Strategic decisions of a company are influenced by market conditions, degree of competition, condition of economy, regulations affecting the industry, its own growth targets and the interactions with its subsidiaries i.e., business units (Morton, 1990). However, the management of innovation for the parent company is a challenge.
It is interesting to note that companies employ different set of strategies at different phases of the life cycle. Initially the product idea comes from in-house innovation, and the company resources are concentrated around development and marketing of the product. During growth phase, efforts are used in marketing to achieve high market share, revenues and the innovation is heavily influenced by the market pull. Once a company has achieved “success”, competition sets in. Additionally, company has to expand to retain its growth, and starts diversifying and expanding. With the competition growing and limited resources, the company starts joint ventures and alliances setting up subsidiaries and business units.
Strategy informs your decision making. Decision making drives the routes your company will take to achieve its goals. How then do you formulate and implement good strategy? By truly understanding the value drivers for your organization and its market space.
Strategy is critical. But often there are two extremes in executive’s minds – one that believes that strategy is everything, and consequently spends too much time thinking than doing. The other extreme is that of an operationally efficient mindset, that considers everything to be run efficiently without regards to whether it is important or not.
That’s why decision making is so important.
ASUSTek Organizational Structure
Available from http://www.acer-group.com/public/Investor_Relations/pdf/Acer2008AnnualReport.pdf
ASUSTek vs. ACER organizational structure
Our group has examined the top levels organizational structure of both companies that was based on the secondary data gathered from internet sources. We are going to evaluate each structure and choose the most effective one. Despite the fact, that both companies are using Hybrid Matrix Structure, they remain unique in their development and adoption for their own needs, operations and sustainable growth.
According to the structures we can divide the two companies based on their functionality and analyzed them as follows:
ASUSTek chart represents the predominantly functional or hierarchy type of structure which focuses on particular target group and their narrow marketing strategy. Hierarchical structure helps to control managers and subordinates more efficiently. Moreover it helps to define each role of employee within the company and defines relationship with other employees. ASUSTek is using tall, centralized structure that refers most of decisions taken at corporate level. Tall structure has weak links of control, which become bigger and stronger as we go down the structure. But such implementations as external Supervisor and Audit can fully recover the situation with weak control of the top management.
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Acer chart represents the matrix strategic alliance structure mainly focused on products differentiation and geography location based on their type of operation and strategy. Acer is using matrix structure which as well has its own advantages and disadvantages. Matrix structure has low standardizations, but it has high level of differentiation and the overall structure is flat which is always decentralized. This means that the decision can be taken much faster to solve a problem which have effect on the overall work efficiency. Although decentralization has some disadvantages in co-ordination which cause a constant conflict between managers and a constant competition among them. It is hard to maintain the operational process because of many departments, divisions and executives that are delegated to maximum possible operational outcome.
Our group came to consideration that the ASUSTek hierarchal structure with external monitoring of top level management is more efficient in the case of Hi-tech technology market as it helps to define each role of employee within the company and defines relationship with other employees and implies high level of internal control.
Mission, core values and objectives review
Acer’s long-term mission is to break the barriers between people and technology. They commit to developing easy-to-use, dependable products that meet customers’ needs has led to the creation of our unique Empowering Technology, designed to ensure that customers receive the full benefit of each and every technological breakthrough. Empowerment through hardware, software and services – that’s the Acer brand promise.
Overcoming the barriers between people and technology: This is Acer’s long-term mission, to allow anyone to use and benefit from technology. Acer is renowned for the development and manufacture of sophisticatedly and intuitively designed, easy to use products.
ASUS’ corporate mission is to provide innovative IT solutions that empower people and businesses to reach their full potential.
ASUS plans to achieve its mission through Passion for Technology, Focus on Quality, Long-term Relationships, and Perseverance.
Passion for Technology
Technology is the heart of ASUS. They continue to invest in the world-class Research and Development to be able to provide leading-edge innovations to people and businesses.
Focus on Quality
Quality is of utmost importance to ASUS. The company continues to refine quality management processes to ensure customers receive the highest quality solutions cost-effectively.
Whether they are our customers, the media, shareholders or consumers, we believe in growing with our partners at all levels. Maintaining strong relationships with key stakeholders is one of the most important factors of continued success.
All ASUS employees share the same sense of purpose. They work to accomplish the same mission-to empower people with innovative IT solutions.
