Buyer Seller Relationships- Acer

7/29/2019 Buyer Seller Relationships- Acer

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Buyer Seller Relationships

The relationship and interdependence between Buyer and seller is a very

important link in any business chain and each contributes to the success or

failure of the other.

Buyer Supplier relationship is a very complex and competitive in nature as each

party tries to take advantage of the others strength as well as weakness.

Businesses have to pay increasing attention to buyer-supplier relationships and

supply chain management if they want the benefits of collaborative approach and

avoid confrontation.

Buyer-supplier relationships have evolved from being a zero-sum game to

collaborationist outlook and finally to the more network-oriented view where both

are important players of the same business system.


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Basic information About Acer

Founded 1976 as Multitech

Founder(s) Shih Chen Jung aka

Stan shih

CEO and President J.T Wang

Slogan Empowering

People

Revenue 16.18 billionUSD(2011)

Case fact Fourth largest PC

vendor in

world(2012)


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Background

It began with eleven employees and US$25,000 in capital. Initially, it was primarily

a distributor of electronic parts and a consultant in the use of microprocessor

technologies.

The company was perceived by many as a Taiwanese PC cloner

The company was renamed Acer in 1989 from its inception as Multitech.

In the early 1990s Acer experienced a decline in sales and profit. The US

operations in particular were at loss due in particular to price war in this market

dominated by Compaq, IBM, and HP.(Change Course 1)

Instead of creating a series of centrally controlled foreign subsidiaries, Acer

established a network of virtually autonomous affiliates, much like a fast food

franchise system. Each of these affiliates was managed by a group of locals who determined product

configurations, pricing strategies, and promotional programs based on national or

regional preferences


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Changing course at Acer


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Change course 2

Basic Problem: There was a conflict of interest between Acerscontract manufacturing for customers such as IBM and thebusiness of selling its own-brand computers.

By the start of the new millennium, Acer had lost its way.

Upstarts such as Quanta Computer Inc. and Hon Hai PrecisionIndustry Co. emerged as Taiwan's hot contract manufacturersfor U.S. companies that felt uneasy teaming up with Acer, apotential rival.

"When we were a $300 million business, nobody cared,"

recalls Lin. "When we were a $6 billion company, they cared alot.--- the conflict between Acer's brand-name business andits contract-manufacturing operations had to end and sogroup was broken down into independent affiliates whowould no longer use the Acer logo


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The Acer Family offspring's..

Ali Corp- In 1999, Shih spun off Acer Labs as a separate company. This

May, it changed its name to ALi Corp. Since winning independence, Ali has

expanded into chips for such products as DVD players and wireless

telecom equipment.

Wistron Corp - The group's former contract manufacturing arm. It was

dedicated to the design and manufacture of PCs and related IT products

for OEM customers .

BenQ corp - BenQ is a leading producer of thin computer monitors and is

the largest contract manufacturer of mobile phones for Motorola Inc.

Ambit Microsystems Corp: Telecom equipment maker AmbitMicrosystems Corp. is a growing supplier of modems and has begun

making equipment for wireless networks.

AU Optronics Co - Another Acer spin-off that makes thin-film transistor

liquid-crystal-display (TFT-LCD) panels.


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Benefits

Spinning off contract-manufacturing also helped Acer lower costs and

boost efficiency, That's because it now is free to use outside component

vendors and factories.

Acer Inc. now can focus on its core business of selling its own PCs, rather

than struggling to master every sector of the electronics industry.

The new arrangement has shown results.. For ex- the company Ambit in

the mid-1990s, the company sold half its output to Acer. Now, it sells 95%

of its broadband networking gear to such customers as Apple, Cisco and

IBM.


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Key Takeaways

Own-brand building is necessary for a contract manufacturer with the intention

and competence to establish itself as independent manufacturer.

Difficulty of sustaining relationships with Buyers while pursuing own-brand

building shows how a manufacturer gets in to problems.

Contract manufacturing building own-brands sends a strong/negative signal that

the commitment to the partnership is weak.

Having own-branded product threatens the interests of the clients resulting in

discontinued cooperation losing the orders as well as clients.

Need to evaluate own competence and constraints before embarking on own-

brand building.

Contract manufacturers need to have strategies to maintain its attractivenessand to avoid the risk of losing orders and clients when they decide to build own-

brand.

Buyer Seller Relationships- Acer

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