work culture of the Chinese labors, the incentive policy.
Acer has been hiring the locals, and should follow the same and not force the Taiwanese to relocate. •However the senior management will have to relocate, in need of a skilled employee who can centralize the autonomy within each plant. The Taiwanese managers however can be provided with better social living facilities, relocation incentives that could maintain their standards. •Setting a plant in sparsely industrialized region, closer to east coast. More employment for the locals- cheap labor plus ready to learn. Maximize information flow; minimize material flow between Taiwan and China to avoid Political conflicts and custom issues by utilizing resources within. •Not many major PC manufacturers have their units in China, Setting a unit in China will help Acer to invade Asian and European countries. Reducing operation and transportation efforts and cost. To overcome the past loses, Changes in organizational working is necessary, hence risk is inevitable! Acer to manufacture in China?! (Review)