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Acer Inc Taiwans Rampaging Dragon

Solution Id Length Case Author Case Publisher
2011 671 Words (4 Pages) Christopher A. Bartlett, Anthony St. George Harvard Business School : 399-010
This solution includes: A Word File A Word File

Acer’s initial success can be attributed primarily to the corporate culture of the company and the strategic decisions taken to achieve expansion into the growing Asian market. The company’s founder and CEO, Stan Shih, practiced a policy of frugality and delegation. This meant that resourced were carefully rationed to minimize costs. Low costs, in turn, resulted in better margins. Greater delegations and a 'hands-off' approach encouraged creativity and attracted young, aspiring engineers to join the company. This made the company innovative and forward-thinking, quite a contrast from traditional companies, which were heavily patriarchal.

Following questions are answered in this case study solution:

  1. How was Acer able to grow into a half-billion-dollar company in just 12 years before its 1988 IPO?

  2. What went wrong in the late 1980s? 

  3. How effective was Stan in re-assuming the CEO role? 

  4. What should Stan decide to do about AAC’s Aspire?

Case Study Questions Answers

Furthermore, the company sought to ally itself with smaller suppliers and business partners, the ‘commoner culture’, which allowed the company to grow with little financial input. At the same time, these ventures proved very favorable as they gave Acer access to Asian markets that were beginning to experience rapid growth. The company also had a strong customer focus, which increased the need for constant improvement and innovation. Constant challenges and creative solutions to these resulted in Acer's success. 

2. What went wrong in the late 1980s? 

Despite its early success, Acer was plagued by a variety of issues. The rapid expansion resulted in the company hiring new workers, which eroded away the corporate culture of frugality and delegation. This issue was intensified when Stan Shih hired Leonard Liu, a former IBM executive, to take the helm. The idea was to professionalize the organizational structure, which Liu did, but this alienated the company’s long-term employees and, as a result, it experienced a huge turnover.

Acer also suffered due to growing competition, which decreased margins significantly. As it entered the international market, the company was faced with competition on a much larger scale. The strategic decision to takeover Altos, a multi-user minicomputer company, also proved disastrous as rival companies introduced better technology. Acer had to mediate its rapid expansion and the necessary structural changes while surviving in an increasingly competitive industry.

3. How effective was Stan in re-assuming the CEO role? 

Shih’s return as Acer’s CEO in 1992 did resolve many of the issues the company had been facing. Being the founder of the company, Shih was well aware of the strengths that made Acer the million-dollar company it became in just over a decade’s time. 

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