In recent years, the personal computer (PC) industry has been developing by leaps and bounds. Global sales of PCs totaled 230 million units in 2006, representing a 9 percent increase over the previous year. Lenovo has a product line that includes everything from servers and storage devices to printers, printer supplies, projectors, digital products, computing accessories, computing services and mobile handsets, all in addition to its primary PC business, which made up 96 percent of the company’s turnover as of the second quarter of 2007.
Since its acquisition of IBM’s Personal Computing Division in May 2005, Lenovo has been accelerating its business expansion into overseas markets. The company transferred its corporate headquarters from Beijing, China to Raleigh, North Carolina, USA. Today, the group has branch offices in 66 countries around the globe. It conducts business in 166 countries and employs over 25,000 people worldwide. Lenovo is organized into four geographical units: Greater China, America, Asia-Pacific, Europe, and the Middle East and Africa (EMEA). Within each unit there are functional departments that include production, transportation, supply chain management, marketing and sales. Sales outside of Greater China compromised 59 percent of the company’s total turnover in the second quarter of 2007.
Before 2004, multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo. However, their operations began to have a major impact on Lenovo market share in 2004, particularly among key accounts—mandating better execution and core competitiveness in order to increase market share and improve business performance.
In order to address these challenges, Lenovo proposed substantial changes to its...