ACER IN CANADA: CASE ANALYSIS

The essential problem confronting Acer, a personal computer (PC) and components manufacturer and marketer, in this case is a decision on whether to serve the Canadian market through the company's United States subsidiary, Acer America, or to establish a Canadian subsidiary to serve the Canadian market. Acer America served the Canadian market at the time of this case in 1995. Thus, a continuation of this strategy would be the status quo option for the company in this case.

Acer's total global revenues in 1995 were US$5.8 billion. In great part, this revenue was generated through the sales worldwide of 59.2 million PC units, of which 23.9 million units were sold in North American (United States and Canada) markets. With a 40.4 share of Acer sales, the North American markets obviously were very important to the company in 1995. By 1998, total PC unit sales for Acer were projected to reach 93.2 million units, of which 35.7 million would be sold in North American markets. While the North American share of Acer PC unit sales would drop to 39.7 percent, the absolute increase in such sales would be 49.4 percent. Thus, the North American market was projected to remain very important to Acer.

For North American markets, PC unit sales for Acer in 1995 were split 59.4 percent to corporate buyers and 40.6 percent to consumer buyers. By 1998, this distribution was projected to be 53.5 percent corporate buyers and 46.5 percent consumer buyers. Thus,

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, than did smaller retainers and mass merchandisers, 37 percent and 17 percent respectively. Thus, the company needed to make an extra effort to promote their PC unit products through the value-added resellers and national systems integrators, as they were less dependent on such products as revenue contributors than were other distributor groups. The home-office market for PC units in Canada was growing and was projected to continue to become more and more important as a market segment. This market has a greater variation in needs for PC products than characterizes either large corporate customers or consumers. Thus, to serve this growing segment of the Canadian PC market, Acer needed to be able to respond quickly to the needs of this market segment. Desktop PC units were dominant in the Canadian market in 1995 and were projected to remain dominant in 1997. While the sales in units of both portable PCs and PC servers were expected to increase more rapidly than desktop PCs in the Canadian market than were sales in units of desktop PCs in proportional terms, this statistic is not a good basis for analysis because of the great variation in base unit sales of desktop PCs and both portable PCs and PC servers. In terms of absolut

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