The challenge for Acer is to be unique. The mission of the company is to stands out from the crowd.
Being unique, however, isn’t a simple quality.
At Acer has built its reputation on creating value in every aspect of the company throughout our
history. The enterprise creates value for:
â€¢ customers by offering a continuous stream of innovative and empowering solutions that anticipate and
satisfy their needs.
â€¢ investors by consistently providing positive returns year after year.
â€¢ employees, allowing Acer to realized our full potential and achieve goals.
â€¢ business partners with win-win solutions with vendors and valuable channel partners.
Creating value through brand recognition is the way forward rather than competitive pricing.
To be a successful global brand company, it is critical that employees have a consistent set of core values
as a solid basis. The defined core values are likely bring to the Company both short-term benefits and long-term
The main approaches that the Company must base on are: Value-creating, Customer-centric, Ethical and Caring.
The way of acting is: Innovative, Fast and Effective.
ACER objectives are:
– To promote the development of free market and to develop the relevant associated economic policies;
– To promote institutional reform and the practical implementation of democratic values in legal and economic practice;
– To establish the ground for a better understanding from the public of economic development issues, and
– To develop an interdisciplinary research institute, trustful for accuracy and transparency on public affairs, problem analysis capability, surveys and case studies, researches, and expert-wise opinion on economic development and growth.
– To build bridges between scholars and policy makers and promote public private coalition building.
The objectives of ACER also are to advance educational and scientific profile and understanding, in the field of the promotion of free enterprises, limited government and personal responsibility; to publish, to conduct seminars, and to engage in such other and further means as may be necessary and proper to accomplish the foregoing objects and purposes. ACER encourages an open dialogue between scholars and policy makers and promotes public-private coalition building.
The definition of sustainability at Acer is to continue proactively fulfilling socially responsible practices, aiming for steady economic growth, environmental protection and social betterment in a robust corporate context of consistent earnings and sustained growth.
Acer continues to focus on 5 priority agenda and practices formulated at year end 2007, including better management of the social and environmental performances of our supply chain, the development of green products, countermeasures
against climate change, communication and information disclosure involving management and stakeholders, and efficient product take back. More precisely the corporation focuses on the following formulas:
1. Global brand management
2. Product design differentiation
3. An integrated marketing approach
4. Effective global customer relationship management
5. Precise and efficient marketing and communication
ASUS, a technology-oriented company with a global staff of more than ten thousand and blessed with one of the world’s top R&D teams, is renowned for high-quality products and cutting-edge innovation. As a leading company in the new digital era, ASUS offers a complete product portfolio to compete in the new millennium.
Inspired by the diverse needs of consumers in all areas and phases of life, ASUS’ foremost mission is to deliver truly innovative solutions that in turn inspire consumers to reach for greater heights of productivity and fun. By leveraging its intimate understanding of the requirements of today’s digital home, digital office and digital person, ASUS has the honor of claiming many world’s firsts-such as the introduction of the groundbreaking Eee PCâ„¢, the ingenious use of renewable materials like leather and bamboo in notebooks and the incorporation of its proprietary power-saving Super Hybrid Engine technology into its notebooks and motherboards. By pioneering many new innovations, trends and technologies that have had a genuine impact on its customers’ lives and the Earth at large, ASUS hopes to garner mindshare as well as market share.
To succeed in the ultra-competitive IT industry, ASUS focuses on speed-to-market, cost and service.
ASUS constantly strives to be an integrated 3C solution provider (Computer, Communications, Consumer electronics) that delivers innovations that simplify our customers’ lives and enable them to realize their full potential. ASUS products represent the best that technology has to offer, providing outstanding performance and aesthetics that seamlessly accommodate all lifestyles, anytime, anywhere.
Environmental Analysis of The Global Laptop Industry
Firstly, we would like to introduce you the review of the industry. Over the past few decades, in the notebook segment there has been an increase in competition as part of the new devices, and technologies. Smart phones (iPhone, Blackberry, Palm Pre) and mobile Internet devices start to compete with notebooks with features that include games, Internet access and enterprise applications. Changes in demand and new technologies continue to alter the outlook for the notebook industry in the coming years. New demand for low cost ultraportable laptops, called netbooks. The netbook has created new competitors, as ASUSTeK, and forced companies to change their business models to succeed. This affects the profitability of existing producers.
