Acer Case Study Marketing Strategy

This sample paper on Acer Case Study offers a framework of relevant facts based on recent research in the field. Read the introductory part, body, and conclusion of the paper below.

Acer’s strategy has been described as “divide and conquer. ” Compare and contrast this to Lenovo’s strategy. Divide and conquer is a strategy that was initially applied in the military to weaken the enemy forces. It involves splitting the enemies force into two or more elements. This weakens the enemy increasing the vulnerability to attacks from more than one direction.

The old adages ‘unity is strength,’ and ‘united we stand-divided we fall’ are apt in explaining Acer’s strategy of divide and conquer. This strategy acknowledges that it is to easier to defeat a group of small companies than defeating one large one.

In the light of the Acer case study, divide and conquer strategy could be interpreted to mean having distinct approaches for the local, regional and global market.

In this sense, what is being divided is the market and competition. What Acer plans to conquer is the local, regional and global market by increasing her market share. This would be done at the expense of competitors such as Lenovo, who could possibly be conquered by being locked out of each segment of the market through Acer’s superior offering. Acer’s management realized early enough that the company’s position in the American market was weak.

As a matter of fact, the company’s market share had significantly dropped.

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According to Keegan and Green (2011), “Between 1995 and 1997, Acer’s U. S. market share dropped from 15 to 5 percent”(p. 36). In an attempt to conquer the pc world, in 2007, Acer acquired Gateway, which is a U. S. -based company. This acquisition provided the much needed opportunity for growth and global expansion. It is worth noting that initially Acer had a brand recognition problem springing from consumer’s perception and concerns on quality and reliability.

By focusing on the Chinese market, Acer had recognized the importance of securing the local market before pursuing the global and regional markets (Keegan and Green, 2011). In addition, Acer was to benefit from economies of scale, cheap labor, and the availability of highly trained engineers and professionals in China. Acer’s spirit of innovation saw the company introduce small size laptop computers known as netbooks. These affordable laptops enabled Acer to attain considerable growth as a result of the competitive advantage as competitors lagged behind in introducing notebooks in the market.

A closer look at both Acer and Lenovo’s strategies brings out some similarities. The two companies relied on acquisitions to penetrate the U. S. market and to expand globally. While Acer acquired the U. S. -based Gateway, Lenovo purchased IBM’s personal computer division. Both companies capitalized on building brand awareness. Acer focus towards this end was to produce affordable consumer friendly products. Lenovo on the other hand was focusing on building brand recognition through partner programs such as the Olympic Partner Program. The need for brand recognition was equally felt in both companies.

Each company was focusing in brand recognition, but using slightly different approaches. Explain how the “global markets-local markets” paradox figures into Stan Shih’s strategy for China. Stan Shih understands that Acer’s growth would be achieved through a strategy that focuses on local, regional, and global markets. Operating in local market gives a company the stability to launch marketing efforts. Keegan and Green (2011) state that, “Shih believes that it is necessary for all companies to be stable and secure in the local market before pursuing regional, then global markets”(p. 7).

It is this kind of thinking that led Shih to focus on China as Acer’s local market. Acer’s focus on China as local market is informed by the availability of cheap labor and economies of scale. China is a big market that could fuel Acer’s global expansion. The Chinese culture is no different to that of Taiwan and as such, it would be easy to build a solid market base in China. It is this local market Shih hopes the company would expand to the rest of the world. There is however the need for government and general public to support activities for locally made brands.

It is interesting how Shih perceives global markets and local markets in relation to Acer’s growth. According to Shih, Acer is well-positioned to compete with local PC makers because it is “more global. ” At the same time, he argues that Acer would be in a better position to compete with global companies in China since Acer is “more ‘local’ than they are” (p. 37). Shih envisages an Acer that enjoys competitive advantages at both local and global markets owing to the acquired strengths such as technology, global exposure, and international know how (Keegan and Green, 2011).

Determine what strategies Acer can apply to become the world’s largest PC Company, behind Dell and Hewlett-Packard. To become the world’s third largest PC Company, Acer needs to apply several strategies. Some of the strategies discussed here have already been tried out at Acer with astonishing results. A strategy that has worked before for Acer in driving growth is acquisition. By acquiring the U. S. -based Gateway, Acer did not only achieve expansion, but also entered the lucrative U. S. market. Acquisitions are necessary for rapid growth and new market penetration.

In order to achieve growth and market share objectives, Acer has to focus on building brands in the business-to-consumer market. As pointed out by Shih, “Business-to-consumer brands have more value” (p. 36). It is this value that could catapult Acer to become world’s third largest PC Company. Acer’s growth could be achieved through introduction of new products. The netbook product gave Acer the growth impetus needed to face off competition. It is possible for Acer to churn out new products taking into consideration the company’s heavy investment in R&D. The company’s underlying culture of innovation is ideal for developing new products.

Another strategy that could grow Acer into a leading PC company is refocusing on distribution and marketing. Keegan and Green (2011) opine that, “Shih focused Acer’s distribution and marketing on the vast, fast-growing China market” (p. 36). Mainland China is a big market that Acer could use as a springboard for global expansion and market share growth. By focusing on the emerging markets such as Russia, South Africa, India, and Brazil; and by maintaining low prices as a selling point, Acer would grow exponentially to become the third largest PC Company in the world. Brand recognition is vital for Acer’s growth.

This could be achieved by building local market. Acer Group CEO J. T. Wang states, “We can take our brand global by building a strong home market” (p. 37). Acer’s brand recognition could be strengthened by designing quality products, establishing a quality and high-end image. The application of these strategies would help Acer become the world’s third largest PC Company, behind Dell and Hewlett-Packard. Even before the current economic crisis deepened, growth in the U. S. PC market had begun to slow down. Despite strong competition from Dell and Hewlett-Packard, Acer’s U. S. Market share increased from 1% in 2004 to 3. percent by the end of 2006.

Analyze Acer’s prospects for gaining further share in the United States. Acer survived the current economic crisis and competition from Dell and Hewlett-Packard. This is proof that the company is on a sound footing. The strategies discussed in elsewhere in this paper are geared towards global expansion and achieving market share objectives. Acer has bright prospects to gain further share in the United States. At the outset, Acer has invested heavily on Research and Development that puts it at par with competition. It is through R&D that new products are developed. Acer was a pioneer in the notebook market.

The netbook was instrumental in strengthening Acer’s position as the competition had not developed their version of notebook. Acer has the technology, global exposure and international know how to gain further share of the U. S. market. In 2008, Acer proved that it was a force to reckon with in the PC industry when it out-performed HP in sales in the European market. In the words of David Meyer, a technology journalist, “HP has been toppled from the top spot in Europe, Middle East and Africa PC-selling league by Acer, partly as a result of Acer’s success in the booming netbook market” (Meyer, 2008).

Acer’s strategy of focusing in the Chinese market further improves the company’s prospects of gaining further share in the U. S. market. The management believes that for Acer to expand globally, it has to be stable and secure in the local market (Keegan and Green, 2011). Acer’s performance in the U. S. market could be boosted by more acquisitions and building alliances with other brands and covering the market with a range of brands that meet the needs of various segments.

References

• http://www.zdnet.com/acer-knocks-hp-off-top-spot-for-emea-pc-sales-3039517299/