In the personal computer business everybody knows Michael Dell, who changed the industry when he started selling computers out of his college dorm. Mark Hurd has won accolades for reviving Hewlett-Packard. But the most influential force in PCs these days may well be Gianfranco Lanci, the little-known Italian chief executive of Taiwan’s Acer. Under his watch, the long-time also-ran has been gobbling up market share and gaining ground on its American rivals. If Lanci can keep the current momentum, Acer could pass second-place Dell in number of computers shipped this year—and close in on HP. Acer “has a strong chance of overtaking HP,” wrote analyst Gokul Hariharan of JPMorgan Chase in a report earlier this month. Lanci’s strategy? He has used Acer’s barebones cost structure to get extremely aggressive on price. He moved faster than HP and Dell in marketing a broad selection of the inexpensive portable computers known as netbooks. By selling basic machines for $300 to $600, Acer swiped chunks of market share while the rest of the PC business tanked. In the process, Lanci has driven down prices across the board, torching profits for everyone. “To run a business with lower costs is good when the market is growing,” he says. “It’s even better when the market is not growing.”

Questions 

1. What kind of business-level strategy is Acer pursuing? 

2. What kinds of skills and competences does it possess that allow it to pursue this strategy? 

3. In what ways does this strategy allow the company to outperform its rivals Dell and HP?