Acer, Inc: Taiwan’s Rampaging Dragon

1. Growth Summary of Acer

 In 1976, Mr. Stan Shih, his wife and three friends, founded the “Multitech” which was the

predecessor of the Acer company

 By the mid of 1980s, Multitech announced a international expansion plan described as

“Dragon Dreams”.
 In 1987, Mr. Stan Shih rename “Acer” for Multitech due to namesake problem
 In 1989, Mr. Stan Shih brought in Leonard Liu, senior IBM executive. Liu divided Acer’s

organization into SBU focus on production-and-engineering and RBU responsible for sales-

and-marketing.
 In 1992, Mr. Stan Shih reclaimed the CEO role for Acer. He articulated new management

philosophy and organizational model and even business concept:

—“Global Brand, Local Touch” philosophy

— Client server organization model

— The fast food business concept
 In 1994, ACC was breaking even and promoting its new product to become a viable global

product.
2. Organization culture
The organization took an important role in Acer’s success since its

inception.

The firm’s culture under the leadership of Stan Shih, CEO of Acer Inc., had

always been very supportive and employee-friendly. For example, even in

the initial days when Acer (then Multitech) was capital constrained and the

CEO had preached the philosophy of frugality, key employees were offered

equity, giving them substantial ownership positions in subsidiary

companies.

Why did he introduce this kind culture? Shih had learnt a lesson from

his past experiences that authoritarian or dictatorship culture should not

prevail in an organization. He believed that in that culture it tends to

generate opinions which are neither balanced nor harness. As a result, he

involved his employees in substantial decision-making process and trusted

their capabilities to keep them motivated.

Meanwhile Shih was committed to employee education in his organization

and developed a strong pupil-teacher relationship between the employees

and their supervisors. In fact, he had decided on grooming of one’s

subordinates as a criterion for promotion of the supervisors.

What were advantages of this culture in the organization?

Such an employee-friendly culture is very conducive to provide the

employees with a relaxed environment where they can perform without

any stress. For example, they were given liberty to make their own

decisions as long as they took responsibility for their actions. If the

employees are allowed to make mistakes and learn from them, they tend

to be more creative in their ideas and more expressive of their concerns.

Moreover, the existence of a mentoring attitude of the managers towards

their subordinates leads to personal development and growth of the

individual, which in turn leads to more productivity and dedication in the

workplace.
What were the possible disadvantages of this culture?

The prevalence of such a liberal environment may be misunderstood as

one without any discipline or a proper code of conduct. For example, the

company under the leadership of Shih lacked a clear organizational

structure or procedure-based administration. If the employees are so used

to working in a relaxed environment, it might be very difficult for them to

deal with stressful job conditions, especially in case of emergencies. In

addition, employees might not be able to improve their capabilities

effectively due to the absence of stern performance standard.

What was the vision and target of the company with this

organization culture?
Shih hoped to make Acer a company where employees would be

constantly challenged to ‘think and learn’ and where co-workers shared a

family-like bond with each other. That was the reason for him to develop

so closely-linked culture at Acer.

3. Leonard Liu’s management style

To meet the increasing market competition Stan Shih bought in Leonard

Liu, an senior IBM executive with a reputation for a nononsense

professional management style. Shih stepped down as the president of

Acer group and giving Liu the reigns of the company.

What was the different management style between Liu and Shih?

Liu had a different mindset than that of Stan Shih. He introduced RBU and

SBU in Acer at various places in the world and they had the complete

responsibility of giving profits to the company. Also he bought a number of

companies in North America to increase the profits of the company, but

when these takeovers didn’t give profits then he went for layoffs. Hence

first ever major layoffs took place in Acer’s history in Jan 1991. In contrast

to Shih’s supportive, family-oriented approach, Liu’s iron-fisted

management style incurred antipathy in the mind of most employees. Due

to this “commoner’s culture” was lost and hence Liu has to resign and

Shih had to come back as the CEO of Acer.

What was the change Shih bring for Acer when he came back?

Firstly Shih brought Acer a Client Server Organization Model because of

which he was able to connect to the various SBU’s and RBU’s more

efficiently. At the same time, he gave full independence to the SBU and

RBU heads.

Secondly Shih advocated a “Global Brand, Local Touch” philosophy, with a

vision to evolve Acer to a truly global organization with deeply- planted

local roots.

Lastly he bought in the “fast food industry concept” in the company to

achieve saving a lot in logistics and duties which could easily compensate

higher local labor assembly cost.

Hence, these changes brought Acer back profitable after three years of

loss and boosted it to be a multinational conglomerate with operation

globally.
Ref: Abhirup Mukherjee (04 Mar 2009) “Acer Inc Taiwans”, Scribd