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Secondly, Porter’s five forces analysis should be conducted. Competitive rivalry in the industry – the notebook industry expects the decline trend of rice in the long term. Thanks to standardization among Windows-based PCs, the transition to lower cost and, consequently, competition drives prices down, rather than product differentiation. Apple, on the other hand, competes on product differentiation by developing premium products rather than low prices (Shah, A. and Dalal, A., 2009). Bargaining power of suppliers – for all competitors, they are quite limited in terms of market power because of increased hardware. Intel and AMD, two major microprocessor vendors compete for market share. However, their power is limited because of their need to promote products among consumers. Most manufacturers use different suppliers for one component, in search of their requirements from those who offer cheaper prices. Therefore, if prices are not competitive, suppliers will lose their competitors. As for Microsoft software dominates the line of Windows operating systems have a significant impact on computer manufacturers. Bargaining power of customers – have more power over the negotiations manufacturers, as most of the total PC sales consist of a large volume of purchases from businesses. In addition, consumers also have the right to vote, on demand dictates and buying preferences. Consumer preferences for mobile and wireless communication at low prices led to an increase in notebook PC market, compared with desktop computers. In addition, continued demand for lower cost lead to aggressive pricing, as well as creating new categories of devices such as netbooks.
The threat of new entrants – because of aggressive pricing and lower profits, there is a high barrier to entry for new companies. Since large companies are able to invest more in R & D and to more easily hire the best management professionals, there are great opportunities for innovation in products. This further increases the barrier to entry for smaller companies. However, the introduction of netbooks ASUSTek in late 2007, is an example of the identification of consumer demand (Shah, A. and Dalal, A. 2009), which was not recognized by any one of the leading players in the industry and becoming a new competitor. Consequently, ASUSTek growth rate of 103% in 2008, because he was the only manufacturer of netbooks at the time (ASUSTek Computer Inc. annual report, 2009). Threat of substitutes – the laptop industry is facing serious threat due to new trends such as cloud computing, which could potentially reduce the need for high computing power in portable notebooks. In addition, advances in computing power and, as well as communication technologies (3G, WiMax, etc.) devices such as smart phones (iPhone, Blackberry, etc.) to compete with laptops providing similar capabilities. For example, iPhone applications, reduce the need for laptops, providing similar functionality.
Thirdly, we would like to show you the competitors in the PC industry and key industry factors. global PC market, including portable segment is dominated by mainly five major competitors: Hewlett-Packard, Dell, Acer, Lenovo and Toshiba in descending order, and together they make up about 60% of the total market share (Gartner, 2009). In the top-10, Apple has been gaining market share compared to Windows-based PCs and laptops, mainly due to its positive brand reputation. In terms of overall PC, HP is the leader (18,9%, 2008) followed by Dell (15,5%, 2008) (Shah, A. and A. Dalal, 2009). In the segment of netbooks, Taiwanese companies such as ASUSTek and MSI has sharply increased its market share in recent years (Gartner, 2009). In order to remain competitive, all the leading manufacturers have some common characteristics or key success factors. Efficient production and distribution capacity is one of the key success factors.
Innovations and capability to reveal requirements of clients are success key drivers. Besides, influence of these success factors consolidations in the computer industry from the largest firms have led grows.
According to the Shah (2009) report based on the analysis of key drivers of success, the weighed estimation of competitive forces shows that the market future will dominate HP, Dell and Acer. All the best firms in the table are very similar as a matter of fact, except for Apple. Less quantity of netbooks, the price with the allowance, a small part global, and various operating systems leads to the Apple, typed the least quantity of points. The best Windows laptops have similar estimations in connection with the commoditization industries. In the future, netbooks which under forecasts, will grow to market shares of 30 % of the world market of laptops in 2012.Netbook industry affected by two methods: more low prices for all categories the laptop and change of consumer preferences. Besides, Gartner, Inc estimations of global growth the block of the personal computer of 10 %, but only 4 % growth in dollar expression in 2009. Thus, the long-term trend to profit decrease proceeds, despite growth of sales of the company are forced to correct the business models to keep profitableness. For example, Acer declared a new line of laptops and thin laptops for maintenance and profit increase, despite reduction in demand for the personal computer.
