Tuesday, September 17, 2013

Acer Aspire Case study solution

1.       Why is the Acer Aspire in such trouble just two and a half years after its launch? What are the sources of the problems in the U.S.? Worldwide?
Client Server organization structure
Ø  RBU’s and SBU’s were decentralized with lack of trust, understanding and coordination between them.
Ø  RBU’s lacked product expertise, resources and worked independently without capitalizing the strengths of SBU’s leading to component integration issues and diverse products.
Aspire’s Quality and Customer Service:
Ø  Quality of the product did not live to the marketing hype and positioning.
Ø  Revenue lost because of 3 years warranty and 15% and more returns.
Ø  Faulty products [CD-Rom issue] lead to expensive long customer service calls.
Inventory Issues:            
Ø  Excess Inventory [faulty products with local adaptation > 100 configurations].
Ø   No Standard Acer parts added 10-15% to cost, excess tech support for unique parts.
Market Competition
Ø  Global Branding ads not effective because of modified design and product positioning by individual RBU countries.
Ø  Lack of standardization and each RBU customized according to their needs adding to redundant functionality and more costs.
Ø  Lost market share because of strong brand competitors low price offering.

2.       How effective has management been in responding to these problems? What is your evaluation of the changes they have made to the product, the marketing strategy, the organizational structure and the management roles and responsibilities?
Created Marketing coordination for a Global Brand:
Ø  Culver took an informal role which shows lack of global business management team with assigned responsibilities.
Ø  Aspire had a different look and feel from country to country and each country positioned differently and used different pricing strategy.
Did not share insights and best practices across countries.
Ø  Hong Kong marketing program was a great success by teaming with chase bank which could have been done in other Asia pacific countries.

Diverse design and marketing approaches
Ø  Customers were confused because they got stripped down version of Aspire in the local market but not the globally advertised product.
Ø  Inventory issues [unique components for local market].
Ø  Lack of common brand planning process and responsibility to create cross-country synergies.
Ø  Accounting: No provision for future service costs, returns and inventory write-offs which were charged against same period sales.
Client Server Organization
Ø  Culver’s new marketing strategy with three new segments helped in expansion and reengineering customer service [20 minute to 2 minute wait time].
Ø  Arthur Pai as Project coordinator between RBU’s and SBU’s helped to resolve the tensions and enforced them to work together. Influenced Frog design to make entirely of standard rather than custom parts.
3.       In 1998, how should Stan Shih respond to broader issues raised by the Aspire problems? Should be continue to support the goal of building Acer as a global brand? What changes (if any) would you recommend he make in Acer's global strategy, organizational structure and / or management philosophy to ensure that it can continue to operate successfully worldwide? How should he implement your recommendations?
Ø  Redefine Client server concept: Stan must integrate RBU’s into SBU’s and move from a decentralized to centralized system to become a global business unit.
o   This will also help RBU’s to leverage the product expertise, build trust and capitalize the knowledge and additional resources from SBU to better position Acer in the global market.
o   Eliminates the redundant stuff and helps Acer in standardizing critical parts.
o    Reduce the overhead caused by unique components and increased customer calls from faulty products.
Ø  By doing this Acer can lead in its Global operations, leverage them for OEM business and position them for a better global brand.
Ø  Yes Stan should support global brand.
o   Branding should be created as a global function centralized in Taiwan.
o   Stan should form a Global management team with global brand managers from each country.
o   Stan should serve as Brand champion and each manager should be assigned responsibility for their countries.
o   Strategic elements of the marketing mix such as brand name and positioning should be standardized than execution –intensive elements such as distribution, sales promotion and customer service.

Ø  Utilize computer sales forecast tools for better inventory management; know where to invest and how to spend the marketing funds.

Global Marketing case study analysis

CPA/CAGE/PMA Market/Country Assessment

Product: Netflix Streaming-only service
Base Country: USA   Developed Country : Australia australia-flag-small.gif Emerging: India india-flag-small.gif

CPA Analysis [C]
Variables
USA
Australia australia-flag-small.gif
India india-flag-small.gif
Size of customer market[Broad Band internet users 2011]
85,630,000
5,498,000
13,350,000
GDP/Capita [2011]
48,112
60,979
1,489
GDP Growth[2011]
1.70%
1.90%
6.90%
Inflation [2011]
3.2
3.4
8.9
Currency Stability (Rating /10)
Strong (10)
Strong(9)
very Good(7)
Unemployment
8.20%
5.20%
9.90%
Decision

40%
60%



CAGE Analysis [C]
USA
Australia australia-flag-small.gif
India india-flag-small.gif
Cultural



  Language
English 100%
English 78.5%
Hindi(41%),Local language(59%), English Secondary
  Social Network
Hofstede's Cluster: Anglo
Hofstede's Cluster: Anglo
Hofstede's Cluster: Southeast Asian
  Social Norm
Prefer English programs/movies
Prefer English programs/movies
Prefer local language movies/programs and high linguistic content
Administrative



