International Business

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Perspectives on globalization

chapter 2



1 stunned the world in 2004 by announc­ software orientation to one of service provi­ Case study 2.2: that it had sold its personal computer sion, which will require greater flexibility and IBM and Lenovo: a ? ~ business to Lenovo, a Chinese company more of a solutions approach than its tradi­ --':e known outside China. The takeover even tional hardware business. Reflecting its new tale of globalization :,'acted the attention of the US Congress, outsourcing orientation, the company has : se Committee on Foreign Investment in reorganized and shed 13,000 jobs, mainly in . : US was needed to clear the deal, as a takeover by a Chinese Europe, moving departments to lower cost locations: human ~ .:~p any in the technology sector could raise questions of resources to Hungary and payroll functions to Romania. onal security. For both companies, the takeover represented IBM has retained strong ties with its former PC business, ::':-amatic change of strategy. IBM's reputation was built on its through an equity stake and licensing agreements for its patents ."-:",vare expertise, and it was now selling off its entire PC busi­ and designs. It owns 19% of Lenovo's shares, and it allowed =So Lenovo was an entrepreneurial Chinese PC producer, which Lenovo to use the IBM brand name on its products for five years. One of IBM's greatest successes had been the ThinkPad notebook ~ -: built up a market share of 30% in China, but had little pres ­ computer, with its iconic black casing, which continues to be sold - .:e elsewhere. It paid $1.75 billion for IBM's PC business, making ' :s the largest ever overseas acquisition by a Chinese company. by the new owners under the Lenovo brand. Lenovo is increasing "Emight, Lenovo became a global company. the range of products offered under the ThinkPad brand, to cater :o:vr, as its name, International Business Machines, reflects, has for small and medium-sized businesses. For Lenovo, the...
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