Company Analysis: Acer Report Samples
International business and governance for Acer 3
Legal, financial, and ethical issues 4
Understanding and learning from failures 4
How to create a global business: Acer entry strategies 5
Environment analysis 7
Internal environment analysis 7
SWOT analysis 7
External environment analysis 9
PEST analysis 10
Porter five forces 11
Organising and managing international firms 12
Culture in international environment 12
Business groups, conglomerates and emerging markets MNCs 12
Reference list 13
A business focus is towards sustenance of profitability and revenue yield. It is highly imperative that companies implement effective strategies towards market venture. Thus, Taiwan has been a plausible and successful company in the laptop industry. As a large multinational company, it has operations in both Taiwan and Europe. The organisational headquarters are in Taipei located in the Taiwanese country which is one of the emerging economies globally through diverse operational outcomes. With an employment base of over 5000 employees, the company has been successful in controlling a given market niche in its industry. Thus, this paper will evaluate the internal and external environment of acer coupled with its entry strategies in the diverse economies.
International business and governance for Acer
The international environment for the company is highly diverse and denotes disparities pertaining to various aspects of governance. Most fundamentally, the international environment exudes disparity in governance. The disparity in governance emanates from the form of economic system used. There are three common economic systems implemented in the international sector. Planned, free and mixed economies are used by different governments. Planned economies denote the government having a significant control in the use and distribution of resources. Clear examples of such economies include china and Cuba. Secondly, the mixed economies denote the government and the private sector having a significant role in the control and distribution of resources. USA and England are two governments that implement the mixed economic system. As the third and culminate economic system, there prevails the free economic system. Free economic system is characterised by the private sector individuals and forms having a control of the resources with little or no control byte government. Japan is a clear example of a free market economy.
Legal, financial, and ethical issues
The international environment presents disparities in regards to legal, financial and ethical issues that are highly localised. As the first aspect of concern, legal disparities are mainly evident in regards to labour laws. In some countries such as those in UK, it is imperative that conformity to diverse regulations, safety at work place act, implementation of the living wage and so forth prevails. On the other hand, regions such as USA present different legislations such as the employment act, employment equality act and so forth. The disparity in regulations depends on the stipulations laid forth by the government.
As the second facet of concern, it is imperative that organisations understand the international financial issues. There is disparity in GDP, per capita income and so forth that may impede on the operations of the organisation. As a clear example, Russia’s currency is grappling with financial currency issues as a result of the sanctions imposed. Thus, the falling strength of the Russian currency denotes a daunting environment for operations in regards to an international business.
Thirdly, ethics entail the various issues that supersede the organisational roles to the environment or area of operation. As a clear example, in the international environment, condemnation of child labour use is a prevailing ethical issue. It is therefore imperative that internationally based organisations ensure that they communicate the need for ethical practices and the non-use of child labour both internally and among their stakeholders.
Understanding and learning from failures
The international environment is highly daunting and is evidenced by various challenges that an organisation has to handle effectively. From the analysis of the international environment, the main aspects of failure include cultural disparity, consumer tastes and preferences, organisational pricing approach. The aforesaid three aspects result into failures among the various organisations since customers form the most fundamental part of an organisation towards success and profitability. Through understanding the customer, many of the pundits emphasize that profitability is bound to prevail. For an international business such as Acer to maintain international competency, implementation of research and data mining is bound to ensure effective and successful outcomes.
How to create a global business: Acer entry strategies
The entry of a business into the international markets and maintenance of sustainable sources of sales and profits are cardinal issues to the business. As the first entry way, Acer incorporates foreign direct investment. As such, foreign direct investment entails setting up operations in a given country through setting up a subsidiary. . This vivid explanation explains what a wholly owned subsidiary control of operations. Acer has subsidiaries in Canada, California, and Germany and in Britain In accordance to P & Rai, (2009 p56), the term subsidiary refers to the business bought while the buyer is known as the parent company. The parent company has vehement control over the operations of the business. This is done or incorporated through the overlooking endowed powers on the parent company. Consequently, the business with controlling interests faces the following rewards; it has accessibility to more financial resources in form of income earned in the subsidiary. Through this income, growth and expansion measures can be undertaken by the parent company expanding their revenue sources (Hill & Jones, 2009 p.67). Similarly, integration of technological and performance processes between the parent and subsidiary can lead to reduced costs at an exponential level. The control that the parent company has on the subsidiary can be quite rewarding since the steps and directions taken by the subsidiary are usually predetermined by the business. The performance and technical expertise are intertwined and incorporated to get better results. Added to this, the parent company can use its subsidiary in the launching and execution of a novel product. If the subsidiary is of solid base and recognized widely in the local market, the sales margin may prove worthy to the parent company. On the other hand, through the use of foreign direct investment, Acer faces the following perils. Firstly, concentration of risk on one subsidiary may result to even greater losses; these losses may be as a result of malfeasance by the subsidiary which may have further ripple effects on the parent company (Hill & Jones, 2009 p.34). Secondly, the differences in culture between the parent company and subsidiary may result to conflicts of interests and ideas culminating into myriads of losses. Admittedly despite the advantages and disadvantages of this strategic entry method, it has still proven a crucial line between success and failure in the foreign markets.
