Lenovo: Building a Global Brand
1. Why did IBM want to sell its PC business? Why did IBM sell to Lenovo? The reasons that IBM wanted to sell its PC business to Lenovo are: • • • To shed an unprofitable operation as the company saw the limitation and more competitors in the market. Selling its PC business to Lenovo would help them increase market share, especially in Asia. IBM shifted their business from producing PCs to concentrating on consulting service. Therefore, merging with another company will help them cut the operational cost. Lenovo is one of the world’s leading manufacturers in PC market after Dell and HP. Its brand is best known in China and Asia-Pacific region. The company is the China’s PC market leader with 21.5% share. Both companies have no conflicts in target audience. While IBM targeted the corporate and large enterprise customers, Lenovo focused more on small businesses and consumers.
2. What explains Lenovo’s success prior to the acquisition? The first success of Lenovo was when the company launched its first product called ”the Legend Chinese -Character card” which translated English-language operating system into Chinese. After the success of the Legend card, the company launched its own-brand PC into the Chinese market in 1990. The desktops were designed to be easy to use for Chinese consumers. In 1999, the company introduced a PC that overcame China’s complicated Internet access procedures with a preloaded oneyear Internet connection. This also included Chinese voice-recognition software and a graphic pad for writing Chinese characters by hand. Thus, the company became China’s PC market leader with 21.5% share in 1999 and well known throughout the Asia-Pacific region.
3. What challenges did Lenovo face after the acquisition? After the merger with IBM, Lenovo faced many challenges as following: • Integrating Thinkpad into Lenovo brand. Lenovo wanted to create awareness of the new brand, on the...