Case 20

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Question1: Is 1+1 going equal 3 or 1.8?
In my opinion, 1+1 going equal 3 because of some reasons follow. First, Lenovo and IBM’s PC division will have competitive advantage of both company when they are integrated. For example, they will have high technology and wide distribution network of IBM. They also have low-cost manufacturing of Lenovo because the labor cost in China is very cheap. Second, before IBM’s PC division was sale for Lenovo, IBM was lose nearly $1 billion in four year. After Lenovo Group buy IBM’ PC division the revenue and net income was increased sharply. In fact, revenue increased from $2,986.4 million in 2004 to $16,351.5 million in 2008, net income also increased from $135.7 million in 2004 to $484.3 million in 2008. As a result Lenovo become the largest PC manufacture in China and they continue getting more success.

Question3: on page 4&5 it list potential problem resulting from different culture of the companies. Address each one of the problem. Are they solvable? How?

The problem is IBM had wrong targeted market. They sold product into high end of market and focused on large corporate and education sectors by promoting product with unique, premium features such as e-business and enhanced customer support. However, the market for large corporations was becoming increasingly saturated in recent years, making sales more and more difficult.

To improve, the new Lenovo cultivated its Chinese relationship sales model in the American market. Moreover, while exploring ways to repackage computer products sold to Chinese consumers so that they would appeal to the U.S. market, which had different design and color preferences, Lenovo sold ThinkPads through nearly 700 Circuit City stores, thus expanding on earlier deals with Best Buy and Office Depot.

Question 4: the global brand awareness section it stated that Lenovo had a US branding problem so they tried to brand themselves with various sports entities. What do you think of their...
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