The Acer Group’s China Manufacturing Decision Case Study Solution
Situation Analysis (Looking for an opportunity)
The location clearly indicated from the perspective of Mr. Lin that China was one of the fastest developing countries around the world. It is involved in an emerging market expansion rather than going towards the selected industry players. He said that an opportunity has arrived under which, we can prove what we possess in order to fulfill the third world’s market needs.
The third world, in this scenario consisted of villages and other small territories where ACRE could boost their presence and make it a successful company,in that country by continuously focusing on their business expansion. On the other side, we would also be able to increase the relationships, politically as well as economically. Therefore, under particular circumstances, an opportunity could be executed by focusing on controlling the external barriers and then allowing to increase its operational controls.
In this sense, the internal opportunity could be to increase the Chinese workforce within a new project because they provide cheap labor with minimum wages. In contrast, there are more threats imposed on ACRE as compared to the highlighted opportunities. In this regard, Lin should critically evaluate the opportunity and determine the process of the outcome in an efficient manner, and that would achieve the mission as defined by Lin himself.
Need to focus on China’s market
There are various consequences of entering China’s mainland, that could affect ACRE. The first advantage that ACRE could implement,would be the fact that it has a strong,thorough understanding of china’s culture, that could allow managing the operational flow of the business in a proper way. Secondly, many foreign investments could take advantage of the emerging economies like China to increase their revenues and other benefits. Thus, looking towards the recent trend, Lin decided to focus on the manufacturing concern in China.
In addition, another advantage that ACRE could take was that China was offering tax cutting over manufacturing operations based on electronic industry perspective. In the first two years, tax was exempted entirely, not allowing any entity to pay, unless a 50% cut would be granted in the third year. Taking this advantage, ACRE could reduce the cost of operations and manage the revenues and profits in a proper manner if it would focus more on niche market instead of an established one.
Moreover, there was another advantage for MR. Lin that was reducing an overall wage rate. The pay rate in China was petite(One-tenth of Taiwan’s worker rate) and could allow the business to expand with minimum operational cost to bear overtime. So, these are the main reasons why ACRE was desperate to establish manufacturing operations in China.
Build motivation towards the new workforce
To achieve the contribution of the new labor force, ACRE could implement the culture of rewards and recognition because, in China, workers were demotivated by limitations of fixed wages with no compensation on job overtime. Also, the government allowed the work to be done in extra time instead of providing flexible working hours. This sort of traditional culture could allow ACRE to be implemented in China, but in a different way. It could motivate the new workforce by external rewards like attractive salaries for employees and workforce around the country. Another option that ACRE could implement, would be to pay bonuses on performance and overtime,by the related labor force. If this sort of scenario would perform correctly, then it can be said that the operational efficiency of the new manufacturing operations would be achieved and allowed to increase the business expansion within China overtime.
From the following situation, it can be concluded that Mr. Lin had set three alternatives to execute the mission of ACRE. The first option was to create joint venture with one of the giants in China. However, this scenario could not meet with the expected outcome due to external threats imposed by the Chinese market. The third option illustrates that ACRE could wait some years unit the relationship would improve between Taiwan and China. So, this alternative wouldn’t be suitable for company’s mission. The second choice consisted in focusing on the third world market, where villages and small territories were located. It is recommended that ACRE should step in China with the intention of picking a third global market, referred to as the “Blue Ocean Strategy”, where there would be less or no influence on operators. Therefore, the first step for ACRE should be to install their plant in that region because it would grab low-wage workers as well as quickly adopting to the small market with a potential to expansionist cities. On the other side, there would be less influence of political conditions over the business,making it able to manage an entity without any external threats. If this sort of process would be implemented by Mr. Lin, then it can be said that ACRE would achieve their overall outcome and be able to manage the operational efficiency at a level higher than the one they expected.
Appendix (Opportunity for ACRE to enter China)
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