Synopsis of the situation Shih Chen Jung was born in 1945. In 1972 he earned his maters degree and started working as an engineer for Qualitron Industrial Corporation. “In 1976, he and several friends founded Multitech International with a $25,000 initial investment. They started by designing hand-held electronic games, and then expanded into the distribution of imported semiconductors. Shih renamed his company Acer Inc. in 1981” (Net Industries, 2007. pg. 1). Acer began making PC clones and components that were sold to larger companies with strong brand names.
In 1989 projections indicated the company was overextended. Shih hired Leonard Liu away from the International Business Corporation (IBM) and stepped down as the president of the Acer Group. Liu changed the organization to centralized control and later took the blame for the company’s poor profitability. The industry changed from high profit margins to low profit margins almost overnight. This made it difficult to make a profit from the completed products. Shih expanded and setup Regional Business Units (RBU) which developed global brands in order to turn the company around.
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Shih’s global expansion included joint ventures “in less hotly contested markets in Latin America, Southeast Asia, and the Middle East. By 1995, it was the top-selling computer brand in Mexico, Bolivia, Chile, Panama, Uruguay, Thailand, and the Philippines, not to mention Taiwan” (Net Industries, 2007. pg. 1). In 1994 Shih revealed a plan for Acer to become 21 publicly traded companies by the end of the 20th century. Acer America Corporation (AAC) developed the Aspire computer to be positioned between the high and low end home computer market.
Critics and Shih both had reservations about the Aspire and the organizations client server management style. Key issues Shih’s business model was out of the box; his way of thinking was not the common business style of Taiwan. Stan Shih “delegated substantial decision-making responsibility to his employees to harness the natural entrepreneurial spirit of the Taiwanese” (Bartlett, 2008. p. 41). Not all issues were considered before implementation. Rapid business expansion created issues with the company’s finances, stock and management.
Providing stock options to one year employees quickly devoured much of the company’s finances. The company’s managers were not trained to operate in international or global operations. The change in company leadership from Shih to Liu did not help the company. Shih allowed the Regional Business Units (RBU) to develop products though much of the direction came from Taiwan. This brought about the Aspire and new ways of manufacturing and delivery. Define the problem The key issue is the lack of management having global business experience.
The management of Acer was based on employees from Taiwan who had little experience outside of Taiwan. Stan Shih envisioned a global enterprise. Shih had developed a manufacturing and distribution setup in many countries around the world. By 1994 the organization had subsidiaries setup around the globe. The question is who should be in control? Who is actually in charge; the Strategic Business Units (SBU), the RBU’s or the CEO? Who makes the decisions? Alternative solutions The first alternative solution would be to cultivate the managers just as the managers at Acer were encouraged to groom there staff.
Acer should have provided the managers at all levels training in global operations and culture. “Global companies develop cultures, where middle managers from various parts of the organization are put together in working, training or social situations, including staffing multicultural teams, encouraging international mobility to various training courses, conferences and parties” (Kottolli, 2006. p. 1). The pro side of developing a global staff is that the strategies the organization implements will be more tailored to global operations and the solutions will be formed from a multicultural stand point.
The down side to having a global experienced staff is the possibility of losing employees to other global businesses. The second alternative would be having one SBU responsible for development, production and design for all the RBU’s which would create a more direct line of communications. The pro side of having one central SBU would be a managed inventory and supply system with less duplication of efforts. The con side of a central SBU would be in the import and shipping costs or logistics. With proper management the duplication of efforts can be eliminated and a better understanding of the finances can be observed.
Selected solutions to the problem The selected solution would be for Stan Shih to make sure the managers at all levels understand and receive global training and awareness in business operations and communications. This will help streamline communications in order to open up business operations and finances and let all the RBU’s to know what the other is doing. This would reduce duplication of efforts in SBU’s by allowing managers in all divisions to be aware of other division’s efforts and abilities.
This will allow all to see where there are financial issues and what is benefiting the organization and what is not. Better global solutions will be realized via global management cultures. Expected results Providing global training will provide Acer with an organization with a global mindset. “Which global opportunities a company pursues, and how one deals with the many challenges of a global business approach, depends on how good one is at interpreting and responding to the dynamic and diverse environments in which one operates” (Net Industries, 2007. p. 1).
Shih had developed a business network organization by setting up the RBU’s each responsible for a geographical area and the SBU’s each responsible for a group of products. “Shih delegated substantial decision making responsibility to his employees. Acer; was able to harness the natural entrepreneurial spirit of the Taiwanese” (Bartlett, 2008. p. 41). A global mindset will allow the organization to focus on the big picture and changes in the corporation’s global business environment, instill strong confidence in vision and organizational processes, and set a high value on multicultural teams.
Diversity will be seen as a source of opportunity and management can constantly challenge organizational experiences and assumptions while building a business which is always open to change (Net Industries, 2007. p. 1). Shih’s steps to make Acer a global name was in fact building a global organization. Better management of finances and giving the management a global mindset will allow the SBU’s and RBU’s to better understand what products the company should develop and what the customers in various regions desire, where the success and failures are.
One should allow the business units to proceed and maintain control at an upper management level by controlling the final go ahead on new projects. Positive and negative results The positive aspect will be achieved by every success being a global company success. By focusing on customers in the global realm; the various business units can work together to develop successful products. Having a global mindset is necessary to conduct business and reduce uncertainties. This will allow “all workers to adjust faster and more easily to their new assignment if they have accurate expectations, role clarity, and low levels of conflict” (Global, 2006. . 13). As business complexities increase so must the capabilities of the managers. This will lead to accelerated product adaptation, positioning and market entry. On the negative side many managers are selected for their soft skills and not their technical skills. There needs to be a combination of both. A negative aspect may be in the turn over of employees as those with global training are highly desired. A further negative aspect may be if the company diversifies from their standard products and develop a high number of regional variations.
Stan Shih has managed to bring Acer back from possible financial ruin with his global mindset. There now needs to be a successor developed to carry the company to the next level and further the global mindset of the organization. References Bartlett, C. , Ghoshal, S. , & Beamish, P. (2008). Transnational Management (5th ed. ). New York, NY: McGraw-Hill Irwin. Jeitosa Group International. (2006). Global Mentoring. Retrieved May 09, 2008 from the World Wide Web: http://www. jeitosa. com/resources/karen_beaman/Global_Mentoring. df Kottolli, A. (2006). Developing a Global Mindset. Retrieved May 09, 2008 from the World Wide Web: http://www. geocities. com/akottolli/developing_a_global_mindset. htm Net Industries. (2007). Acer Inc. – Company Profile, Information, Business Description, History, Background Information on Acer Inc. Retrieved May 08, 2008 from the World Wide Web: http://www. referenceforbusiness. com/history2/28/Acer-Inc. html Rodrigues, C. (2001). International Management (2nd ed. ). Cincinnati, Ohio: South Western College Publishing.