In the fourth turn, comes PEST the analysis. Political factors – the laptop and the industry personal computer will grow faster rates in developing states in comparison with developed countries. Thus, changes in a state policy in developing states as India and China can affect growth potential in the markets. Additional testing and certification participation direct influence on supply chains for laptops and the personal computer of manufacturers that leads to increase in expenses. The increase or to influence consumers and less favorable to manufacturers. Business factors – world economy influences various factors which influence growth of the industry of the personal computer. Since 2008 world economy delay is one of the reasons of decrease for business capital of expenses for small and large corporations that has led to reducing of demand for the personal computer. Gartner, Inc the forecast of decrease for 3,8 % in global IT Expenses from which cost of computers, predictably, will be reduced to 14,9 % in 2009 (Gartner, 2009). In connection with Garner (2009), this expenditure cut on IT, possibly, slow restoration in 2010, in the personal computer world market, predictably, the person delay from the point of view of market value of expectation 5,4 % of growth in 2009 to 4 1 % in 2012.
The majority of manufacturers of laptops, such as Dell, HP, Acer, Lenovo, Apple and to generate sales worldwide and, as consequence, exchange rate is the important factor. The economy in developing states, such as China, India, Brazil and Latin America grows much faster, than the developing countries and, hence, to provide higher rates growth of possibility for manufacturers of computers as developed countries, like USA and Japan were stagnant. This tendency finds the reflection in slowest one figure of growth in the last some years, in difference from the consecutive two-place growth in emerging markets. Social factors, such as formation, preferences, level of incomes, and other cultural factors influence demand of models in various regions and, hence, to influence the companies working in each region. It has allowed Apple to continue the strategy of pricing of an award in performance and in comparison with level formations influences as product demand, and also preferences.
Technological – technological achievements for last decade, such as increase in computing capacity about low consumption of energy and to expenditure cut, standardization or as Windows and Intel’s in laptops, are one of basic reasons of increase in a market share a segment of laptops in comparison with the general industry of the personal computer. New technologies, such as placing virtual desktops (HVD), threaten completely to change the industries dynamical, in connection with possibility more cheap computers, along with lower cost of the software.
C:UsersAlmatDesktop3.png(Available from ASUSTek annual report, 2009)
(Available from ACER annual report, 2009)
Acer and ASUSTek are the second and third largest computer manufacturers in the world by market share. ASUSTek was number two until late last year, when it was taken by Acer. ASUS pins its problems on the increased cost of components and on declining corporate sales.
Acer diversifies its product designs under the auspices of its multibrand policies; its current core businesses include R & D, the designs, marketing and services of quality notebooks, desktops, servers, handheld devices, LCD TVs and projectors. In 2009, Acer made inroads into the smartphone market by launching the Tempo series; Acer is ready to provide high-performing, reliable and userfriendly products in the future so that the customers stay on top of things in the information society. In addition to innovative R & D endeavors in product designs, Acer steadily expands its business empire; at current, operating bases are set up in over 50 countries across the 5 continents. In 2007, Acer celebrated successful mergers of Gateway and Packard Bell to bolster the company’s global positioning by strengthening its presence in the U.S., and enhancing its strong position in Europe to balance its revenue distribution and attain risk sharing. By yearend 2009, revenues in Europe, the Americas and the Asia- Pacific account for 50%, 30% and 20% of Acer’s global gains.
In addition to its focus on mobile computing to build market share, Acer intends to make inroads into the corporate world to propel it to market dominance. With new IT spending trends on the rise, Acer has a lot of potential if it manages to overcome its newcomer status and consumer-oriented reputation. Acer’s challenge is to convince corporations that it is capable of producing and supporting quality computers for the global enterprise. To date, Acer hasn’t gained much ground in the corporate world, but hopes that increase IT expenditures in the current year will provide impetus to its new initiatives.
We state that in order to continue successfull development of the ASUS company, it should be more inovation and price-reduction oriented. As we can observe from the last 3 years reports, ASUSTek is going to reach the phazeof stagnation in 3-5 years in its life cycle. So, the campany’s strategy needs further implementations and reinnovations for further expanding.
As for the Acer’ strategy, our group claims that it is likely to achieve a success in the future by following this structure also such implementations as new corporate mission statement: Fresh Technology Enjoyed by Everyone, Everywhere. To provide the best value, products need to have the freshest technology available. We think, that following this strategy is going to bring future prospects. Acer claims to be number one.
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