  Monetary Association
Stable Government/Globally accepted currency
Stable Government/Globally accepted currency
Unstable federal government, political corruption.
  Political Climate
No government regulations, No Corruption
No Government restrictions and regulations on foreign investments and markets. No Corruption
Government regulations and pressure from local cable TV and local media partners
  Govt. Policies
English Colony ties
English colony
English Colony
  Institutional
Geographic



  Physical Remoteness (2010) [Urban]
82 % of total population
89% of total population
30% of total population
Communication
Economic
Ranked 2 in the world
Ranked 25 in the world
Ranked 6 in the world
  Consumer Incomes (GDP)
48112
60979
1489
  Cost & Quality of Information   Cost & Quality of Infrastructure
Best infrastructure for streaming movies support by mobile streaming platforms
Australian infrastructure is  close to US Infrastructure
India infrastructure is improving

Based on the above CAGE Analysis and taking into consideration the market similarity matrix [A] Australia looked more attractive and less risky than India.

PMA Analysis [C]
Country
USA
Australia australia-flag-small.gif
India india-flag-small.gif
Key Drivers
Enabling Conditions
Cost of entry
Enabling Conditions
Cost of entry
Enabling Conditions
Cost of entry
Broadband Internet Infrastructure (itu.int)
85 Million
Good Customer base less cost.
5.49 Million
Good Customer base less cost.
13.35 Million
Good Customer base less cost.
Copyrights License (Movie database)
Netflix currently has exclusive pay-TV deals with major and mini-major movie studios.
First Mover advantage , big customer base to sign up with more movie collection
All most all of the existing Netflix movie database can be used in this market
Less cost of entry
Netflix’s traditional licensing agreement will not be easy to pull off with such content provider
Netflix will find it tough to negotiate with the domestic production houses in India
Very high cost of entry to buy local collection
Piracy
Strict Federal law
Easy to enter
Strict laws
Easy to enter
No laws, Pirated DVD
Difficult and high cost to enter.
Local Competition
first mover advantage
Easy to enter
PPV/IPTV/YouTube/Quickflix competition
Urbanized population and more exposure to United States. Moderate Cost.
Very Strong competition from Pirated websites/YouTube/IPTV/PPV/local Cable TV
High Cost to enter
Media Compatibility
Netflix compatible with Gaming consoles, Blue ray /DVD/Set top boxes
Existing Media console support
Netflix compatible with Gaming consoles, smart TVs/Blue ray /DVD/Set top boxes
Existing Media console support
India's market is still in early development. Smart TV's are not affordable, less Netflix media compatibility.
Higher Cost because only 30% Urban population and huge investment in supporting media
Sophisticated Customers
English speaking country
Netflix existing media library easy to use
English speaking country
Netflix existing media library easy to use
Local language movies need to be streamed, English movies with translations
Cost associated with purchasing rights of regional movies/shows are high
Brand awareness
first mover advantage
Low Cost
Media advertisement
Low Cost
Majority in rural population more cost for brand awareness
Advertisement and customers reach cost is high
Movie Market
No Piracy so people watch through Netflix
Low Cost
Strict Piracy laws encourage them to watch through Netflix
Low Cost
Torrent movie downloads, pirated online streaming, tough market to compete
High Cost to fight piracy

Based on just the PMA Analysis these are the recommendations
Country
PMA Analysis
USA
Current Market
AUSTRALIA
Should Enter Next
INDIA
Risk Involved in entering

Evaluation /Conclusion [CPA + CAGE + PMA – Market Entry Analysis]
Ø  Developed Country : Australia australia-flag-small.gif
  • Taking Canada as the analogous market for estimation purposes where Netflix entered recently, it’s less risky and attractive to enter Australia next. Netflix can use the same pricing strategy of $10 subscription.
  • Australia being a very close similarity to USA according to [A] and from the CPA/CAGE/PMA analysis above, Netflix can use their existing movie library to penetrate into Australian market with less risk.
  • Australian market is growing internally, customers are increasingly aware of global trends and more comfortable with online payment systems, internet penetration is on the rise and movies remain popular in general.
v  Risks: Quickflix Australian DVD rental/streaming company has an early mover advantage. Netflix had to invest more on advertising and offer a lower price than Quickflix. YouTube with its pay per view option also poses a risk to Netflix in Australia.
Conclusion:   Enter
Ø  Emerging Country : India india-flag-small.gif
  • Taking Brazil as the analogous market for estimation purposes where Netflix entered recently, it will be difficult for Netflix to enter into India because of its lack of infrastructure and Netflix compatible devices. Since Indian movies are produced in different local languages and English is not the primary language there is a  high investment costs associated in buying rights for local Indian movies
  • In India, majority of production houses have already started to host movies through their websites. Netflix’s traditional licensing agreement will not be easy to pull off with such content providers.
  • Corruption and Piracy: A typical lifecycle of a movie is shown in appendix [ B]. In India because of no regulations and corrupted government pirated copies of the movies are freely available in the market for a fraction of the cost. So it’s very difficult for Netflix to attract the loyal and honest customers.
  • Increased competition from YouTube, PPV provided by local cable TV and dish operators also pose a risk for Netflix. There is a strong opposition by local cable TV operators for foreign TV streaming market like Netflix.
Conclusion:  Do not enter





Appendix


e)      http://gapminder.org