More on Acer...
By James Peng
TAIPEI, June 2 (Reuter) - Is building personal computers like making
McDonald's hamburgers? The founder of Acer Inc <2306.TW> says
that's precisely the strategy that built the Taiwan firm into the world's
seventh largest PC company.
In 1992, Acer Group suffered a T$70 million (US$2.5 million) loss
because of high inventory costs and management failures at its
overseas units.
It was then Acer chairman and chief executive officer, Stan Shih,
began to see how selling hamburgers, milk shakes and french fries --
moving final assembly as close to the customer as possible -- was
like marketing computers.
"To deal with the computer industry's disaggregated demands, we
have taken fast food as our business model since 1992," Shih told
Reuters Television in an interview.
"Since then, Taiwan has become Acer's central kitchen, in charge
of producing computer motherboards, monitors and outer cases,
while our business units worldwide have been transformed into
fast-food shops to assemble fresh PCs," Shih said.
By doing so, Acer has slashed its inventory period to 50 days from
100, reducing exposure risks, cutting costs and streamlining financing,
he said.
The strategy helped Acer Group pull off a dramatic turnaround in 1993,
when net profit hit T$2.26 billion (US$81.8 million). Group net profits hit
T$5.4 billion ($196 million) in 1994 and T$10.7 billion ($388 million) in 1995.
Sales rose 78 percent to T$151.2 billion ($5.48 billion) in 1995 from
T$85.11 billion ($3.08 billion) in 1994.
"I think Acer Group will likely reach sales revenues of T$400 billion
($14.5 billion) in 2000," Shih said.
The fast-food model has won favour at U.S. business schools and is the
subject of a book published last Friday in Taiwan. To implement the
model, Shih found Acer had to tap local talent as shareholders of its
overseas units, creating what he calls its "global brand, local touch" strategy.
"Local touch is having many of our units all over the world. Local
touch is our vision, with local shareholders taking majority stakes in
our overseas units," Shih said.
"And to build a common interest with local management and investors,
we like to list these units in their local stock markets," he explained.
"We plan to have 21 listed companies to welcome the 21st century."
So far, Acer Group has two listed firms -- Acer in Taiwan and Acer Computer
International <ACER.SI> in Singapore.
Two more are planned for Taiwan, with monitor and keyboard maker
Acer Peripherals Inc listing in July and marketing and distribution
company Acer Sertek Inc in September.
Shih borrowed a bit of computer industry jargon for Acer's fast-food
style global management, creating a "client/server infrastructure" to
run the group's business-unit operations. "Every business unit is the
client which makes its decisions independently. Yet at the same time
it fully supports other group members, functioning like a server," Shih said.
For example, Acer Peripherals makes and markets monitors independently,
yet also fully supplies monitors to all group members as a server, he said.
"To make the client/server structure work, the business leader must be
willing to fully authorise others," Shih said.
Shih's love of dreaming up and communicating business concepts is the
source of good-natured ribbing inside Acer.
"Chairman Shih does nothing but think, think, think for the group's direction
and talk, talk, talk to press people as if a public-relations man," one
executive joked, while confirming that Shih extends full trust and authority
to Acer managers.
Acer will mark its 20th anniversary by launching another concept product
-- a US$500 "network computer" -- on June 18.
"We'd like to make Acer a global household name. To do so, we need
to diversify our product lines, especially by making more easy-to-use,
affordable home consumer applications.
"Fortunately the PC has that kind of nature," Shih said.
Cultivating talent remains the group's top headache. "Our biggest challenge
is how to recruit people, train and develop them in the Acer way and
culture. And then invite them to be shareholders -- especially outside Taiwan."
(Conversion: US$1 = T$27.6)
04:18 06-02-96 |
