Strengths

1. Strong sales position in China accounting for 43% of 2012 sales.

2. Rapidly growing firm with net income up from $129 million in 2010 to $631 million in
2013.
3. Lenovo has invested $793 million in the construction of a mobile phone manufacturing and
R&D facility in Wuhan, China. Lenovo is the world’s second-largest PC vendor (behind
HP), and markets the ThinkPad line of notebook computers and ThinkCentre line of
desktops.
4. Lenovo ranks fourth in the global tablet market by volume.
5. In July 2012, the National Football League (NFL) announced that Lenovo had become the
NFL's "Official Laptop, Desktop and Workstation Sponsor."
6. Lenovo acquired the Brazil-based electronics company CCE that sells products under the
brand name Digibras for a base price of 300 million reais (US$148 million) in a
combination of stock and cash and an additional 400 million reais dependent upon
performance benchmarks.
7. The second-biggest smartphone vendor in China, Lenovo has begun selling smartphones in
Russia, Indonesia, the Philippines and Vietnam.
8. Lenovo focuses on vertical integration in order to avoid excessive reliance on suppliers and
to keep down costs.
9. Lenovo’s 1) China and 2) Europe Middle East and Africa sales increased 17% and 20%
respectively in FY 2013.
10. Lenovo basically has what it calls a two prong strategy: 1) Protect its commercial global PC
business and its China business; and 2) Attack three high growth opportunities in emerging
markets with smartphones, tablets, and smart TV’s.

Weaknesses

1. Mission statement is only one sentence long.

2. No COO and divisional by region when divisional by product may be more beneficial.
3. Lenovo is still primarily a Chinese PC company with 34% of all revenues coming from PC
sales in China and 81% of all Chinese sales being derived from PCs.
4. Lenovo smartphones are not offered in Europe, USA, or Latin American markets.
5. About a tenth of Lenovo’s Q3 2013/2012 revenues came from its mobile Internet and digital
home (MIDH) business - mainly consisting of its smartphone sales in China, which jumped
77% to $998 million, though that was only 11% of total revenue.
6. Europe Middle East and Africa segment reported $6.8 billion USD in sales but only $24
million in operating profits in 2013.
7. Sales in North America were $4,939 million in 2013, lower than any market served.
8. Inventory Turnover of 20 with Apple over 70.
9. Despite improving profits, the firm’s net income in 2013 was only $631 million.
Opportunities
1. Differentiation of key parts (batteries, display, and storage) are some of the important
features of a phone.
2. HP lost $12.6 billion in 2012.
3. Smartphone is still in the growth phase in many developing markets.
4. Increasing areas worldwide with free WiFi.
5. Apple focuses its business on consumers and does not aggressively develop products
and services for global enterprise customers.
6. Apple lacks consistent global service and support on many products.
7. Customers prefer Android based operating systems to Windows.
8. The global smartphone market increased by 39% in 2012 in terms of units shipped,
according to International Data Corporation.
9. Many smartphone providers in the USA will offer phones at reduced prices for
customers signing 2 year contracts.
10. China is the world’s biggest market for mobile phones and PCs.

Threats

1. Supplies can be undependable at times in providing supplies in the quantity needed.

2. Apple, Dell, HP, Toshiba and Fujitsu all reported higher sales in 2012/2013 than
Lenovo.
3. Apple and Samsung dominate the smartphone market with a 80% market share.
4. The PC market is on the decline.
5. Apple’s inventory turnover was 74 in 2012.
6. Price wars are starting to emerge in the industry.
7. Windows operating systems for phones have not gained near the public popularity as
Apple and Google based operating systems.
8. Microsoft is offering free software similar to Lenovo’s ThinkVantage software.
9. Lenovo is also concerned about China’s ZTE Corp., which plans to become one of the
world’s top-three smartphone brands.
10. An increasing number of companies are interested in purchasing Mac computers for all
or part of their global operations.
SWOT
SO Strategies

1. Build a new production plant for phones and tablets near the R&D facility in Wuhan, China
for $600 million (S1, S2, S3, S4, S7, O8, O9, O10).
2. Form an alliance with Verizon and AT&T in the USA to provide smart phones (S2, S10,
O8, O9).
3. Offer the equivalent of $20 off each phone for up to 1 million customers in Russia. (S1, S7,
O3, O7, O8).
4. Devote $200 million to building relationships with large multinational companies around
the world to supply their employees with smart phones (S1, S2, O5, O6).

WO Strategies

1. Spend $20 million to restructure by product and hire a COO (W1, W2, O1, O8).
2. Invest 80% of all profits generated from PCs into R&D for tablets, smartphones, and next
generation devices (W3, O3, O10).
3. Form an alliance with Verizon and AT&T in the USA to provide smart phones (W4, W7,
O8, O9).
4. Spend $50 million to develop and offer cheaper products for customers in emerging markets
(W4, W8, O3, O8, O10).

ST Strategies

1. Spend $150 million in advertising in China to market the advantages of Lenovo

smartphones over rival XTE Corp. (S1, S3,T9).
2. Further increase the vertically integrated strategy to include batteries, display, and storage
for $500 million in R&D (S3, S10, T1, T5).
3. Invest 80% of all profits generated from PCs into R&D for tablets, smartphones, and next
generation devices (S8, S10, T4).

WT Strategies

1. Further increase the vertically integrated strategy to include batteries, display, and storage
for $500 million in R&D (W8, T1, T5).
2. Spend $200 million to develop top of the line phone for the European market that will yield
higher profit margins (W6, T6).
3. Invest 80% of all profits generated from PCs into R&D for tablets, smartphones, and next
generation devices (W3, T4).
4. Divest all software operations similar to what Microsoft is offering for free (W5, T8).
Space matrix

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
ROA 3 Rate of Inflation -2
Debt/Equity 6 Technological Changes -6
Net Income 4 Governmental Regulations -2
Revenues 4 Competitive Pressure -7
Company Worth 4 Barriers to Entry into Market -3
Financial Position (FP) Average 4.2 Stability Position (SP) Average -4.0

Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)
Market Share -4 Growth Potential 6
Product Quality -3 Financial Stability 6
Customer Loyalty -4 Ease of Entry into Market 4
Technological know-how -3 Resource Utilization 5
Control over Suppliers and Distributors -2 Profit Potential 5
Competitive Position (CP) Average -3.2 Industry Position (IP) Average 5.2

Recommendations
1. Build a new production plant for phones and tablets near the R&D facility in Wuhan, China
for $600 million.
2. Form an alliance with Verizon and AT&T in the USA to provide smartphones.
3. Offer the equivalent of $20 off each phone for up to 1 million customers in Russia.
4. Devote $200 million to building relationships with large multinational companies around
the world to supply their employees with smart phones.
5. Spend $20 million to restructure by product and hire a COO.
6. Invest 80% of all profits generated from PCs into R&D for tablets, smart phones, and next
generation devices.
7. Spend $50 million to develop and offer cheaper products for customers in emerging
markets.
8. Spend $150 million in advertising in China to market the advantages of Lenovo
smartphones over rival XTE Corp.
9. Further increase the vertically integrated strategy to include batteries, display, and storage
for $500 million in R&D.
10. Divest all software operations similar to what Microsoft is offering for free.

Porter

- Intense competition

Questions

- Lenovo is starting to struggle in maintaining financial position and growth in the slowing Pc
market.

- Lenovo is also struggling to grow the mobile division with expansion to developing countries
because of mature and saturated markets.