Acer is a large and fast growing PC manufacturer worldwide. The company realized the business opportunities in Canadian market in 1996. The general manager of Acer America's Canadian operation believed that if they did the right thing, the firm could have a prosperous future. However, there were some difficult problems for him:
1.Was the Canadian market worth pursuing? If so, in what manner?
2.Should the operation be just sales office or a self-sufficient entity?
a.Could the benefits of assembly in Canada outweigh the costs?
b.What distribution channels to choose to satisfy the different customers?
The Canadian market was promising for PCs, especially the lucrative section--home use. The key problem is how to maximize the opportunity--to find a good answer to question two.
There were mainly two alternatives that were available for Acer.
1. Make Acer's operation in Canada a satellite sales office-- to focus on sales, marketing, and service.
Acer America was responsible for manufacturing, engineering and R&D.
2.Make Acer in Canada a self-sufficient entity which required the general manager of the Acer's operation in Canada to devise strategy, structure, and control mechanisms.
I believe that option one is the best, feasible solution to the problem that Acer was facing for several reasons. First, this approach is more likely to achieve economy of scale. Canada market was small compared with the U.S. market. For example, the projected sales of U.S. were approximately ten times those of Canada in 1997. Considering the fact that there were already several strong competitors such Compaq, IBM, Apple, AST and Dell competing in the Canadian market, it was reasonable to say that price will be an important issue. Only by option one, can Acer better utilize its resources to achieve economy...