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.

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