SWOT Analysis of Acer

Strengths
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Acer was one of the first Taiwanese firms to develop its own brand for international market; it has much experience in shifting from assembling to selling its own brand. To strengthen competitiveness, the company has enhanced efficiency, cut costs and scaled down the organization by setting up independent business units, planning a new global business model, downsizing, diluting shareholdings, and the development of the "fast food" style logistics and assembly structure. Acer has built its international capacity by using joint ventures. For example, as it has been shown in the case, Acer invited Computec, its Mexican distributor to form a joint venture company responsible for all Latin America. The result was Acer Computec Latin America (ACLA). Similarly it went in JVs with dealers and distributors in Indonesia, Singapore and so on. By forming joint venture with local partners and encouraging local shareholders to invest, the company has managed to integrate global talent and capital reserves and finally increased its competitiveness in global market. Acer has always been putting constant emphasis on R&D which has led to many innovative products. Acer offered opportunities for committed talent from anywhere regardless of their backgrounds and introduced a flat hierarchy, with middle management involved in decision-making process.

Weakness
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The resources available for Acer are slim. For example, people's perceptions for products made in Taiwan are "low quality" and "low price". Without a strong brand name, it is difficult for Acer to enter into global markets. Its earlier strategy including the acquisition of Counterpoint, an American producer of multi-user system. The company suffered from the lack of managers as the internally grown managers lacked international experience leaving the paratroopers to implement the ambitious offshore expansion plans who might not understand the company s culture or its values

Opportunities y

Computer industry in Taiwan was dynamic and cost effective with much US educated and local Chinese talent, and tremendous production capability to support new technologies.

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The labor cost in Taiwan is low. Taiwan engineers earned about half of their counterpart in the US. Acer was the leader in distribution in developing countries. It targeted the smaller countries in South East Asia where there was not much presence of the international players. For example as early as 1986, Acer held a market share of 25% in Si ngapore. This strategy of targeting smaller countries earlier provided them an opportunity to become a market leader in each of these countries. Also this proved an effective strategy as all these markets were progressively becoming bigger.

Threats
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Cultural differences posed communication hurdles for the company to localizing management abroad. SBUs based in Taiwan viewed the RBUs suspiciously as they cornered some of the product development and assembly works which were traditionally done by the SBUs Competition in global IT industry has been strong. Acer is competing with some of the big players in the global market such as IBM and Compaq.

Smiling Curve model Smiling Curve is an illustration proposed by the founder of Acer. This talks about the value adding potential capacities of different components of the value chain in an IT-related manufacturing industry. According to Shih's observation, in the personal computer industr y, both ends of the value chain(as shown in the graph below) command higher values added to the product than the middle part of the value chain. If this phenomenon is presented in a graph with a Y-axis for value-added and an X-axis for value chain (stage of production), the resulting curve appears like a "smile". Based on this vision, ACER has adopted a business strategy to recreate itself from a manufacturer into a company that focuses on global marketing of brand-name PC-related products and services. Meanwhile, ACER also has invested aggressively in R&D to develop innovative technology