Computer Industry Value Added Curve before 80 Value
Computer Industry Value Added Curve before ‘ 80 Value Added Components Assembly Distribution 10
Stan Shih's Smiling Curve Value Added PC Industry Value Added Curve Speed Cost • Technologies • Manufacturing • Volume • Brand • Channel • Logistics Software CPU DRAM LCD ASIC Monitor HDD/CDD Motherboard PC System Components Assembly Segment by Product Line Global Competition Distribution Segment by Country Local Competition 11
Stan Shih's Smiling Curve • Technologies • Manufacturing • Volume PC Industry Value Added Curve • Brand • Channel • Logistics E 2 E logistics • Brand • Services IP • Integrated Service Value Added Components Segment by Product Line Global Competition Distribution Segment by Country Local Competition 12
E-經濟世代中數位化的變革 Tangible Labor Intangible Brainpower Manufacturing Service Hardware Software Efficiency Innovation Management Leadership 15
OEM vs. OBM 31
Acer’s Total Brand Management (I) Acer Brand Foundation Mission Breaking the Barriers between People and technology Brand Promise Dependable, Easiness, Partnership Brand Personality Dynamic, friendly, trustworthy, creative, open minded Brand Value Easy to use, reliable, innovative, caring, good value 37
n Acer’s Total Brand Management(II) TBM: A fresh Approach (TBM to branding is as TQM to quality) – Branding is a vague, and complex concept – Branding building must be a core business function – Branding needs to be planned, systematic, and conscientious – It is possible and necessary to measure branding impact – TBM is about a focus on marketplace results, not process 38
Acer’s Total Brand Management(III) What is “Acer-ness? ” Attitude/culture of caring, listening and doing Communications with distinctive, focused appeal Approachable, accountable to customers User-friendly, easy, dependable, affordable products “Borderless, ” appealing and consistent identity 39
Resources Allocation n n Minimum critical mass to sustain Develop a role-model to follow Resource is always not enough so that focus is the key Focus on market, product, and customer segment Focus to build up management infrastructure during each stage of operation scale development 40
Considerations on Channel n n n n Through exclusive or multiple distributors Act as a distributor to handle dealers Clarify the responsibility of support & services Channel loyalty vs channel flexibility Channel pipeline issues Credit policy to the channel Terms & conditions with the channel Promotion programs with channel 41
Considerations on Customer Services n n n Whose customers? Brand or manufacture Service is the key factor of brand image Product liability arrangements Third-party services Challenges in US market – Return, warrantee, legal liabilities, publicity, overhead, management know-how 42
Summary n OEM or OBM, a dilemma to Taiwan enterprises n Don’t take short-term approaches for OBM n Need more successful role-models in OBM n Wise choice by owning The Great China & S. E. A markets n Leverage PR in US for the global image n Understand the implication of global & local competition n Managing the conflicts between OBM & OEM 43
What is Internet Business? n A high-tech / no-tech business n A junior / senior business n No entry barrier yet n Game of fighting resources to implement n Knowledge-based business n Super dis-integration 45
Where is the Beef in Internet Business? n Internet as the media – advertisement n Internet as the channel – e-commerce n Internet as the utility – fee of use n Internet as the community – membership service n Internet as technology platform – sales/share revenue n Internet as consultant services – service fee 46
Challenges to Internet Business n Small home market n Low entry barrier n Less innovative n Hard to evaluate n Seems to over-pricing n Investing or losing money? 47
Enabling the Internet Economy enabling products PCs XCs Interne t Various Portals enabling Education E-commerce services/contents. Entertainment Contents/ Services enabling technologies Communication & Internet technologies 48
Strategies for Developing e-Products in Asia n Leverage PC & related component technology to develop the enabling-products and be the key global manufacturing bases n Leverage IC Fabricators in Asia to develop IA, XCs (X-computers), and SOC(system on chip) and to enable e-Life 49
Strategies for Developing e-Technologies in Asia n Leverage/License global leaders’ technologies n Focus the tech-developments either on unique local needs or on those with chances of global competition n Adapt quickly to global industry standards 50
Strategies for Developing e-Services in Asia n Partner with global players (technologies, business model, brand) n Invest significantly in customer relationship management and developing localized contents n Enhance unique localized business models 51