As the second entry mode, Acer incorporates direct export of the products by the business may prove as another entry strategy. Within this strategy in relation to Wyman (2009 p.88), the business is laid upon the duties of distribution to the customer interested, marketing, research, shipment logistics to the demand locations and the receivership of the payments made. Simultaneously, the advantages accrued to this mode of entry include, direct contact with your customers thus knowledge of their needs and terms is enhanced. Through this improvements can be made on one’s products. As well, the solid base created between the seller and the customer ensures a constant available market. This further increase the benefits gained through the effectiveness and efficiencies of the business voyages since pre knowledge of the buyers is guaranteed (Wyman, 2009 p.88). Lastly, this method of entry ensures that protection of the patent, copyrights and trademark is meted on the business. When the tables are turned, this business endeavour is highly costly as seen from the advertisements, exports and logistics involved and delegated to the business. Secondly, time and efforts are paramount in the growth and expansion of the export strategy (Delaney, 1998 p.45). These aspects may not be available considering all the levels of the organizations will be sharpened to the establishment of the direct export policy. Lastly, highly technical products will raise further needs of settling up shops in the foreign markets to cater to the problems that may arise. Nonetheless as an entry strategy, direct export has been a key stroke to the many businesses that favour this method.
Internal environment analysis
The internal environment entails an evaluation of the various issues that are in control of the organisation. Acer operates in the IT industry that is highly cutthroat and requires effective strategies emanating from the internal policy formulation. The company manufactures and sells IT products and provides maintenance services. As such, the acer brand is recognised globally amongst the consumers in Europe, North America and Taiwan (Hewitt 2012 p65). However, the company generates its main revenues from the Eurozone. In the operational facet of the company it is mandatory that it maintains environmental intelligence. Thus, the most plausible tool towards analysis of the internal environment is the SWOT analysis.
SWOT analysis denotes an evaluation of the organisational strengths, weaknesses, opportunities and threats. Therefore, a SWOT evaluation of Acer is as follows:
In reference to the diverse pundits, the acer brand is recognized and preferred among the most consumers in Taiwan and other global markets. As such, the company enjoys heightened levels of brand recognition or awareness in the key markets. Accordingly to the survey undertaken by inter brand, it was found out that the acer brand was ranked third in regards to preferred laptop manufacturer.
High employee efficiency
The organisational employee efficiency is evaluated through comparison of the number of employees with the total revenue generated. The revenue per head in twelve months was approximated at $2.1 million (Hewitt 2012 p65). In regards to the diverse pundits, the level of revenue per employee is higher as compared to the industry average that was pegged at $ 1 million. High employee efficiency denotes organisational success in their human resource management.
Acer has been grappling with the prospect of reduction in margins over the past few years. As such, the company five year profit margins have been between 1 to 6%. The lower profit margin has been in a lower mandate as compared to the 6-7% industry average.
Increase in global IT spending
In the global environment, it spending has been on the rise from 1.2 trillion dollars to 1.5 trillion as at 2010. The global hardware market spending has been estimated to increase and reach $590 billion as at 2011 (Shubik & Levitan 2010 p39). The increase in spending in regards to volume servers, peripherals and storage. Companies are realising the significant role that IT spending plays towards enhancement of efficiency and effective performance.
Growth of the PC market
Increasing demand by customers for PC has been on the upward trend globally. From the evaluation of Shubik & Levitan (2010 p39) the PC shipments are projected to increase to 600 million units as at 2011. Hence, Taiwan provides a varied range of PCs and notebooks such as Verizon, acer power and so forth. The expansion in worldwide market provides Acer with a plausible environment for the company to catapult its revenue.
The PC sector, in regards to diverse pundits is dominated by few large branded coupled with smaller and generic competitors. Organisations have to grapple with extensive competition from the branded companies such as Apple, Dell, HP, Lenovo and so forth. Furthermore, Acer also faces competition from generic manufactures (Greenberg 2011 p82). The pricing pressure in the recent years has led to the need for effective strategy formulation by Acer.
