This paper is on Evaluation of Acer resources, cost positions and competitiveness. The first section of this paper is on the present state of the firm. The second section of this paper will discuss the important resources and capabilities of Acer. The third section is on the power of Acer’s resources and capabilities. The next section will discuss the strength, weaknesses, opportunities and threats posed to Acer. Final section of this paper is on the future of Acer.
Acer is the one of the largest PC manufacturing company in the world with significant growth in emerging markets. Although, Acer has experienced significant growth in the year 2007 as their sales increased by 32.9%, the PC and peripheral industry remains highly competitive and Acer despite being the third biggest player remains miles behind HP and Dell. Their key competitors are HP, Lenovo and Dell. However, this market is highly fragmented as 46% of the market is owned by brands that have less than 4% share. In the competitive landscape Acer seeks to increase their market share and profits to their shareholders (Datamonitor, 2007, p. 7-16).
Acer’s competitive strategy is to serve as a low-cost operator by undercutting their rivals to maintain their cost leadership with their large number of buyers (Taylor & Nichols, 2010, p.27). However, while it is true for Acer and Emachines, other premium offerings from Ferrari and Gateway are for targeting other competitive strategies. Gateway has focused on low-cost strategy while Ferrari has their nice market strategy on the basis of differentiation (Porter, 1980, pp. 35-40). Acer has adopted a transnational strategy (Hill, 2009, p. 439-440), to sell their product all over the world and by sourcing components and producing from cheapest cost source. Unlike Dell who has applied international strategy for sourcing from small range of producers and manufacturing close to the market. This delivers efficiencies to Dell, but Acer can source products from cheaper source handing them competitive advantage
Acer’s business model provides premium, low-cost PCs that work well with local conditions. This makes the products appealing to the customers and is successful due to; firstly, clear vision of having cost leadership, but allowing customers to trade high or low according to their requirements (Cappel et al, 2003, p.54). This permits the emerging markets customers to afford their quality and trusted PCs, whereas in mature markets the customers may choose to upgrade (Matthews, 2010, p.57). Secondly, distribution channel used to grow Acer’s market share. Thirdly, manufacturing by sourcing premium quality product from all over the globe where the price advantage might be leveraged. Fourthly, innovating and pushing their boundaries to locate new markets.
Acer’s competitive advantage is finding new markets for continuous growth, building alliances with popular brands like McAffee, Microsoft and Ferrari, building their product on a transnational basis, covering the customer needs with their product range that suit to the needs of market segments. Therefore, the distinctive competence of Acer is their ability of building PCs and peripherals that have quality components, are innovative and affordably priced for the local markets.
Acer SWOT Analysis
Acer is well known brand regarded among most customers in Taiwan and other countries in Europe and North America. Acer’s has high employee efficiency hat is measured by their total revenue per employee and their increasing presence in North America and Asia that is driving their top-line growth and offers geographically diversified revenue-base (Datamonitor, 2007, p. 18).
Tradition and Nationalism has derailed the bold vision of Acer and they have been paying the price since then, it took them few years to finally figure this out. Acer managed to cash in on their netbook craze and rising sales from mass market of notebook computers, but they largely missed out on trend of handheld computers (tablets and smartphones) and face decline in their profitability. Acer has pushed tried to push their tablet product the Android OS Iconia tablets, but these devices didn’t manage to attract the appropriate customer base. When competitors like Lenovo managed in keeping their PC sales flat and diversified for retaining profits, Acer faced worst decline in industry of PC sales with 24.1% in Q4 2013 (Mick, 2014).
This Taiwanese electronics and computer firm is currently working on making wearable tech that appeal to consumers that it is a big challenge than just the logistics part of the technology. The future business opportunities for Acer wouldn’t be satisfied with a single product or service that is needed to be fulfilled through few innovative initiatives. Acer is planning to maintain their Smartphone shipment target for 2014 of 5 million units and expects growth rate from Chromebook laptops and tablets, as part of their strategy for making a turnaround and improve their product portfolio amid presently weak PC sales (Wilson, 2014).
The key markets for Acer are Taiwan and Europe. Economic slowdown in Europe can place pressure on their revenues. PC industry is ruled by small number of large brands and many small brands. In past few years, the industry has suffered with severe pricing pressures. The intense competition in the industry, threatens to erode Acer’s margins and decrease their market share. Personal computers market is getting more commoditized. This commoditization of PCs can dilute Acer’s brand image (Datamonitor, 2007, p. 20).
Competitive advantage of Acer over others like Dell and HP is that it is ready to build their PCs in a transnational basis (Hill, 2009, p. 439-440), by purchasing components from the most effective manufacturers in the world regardless of their location. This builds a competitive advantage for Acer over other brands building their product closer to the market.
Their value chain also uses synergies for producing other goods like GPS units and LCD screens at competitive advantage. By also locating service, sales and marketing teams within every market with their brand that is highly valued, permits Acer to be agile to the market needs, changing trends and fashion (Hegarty, 2010, pp. 46-48; Shaw & Kotler, 2009, p.23). Additionally, reselling through the retailers helps Acer in expanding their brand’s reach and using this channel for forecasting and driving demand (Shaw & Kotler, 2009, pp. 21-22). While this doesn’t affect Acer’s margin it allows Acer to drive growth. Acer value chain has the ability of developing quality products at lower prices to suit the needs of local markets.
Acer sticks to their channel business model which involves collaboration with many distributors and first-class suppliers, leveraging Acer’s resources and ultimately, sharing the success among all involved parties. In addition, Acer’s low operating expense and capital policy has been responsible for steady growth of their business operations. Acer specializes in manufacturing and sales of their IT products and provision for their maintenance services. Acer brand is well known in many countries and with many customers in Taiwan and other regions like Europe and North America. Acer’s strong brand is responsible for their competitive advantage enabling them to command premium pricing for their products.
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