Analysis of Lenovo's competitive strategies and how can it adapt its core competencies to external changes?
Lenovo, a personal computer manufacturing company, has been one of the leading corporations in the PC industry for over 20 years since the company foundation. The brand has been popular among the PC consumers over a long period of time and its reputation reached a peak level especially after acquiring the Personal Computing Division of IBM. The new business acquisition enhances the brand awareness by using the IBM branding and improves technology of Lenovo that enables Lenovo to compete with the current giant corporations such as Hewlett-Packard and Dell in the industry and to possess a market share of 19% in the international corporate market (Lin et al, 2005).
However, in recent years, the fiscal reports of Lenovo show that company performance is not satisfactory. It even announced that there was a loss of 224 million in fiscal year 2008 of which the whole industry is suffering from the global financial crisis which possibly led to the decrease in demand of computer products in the market. Thus, there comes up with several problems facing Lenovo: How can Lenovo take advantage of its current distinctive resources and capabilities to further enhance its core competencies in order to adapt the changes in external environment including rapid technology innovations, changes in government policies and shifts in society attitudes and consumer preferences? How can Lenovo utilize its marketing strategy to attract different customers and to increase market share? How can Lenovo have efficient risk predictions and pre-assessment of market so that the risk management and decision-making could be more effective?
In this report, we will address the above issues by analyzing Lenovo and providing several suggestions to it.
In recent years, the Chinese personal computer manufacturer Lenovo has gradually become the focus of the world. Lenovo aims to establish an international image for its products and services. Starting from March 2004, it became the Olympic Worldwide partner and then acquired the Personal Computing Division of IBM next year which significantly increase Lenovo's brand name awareness worldwide. In order to develop its business internationally, Lenovo uses a new competitive operation strategy called Worldsourcing to cater for the needs of its business globalization. “Worldsourcing means resources, opportunities, and ideas can be found everywhere around the world.” (Lenovo 2009) The new strategy ideally fits Lenovo's core development concept that it wants to produce the world's most innovative PCs. Afterwards, with the support of its resources and strategies, Lenovo launched a new product in 2008 named Ideapad notebook which contributed a considerable amount of profit to Lenovo. However, in the first quarter of financial year 2009, the fiscal report of Lenovo shows a net loss of $16 million because of the fall of demand which is most likely due to the financial crisis. Nevertheless, Lenovo prepares to implement some measures such as the Global Restructuring Plan to lower the costs and to accommodate itself to the low and high-end market with product diversity (Shilov 2009). SWOT analysis
In order to evaluate the advantages and disadvantages of Lenovo and analyze the potential opportunities and the risks it will confront in the future, SWOT analysis is used in this article to identify the strengths, weaknesses, opportunities and threats of Lenovo.
One of the strengths lies in Lenovo’s core resources is the unique design of their personal computer products and the design of the production lines. The number of the patents that belong to Lenovo is 2088 and 1786 of them are recorded in Intellectual Property Office of P.R.C., and the other 302 are recorded in United States Patent and Trademark Office which enable the products of Lenovo differentiate from its...
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