the acer group's china manufacturing decision Case Solution
The case illustrates an importance of determining the optimal solution to implement manufacturing setup in another country, where under this particular scenario, China was the primary target for ACER forconducting operations, for increasingits competitive position and to sustain the revenues overtime. Lin (The Vice President) was considering several options, one of which includedestablishing setup in China’s mainland. However, there were certain barriers imposed on the project’s execution.
The first issue was the differences in cultural and political background. ACER’s primary operations were located in Taiwan and focused on adopting different cultures to achieve their outcome. Taiwan is a democratic country in which, people can freely conducttheir businesses without the need of any special permissions by the government. On the other side, China, in contrast to Taiwan, focused on the communism culture where people were not allowed to hold businesses independently, unless the business is under active control of the government and other political forces.
Furthermore, a nature of human resource could also affect the operational efficiency of the business. The reason behind such acts was that nationalistsfrom Taiwan were fleeingChina due to the country’s political and economic situation. Therefore, theChinese government was against the relocation of these people into the country. Another factor was that the already established computer market in China consisted of cheaper products to deliver. So in this way, there was a less chance to step in the Chinese market and dominate the industry quickly.
Taking all these scenarios into consideration, Lin was focusing on various alternatives in which the outcome would be achieved in a timely manner and according to the mission criteria. The first option Lin decided on was to create a joint venture with any of the big giants or traditional businesses. The choice was difficult to implement because none of the companieswanted to consider a Taiwan-based dominance within their market.
Another option was to execute “Go Game Strategy” under which, a fixed target market would be villages and small territories,to achieve the outcome through consistent performance and to increase expansion towards the main cities of market rivalry. The final option was not meeting with the mission of the company in which, ACER would not be able to enter into China’s market at a time due to the threats of country-specific problems as well as social perception.
Therefore, to engage in China’s territory, a company should take acritical decision that would be useful to both the countries in promoting relations and the going concern of operational value within a particular market. Also from the perspective of Lin, it has been determined that the related issues should be solved before entering the market and establishing a manufacturing plant and services. If this would not be highlighted, then it can be said that the business would suffer a huge loss and would not be able to survive in the long-term.
Under the new scenario, it was identified that ACER could face several challenges in China, regarding political issues, difference in culture, lack of relationships within particular countries (Taiwan and China in this case) and risk imposed on investment decisions. Therefore, M.Y. Lin was focusing on picking a niche strategy to enter the Chinese market and to gradually getinvolved in divarication towards the major cities to take acompetitive position. But the situation was not right for him because Chinese would never allow other market players to compete and hold the top ranking. Thus, all these highlighted problems clearly indicate that Lin should focus more on the external issues rather than implementing the internal system of control and to enter the market without addressing the environmental andother external sort of problems.
Situation Analysis (Looking for an opportunity)
The location clearly indicated from the perspective of Mr. Lin that China was one of the fastest developing countries around the world. It is involved in an emerging market expansion rather than going towards the selected industry players. He said that an opportunity has arrived under which, we can prove what we possess in orderto fulfill the third world’s market needs.
The third world, in this scenario consisted of villages and other small territories where ACER could boost their presence and make it a successful company,in that country by continuously focusing on their business expansion. On the other side, we wouldalso be able to increase the relationships, politically as well as economically. Therefore, under particular circumstances, an opportunity could be executed by focusing on controlling the external barriers and then allowing to increase its operational controls.........................................................
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