Transcript of Lenovo - a chinese dragon (Case Study)

Background
Lenovo was founded in 1984 establishing a base in the Chinese
market.
Lenovo produces desktops, laptops, servers, handheld computers,
imaging equipment, and mobile phone handsets.
The company has a large diverse workforce of about 27,000
employees.
The company earns most of its revenues from the personal computers
and notebooks.
IDC reported that Lenovo reached 16.7% global PC market share in 2Q
2013, up from 15.0% in 2Q 2012, one year ago.
Strategies for going Global
Porters Five Forces
PESTEL Analysis
BCG Matrix
Political / Legal
Political Instability
Government Grants
Encouraging FDI in developing economies
Easing of government policies (e.g. India)
Government motivation to go global (e.g. China)
US law to restrict purchases of IT equipments
Protection Laws.
Economical
GDP
Increase in afforability
Expo 20-20 Encouraging brands infiltrate the UAE market, due to the
growth forecast in the UAE.
Financial recession 2008.
Tariffs and taxations

Rise in SMEs
Rise in labour cost in China Decrease in working population
Social
Consumer attitude
Consumer buying habits - change in trends
Education
Technological
Innovation
Investment on R&D's for innovation
Short span of Product Life Cycle
Acquisitions
Lenovos acquisition of IBMs PC division was the main stepping stone
for them to reach global potential.
Lenovo hired PC managers, many from Dell, to run its global
operations.
Lenovo learnt from HP about product technology, business models,
management practices and strategic planning
Product alliance with Google Andriod OS for Lenovos smartphones and
tablet
Rivalry among existing firm
MEDIUM HIGH
3 major players contributing to 90% of the market share
Very less differentiation in products due to saturation of PLC
Threat of New Entrants
LOW
Capital Requirements
Economies of Scale
Brand Identity
Bargaining Power of Suppliers
MODERATE
Volume is key

Lenovo No. 1 PC maker brand

Lenovo purchases chips, graphics, OS, boards from suppliers in large
volumes
Bargaining Power of Customers
MEDIUM HIGH
Switching cost is Low
Many players in the market (Dell, HP)
Substitute Products
LOW MEDIUM
Many substitutes available such as Smartphones, Tablets, etc.
Other local brands (e.g. China)
SWOT Analysis
Strengths
No. 1 PC brand maker in the world
Good quality of goods and services
Expanding into emerging markets
Good relations with Governments
Low cost production
Knowledge of Chinese market
Vertical integration keep cost low
Competencies with mergers and acquisition
Patent Protection
Synergy of knowledge and diverse workforce
Focusing more on E-marketing instead of tradional marketing
Cost innovation
Weaknesses
Distribution channels through tradional stores, very little for Lenovo estore.
Poor brand perception in developed economies Chinese brand
Low differentiation Saturation in PLC
Commodity products
Debts
Opportunities
Using ecommerce as a cost effective sales channel to reach B2Bs and
B2Cs

Poor brand perception in developed economies Chinese brand

Commodity products - Tablets & Smartphones
Threats
Decline in profit margin of hardware products
Slowing growth rate of the laptops market
Saturated smartphone markets in developed countries
Rapid technological change Low PLC
Intense Competition
Government regulations and censorship
Internal Analysis
External Analysis
Strengths - Opportunities
No. 1 PC brand maker in the world - Target more B2Bs (governments,
educational institutes, etc.)
Strengths Threats
Competencies with mergers and acquisition - Intense Competition
Weaknesses Opportunities
Low differentiation Saturation in PLC - Growth of smartphones and
tablets market
TOWS Analysis
Alliances & Acquiring Expertise
Acquired Motorola from Google for hardware's in smartphones and
tablets
Ratio Analysis
Liquidity Analysis
Solvency Analysis
Return on Investment Analysis
Profitability Analysis
Investment Income Analysis
Human Resource Key to Lenovo Success
Diversity Management
Women in Lenovo Leadership
MBA programme to attract new talent
Inspiration for good retirement plan from the US