n 2007, Acer Inc.

(Acer) was the third largest computer company in terms of world-wide personal computer (PC) shipments. With 2.43 million units shipped, the company enjoyed a market share of 7.6%. Its growth rate stood at 31% against the 30% of Hewlett-Packard Company (HP) and 21% of Lenovo Group Ltd.1 In the first quarter of 2008, the company sustained its performance and its market share grew to 9.5%.2 Its growth rate of 25.2% was higher than that of Dell Inc. (Dell) and Lenovo

Analysts felt that the company had come a long way since 1994 when it was the number eight player in the global PC market. According to analysts, Acer's rapid growth could be attributed to the restructuring efforts the company had taken up since the year 2000. In December 2000, Acer split its PC-system manufacturing business unit into a new division and this was incorporated as a separate company, Wistron Corporation, in 2002. In 2001, the name of Acer Communications and Multimedia was changed to BenQ and it started operations as an independent BenQ brand. Acer focused on providing Acer-brand IT products like desktop PCs, home PCs, mobile PCs, servers, and Internet appliances. BenQ, on the other hand, offered digital life devices like mobile phones, LCD and CRT monitors, digital projectors, plasma displays, optical storage, and imaging products. In 2006, Acer left the board of BenQ in order to avoid conflicts.3 Acer's restructuring enabled the company to realize lower operating expenses which provided the twin advantages of allowing it to price the PC aggressively and offer higher incentives to its channel distributors. Acer also refocused its marketing efforts from direct sales to indirect channel driven sales. The company opted for achieving growth through building strong relationships with its dealers, by offering lower prices to the consumers and providing unique product innovations. By 2007, Acer was the fourth largest computer company behind HP, Dell, and Lenovo. As a part of its growth and expansion strategies, Acer acquired Gateway, Inc. (Gateway) in 2007.4 This acquisition also resulted in the acquisition of Packard Bell (a major player in the Western European PC market) by Acer as Gateway had a controlling stake in Packard Bell. The acquisition also established Acer as the third largest computer company.

In India, Acer partnered with Wipro Infotech Ltd. in the initial years. In the year 1999, Acer opened its own full-fledged Indian subsidiary.5 It initially concentrated on selling to government organizations and corporate customers. According to Piyush Pushkal, manager for PC research at IDC India, the growth in the market would be fueled by an increased demand for PCs by large enterprises, their increased usage in education, and the Indian government's push toward automation.12 In addition to this, the increase in wages in India would also help in driving PC sales in the consumer market, analysts felt. However, there were certain challenges that Acer faced in India. In addition to intensifying competition, the company had to deal with challenges such as how it could take advantage of the growing affluence of consumers in smaller cities and towns. The growth for Acer in India, thus far, had come from the big cities and it had a low market penetration rate in the small towns. Further, the service infrastructure in the small towns was also a cause for concern. Q1) In your opinion, can Acer's growth in the global arena be attributed to the restructuring of its operations? Give reasons to support your answer. Q2) Write a note on the growth path adopted by Acer in India. What should Acer do to take advantage of the opportunities presented by the Indian market? Additional Readings & References: 1. "Acer to Open Full Fledged Indian Subsidiary,"www.rediff.com, April 9, 1999 2. Dan Nystedt, "Acer Leaves Benq Board to Avoid Conflict,"www.infoworld.com , April 17, 2006 3. "Acer's Retail Strategy Boosts Revenue,"www.channeltimes.com, May 6, 2006 4. John Jacob, "Acer Revamps its Marketing Strategies in India,"www.itvarnews.net, July 17, 2008