Opportunities in Internet Business n Everyone gets new chances n More rooms for innovation n Local advantage n Sustainable with relatively smaller resources n Great return if hits 52
The Value Delivery in Internet Economy n n n Total amount of transaction vs. value creation Total available value shared by number of value creators Winner gains the all. (all of what) Unlimited segments can create a new value Main opportunity is to reduce cost by Internet in current operations Stan’s competitiveness formula checks the value delivery in new economy 53
Internet Business in Taiwan (I) n Successful model will be different from those in US –PC & IC industries as examples –Need to develop a unique approach n Successful model will be different from PC & IC –Global vs local market –Less room for “me too” –OEM/ODM vs brand –Manufacturing vs marketing 54
Internet Business in Taiwan (II) n Internet as a tool is equally important than as a business n Just changing names to dot com is not enough n Investing an internet company is in high risk, unless you know or need n When the market is relatively small, investment should match n Internet enabling products/technologies for global market, enabling services for the regional 55
Summary n Invest money, only affordable, to learn the know-how for Internet opportunities n Develop unique and competitive competences to sustain the values of investment n Merger & acquisition will be more common in Internet business n Balance between focus & diversification n Effective implementation is more important than the idea & speed in the value delivery 56
Why Need Re-engineering? n n n External and internal environment changes Paradigm shift in business For enhancing competitiveness For survival More than just restructure 58
Scope of Re-engineering n n n Re-structure of organization Business focus shift Business philosophy redefinition Business process redesign Resources reallocation 59
Strategies & Process Reengineering n Change CEO’s mindset or change CEO n Communication and consensus n Top down, company wide n Common interest setting n Restructure from defocusing a mega-unit to many simple & focused units n Speed, quick win 60
Critical Successful Factors for Re-engineering n n n Sense of crisis Acceptance of major change Support of most staffs Commitment from top executives Confidence of employees New clear pictures 61
Understanding of Re-engineering n n n Not an easy task It takes times (years) More failure than success Pain comes first, before happiness No help to claim change, unless changing is in action 62
Re-engineering of IBM Outsourcing for competitiveness n Technologies available for outsiders n Services for other companies n Focus on services & e-business n 63
Re-engineering of Japanese Company n n n Talk in early 90 s without major action Social structure & culture are the barriers Life-long employment Lack of speed, flexibility, and open mind Sony is setting the trend Softbank is not in the mainstream 64
Re-engineering of Acer (I) n Scope – Philosophy: global brand, local touch – Organization: client-server organization structure – Process: fast-food business model n Timing – Warm up: 天蠶變 (Nov 1989),勸退 (Jan 1990) – In action: 1992 65
Re-engineering of Acer (II) n Communication Plan –Worldwide communication tour—Acer business sense workshop –Smiling curve – 21 in 21 – 2000 in 2000 –群龍無首 66
Re-engineering of Acer (III) n High growth in revenue and profit Revenue 93 94 95 Growth Rate; Profit Growth Rate (US MM) (%) 1, 902 3, 220 5, 825 51 69 81 38. 6 118. 3 202. 9 2, 436 207 72 67
Re-re-engineering of Acer (I) n Remodeling workshop (1997 Dec) –Global logistics, IT infrastructures –Total brand management –Customer service –Brand business unit 68
Re-re-engineering of Acer (II) n n n SBU/RBU to GBU Delist of Singapore & Mexico companies Internet Organization New IP & Digital Service Sub-Group Customer-centric culture Internet enabler High-Growth, High-Return expected 69
Reactive & Productive of Reengineering n Re-engineering regularly, in a not-too-long timeframe n “Being reactive after the loss of operation” is too late n Pay attention to any signal of down turn n Being proactive. Treat reengineering as an offensive action, instead of defensive. 70
Summary n Reengineering is a normal management practice n Reengineering is not just an organization change n A bigger organization takes longer time for effective reengineering n A “new” CEO plays the most important role in reengineering process n Confidence of the team is the top priority n Signal of turn around is the key for internal & external confidence 71
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