Notes on Intercultural Communication

Structures of International Business (Vertical Disintegration)

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Vertical Disintegration


Vertical Disintegration in Supply Chain Management (SCM)

(…) Acer’s supply chain management strategy can perhaps best be characterized as a strategy of “vertical disintegration.” In the recent past, Acer sold majority stakes in both Wistron and BenQ. These companies were main providers of manufacturing services in Acer’s supply chains. By selling its majority stake in these companies, Acer clearly demonstrates that it intends to “disintegrate” its supply chains and focus on branding and marketing.

(…) The vertical disintegration of Acer’s supply chain becomes even more evident when analyzing the supply chain of specific Acer products. Components are sourced from many different component manufacturers, while assembly is carried out by a small group of selected contract manufacturers. In some cases, Acer holds a considerable stake in these contract manufacturers, although it almost never owns these companies. The selected contract manufacturers are allowed to manufacture final products for Acer. It does not matter whether a desktop computer or notebook is assembled in China, the Philippines or in the Netherlands. In the end, all Acer products are sold as “made in Taiwan”. The following charts show the supply chains for two Acer notebooks: the Travelmate C110 (…).


Supply chain for the Travelmate C110



(…) In most cases, one particular component can be provided by two or three different component manufacturers. A hard disk drive (HDD) for the Travelmate C300, for example, can be supplied by Toshiba or Fujitsu. This is necessary to guarantee continuous supply of critical components. If a supplier fails to provide a particular component just-in-time or on demand, the selected contract manufacturers can rely on other suppliers that are able to provide the same component. For some components, however, the contract manufacturers depend on a key supplier. If these components are out of stock, delays in delivery are likely to happen. (…)

Acer Incorporated / Company profile (Draft Version) Bart Slob Amsterdam, December 2005, SOMO Stichting Onderzoek Multinationale Ondernemingen – Centre for Research on Multinational Corporations /

Get the whole script here.


Direct and Indirect Supply Chain Management

Stan Shih, the founder of Acer Computers in an interview in October 1996: (…) beginning in 1992, we developed the fast-food model, which revolves around each of our local businesses doing local assembly from components manufactured here. So today we have 39 assembly lines in 35 countries. We operate these assembly lines globally the way fast-food restaurants operate locally. We airship components from Taiwan — which is cost effective — to the regional business units overseas for assembly into products. This approach provides “hot and fresh” computers to our local customers.

Not only does this provide fresh products, it also accelerates the speed of new-product introduction and it accelerates the inventory turnover rate. This fits with our strategic philosophy. (…)

Read the full interview with Stan Shih (founder of Acer Computers) from October 1996 in the web or here.


Indirect Supply Chain Management (Fast Food Model)


Direct Supply Chain Management

The Emerging Global Direct Distribution Business Model – Its Making and Research Opportunities; Shong-Iee Ivan Su, Ph.D.; Professor, Director of Supply Chain and Logistics Management, Research Lab, Department of Business Administration, Soochow University (Taiwan)

Get the full article here.


International Matrix of Acer Inc.



Innovation in a Modular Network

Learning From Evolution: A Study of Acer’s Corporate Strategy by Anil Kumar Sahai; System Design and Management, Sloan School of Management, Massachusetts Institute of Technology

This work also explains the cultural background of Asian companies. Get the pdf in the web or here.


Additional Material

Network Structures

Modular network structures appear as a logical consequence of horizontal Supply Chain Management systems.

The modular network form compared to other organizational forms



Country-specific production network models: where the modular production network model fits



Modular Network Matrix of Walter W. Powell

Source: adapted from Powell (1990: 300). Italic entries added to original. Powell, W. (1990), ‘Neither market nor hierarchy: network forms of organization,’ Research in Organizational Behavior, 12, 295–336. / Industrial and Corporate Change, Volume 11, Number 3, pp. 451–496, Modular production networks: a new American model of industrial organization Timothy J. Sturgeon

Read the whole article here.



Links about SCM (Supply Chain Management)


For easy understanding a ppt about supply Chain Management by A.V. Vedpuriswar


Links about Acer

The Globalisation of Acer 1976 – 2009. Author unknown

Acer Incorporated 2009 Annual Report in the web or here.


For the history of international trade / globalisation see the post “Learning to do Business in China


For info about Stan Shih please click here.


reviewed 13.04.2014

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