Acer
...itable, but the (SWOT analysis of the situation)indicates that adding manufacturing to current existing operations is a sound and relatively inexpensive move. I recommend that Acer add manufacturing to existing Canadian operations. The essential problem confronting Acer, a personal computer (PC) and components manufacturer and marketer, in this case is a decision on whether to serve the Canadian market through the company’s United States subsidiary, Acer America, or to establish a Canadian subsidiary to serve the Canadian market. Acer America served the Canadian market at the time of this case in 1995. Thus, a continuation of this strategy would be the status quo option for the company in this case. Acer is a computer company with strong International sales and has seen tremendous growth over the past 20 years. They operate in more than 38 countries, and each business unit is operated as a decentralized strategic business unit. Acer’s Canadian business had in the past served as an intermediation between Acer America to deliver products to Canadian distributors, but in 1996 Anthony Lin was chosen as general manager of Acer’s operation in Canada, and his vision was to have a line of products sold to three different target groups – Business, Home, and non-profit. Previously the Canadian operation was selling no products directly to consumers in Canada, but Lin saw this as an opportunity to use local distributors and assemble the computers in Canada, “to order,” and sell directly to consumers. The opportunities for the Canadian operation are numerous. Anthony Lin set a goal to double the revenue by the end of 1996. Within 2 years, the goal was to be in the top 10 Canadian market share, and do that through Government sales, which would make the profile of the company look good and also by selling direct to consumers, and assembling the computers, “to order, which offers many benefits, such as a lower transportation cost, and a shortened delivery time. This would also help to control inventory. However, there were some threats, such as high cost involved with Canadian production and competitors like AST, who has developed a strong market position and became a significant player with a strong reputation. Furthermore, Low priced consumer products are dominating the market. These products are sold at mass merchandising stores. A continuous rise in distributor sales is hurting the traditional retail outlets that cannot compete with the low cost of mass merchandisers. The focus of sales for Acer, at least in the short term, should primarily be in Ontario, where distributor revenue accounts for 49% of all sales. Western Canada lacking behind at 25% by 1997, and Quebec a drop to 19% in 1997, down from 20% in 1995. In the political Environment, the Government is a major buyer and if Acer can satisfy there orders, then it will invariably promote Acer’s image and brand name. In the Global Environment, there are a lot of dramatic changes and problems that Acer faced in the Global Information technology industry. The supplies of components are a problem because they are widely available. This lead to fierce competition from firms who were trying to compete by lowering price and price skimming. In the Canadian Information Technology Industry, the trend that is increasing is low priced consumer products bypassing distributors and moving directly to and mass merchandisers. Also the home market is growing at a fast rate. If Acer doesn’t get in the mass merchandising sector this could become a threat rather than an opportunity. With the computer components widely available, and just about anyone can put these components together, the barriers to entry or relatively low. What Acer in Canada needs to focus on is brand recognition and multiple channels to distribute their product. In the Canadian Competitor Environment, Compaq and IBM are the main players each accounting for 21 percent of the ...