Commoditisation of personal computers
Any of the critics are emphasizing that the personal computer sector is becoming highly commoditized. In regards to diverse pundits, the demand for the branded PCS has been declining due to the prospect of standardization that reduces the quality disparity between branded and unbranded PCs and components.
External environment analysis
An evaluation of the external environment denotes an analysis of the factors that are not in the control of the organisation. Through an evaluation of the external environment, plausible strategies can be implemented by the organisation towards sustenance of effective profitability. PEST and Porter five forces analysis are two techniques towards understanding of the external environment. Thus a PEST analysis of Acer is as follows:
PEST analysis denotes an evaluation of the political, economic, social and technological factors that impede on organisational performance. An analysis of the organisation is as follows:
Majority of the analysis emphasize that the laptop and PC industry is growing at a faster rate in the developing economies as compared to the developed nations. As such, the changes in government policies in regions such as china and India have positively affected the potential growth of the industry (Hornby 2011 p27). As a clear example, India removed import duties on the laptops. On the other hand, the increasing emphasis on environmental impact has called for increased restriction on high-tech trash.
Organisations are still recovering from the notion of economic recession. Most fundamentally, it is imperative to acknowledge that the forecasts in regards to decline in PC sales have been evident. As at 2008, there was a decline in IT spending by 4%. Furthermore, in 2009, it was estimated that the IT spending had also decreased by 14.9% (Greenberg 2011 p82).
In reference to Hornby (2011 p27) the social factors such as education, income levels, preferences and so forth have become a plausible aspect towards increase in profitability. Most fundamentally, in the developing economies, emphasis in education has led to an increase in demand for PCs. The increase in ICT empowerment has become a commendable aspect for Taiwan.
Technological development and advances in the decades such as an increase in processing power and reduction in power consumption has been highly impactful on the PC industry. The significant changes in the industry have led to the major focus on low cost production of products and services among the diverse industry leaders (Hornby 2011 p27).
Porter five forces
Competitive rivalry in the industry
The laptop and PC industry is highly mature and price has become a differentiating factor among the diverse industry players. As such, the prospect of price wars has led to the concept of standardisation and effective cost cutting measures to increase profitability. On the other hand, premium companies such as Apple have curved out their niche through premium products that are luxury based,
Bargaining power of supplies
Suppliers for all the competitors are limited in regards to bargaining power. The low bargaining power is as a result of the increase in commoditization of the hardware components. Intel and AMD are industry leaders in micro-processor supplying and compete for an increase in market share (Sparrow 2013 p48). However the reduction in bargaining power is a result of the need for product promotion among the consumers.
Bargaining power of buyers
Customers exude a high bargaining power over the organisations since they constitute the main part of the sales. Additionally, customers have a bargaining power in regards to dictating the demand and preferences (Sparrow 2013 p48). The consumer preference for mobility, connectivity and at low costs is aspects that customers want.
Threat of new entrants
Organising and managing international firms
International leadership is a highly dynamic performance aspect. A leader entails a more performance oriented individual. As a leader it is more naturally inborn. A leader is exudes the various characteristics within the organization. Transformational, transactional and so forth are some of the leadership styles that are evident in the international markets. On the other hand international management denotes clearly set operational mandate. Admittedly the manna concept of management is dependent on planning; organizing directing and so forth that is the clearly set policy statement. Thus, the operational facets of management dictate the operational policy mandate as a manager.
Culture in international environment
Culture denotes the different aspects such as language, tastes and preferences, values and behaviour. As such, in the international environment, it is evident that there are different regions that a company can operate. The diverse regions exude disparity among the consumers or individuals in regards to values, tastes, preferences and behaviour. It is mandatory that an organisation comprehends the evident levels of culture that are individual, family, national and international culture. The levels of culture result into the need for disparity towards the strategy implementation and performance mandate.
Business groups, conglomerates and emerging markets MNCs
The international environment is highly daunting and characterised by diverse aspects. From the analysis of the international environment, there are diverse business groups that entail conglomerates, multinational organisations, partnerships and so forth. The disparity in environmental structure of organisations results into the need for effective analysis for plausible outcomes. Furthermore, there are emerging markets that organisations such as Acer need to evaluate extensively. Emerging markets denote regions such as china, brazil and India whereby changes in regards to economic policies, government regulations and the economic environment which have generated a plausible environment for revenue yield in regards to a given organisation or individual preferring market venture.
All in all these entry strategies offer maven tools to the various businesses that desire to venture to the international market. Reproach, redress and calculated manoeuvres in the entry to this market are parsimonious to the survival and success of the business. Thus the most appropriate and favourable strategy should be picked. Furthermore, through the environmental analysis of Acer, it is highly advisable that it continues implementing the entry strategies towards mitigating the various challenges it faces in the operational industry.
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