Lenovo Case Study

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INTRODUCTION
Lenovo bounded on the international scene May 2005 wit the acquisiton of IBM’s personal computer division for $1.75 billion. This was viewed as an experiment to see whether Chinese companies could successfully integrate foreign acquisitions as they continued to expend internationally. With this landmark acquisition, Lenovo’s new strategy was to become a leader in the global PC market. Lenovo Group Limited is one of the most prominent PC manufacturers in the world especially in Asia. It is headquartered in Morrisville, North Carolina with principal operations currently located in Beijing, China, and Singapore. Lenovo recorded revenues of $16.6 billion during the fiscal year ended March 2010, an increase of 11.4% over 2008. The net profit of this company was $432 million in fiscal year 2009 compared with only $305 million in 2008, an increase of 143% (lenovo.com). In 2005, Lenovo purchased IBM’s Personal Computing Division which included it global desktop and notebook computer business. The acquisition made Lenovo one of the leading global PC makers. Founded by 11 members of the Chinese Academy of Sciences in 1984, Lenovo was originally named New Technology Developer, Inc. As of 2008, Lenovo’s ownership was 50.4% public shareholders, 42.3% by Legend Holdings Limited, 6.6% by Texas Pacific Group. The Chinese government owns 65% of Legend Holdings and is therefore the largest single shareholder controlling about 27% of Lenovo stock. CORE COMPETENCIES

Lenovo’s core competencies are developing, manufacturing and marketing desktop and notebook personal computers, workstations, servers, storage drives, IT management software, and related services. Lenovo’s business model is built on innovation, operational efficiency, and customer satisfaction as well as a focus on investment in emerging markets. The computer technology corporation has more than 22,200 employees operating across six continents. MISSION STATEMENT

Lenovo strives to be a new world company that makes award-winning PCs for our customers. We operate as a company uninhibited by walls or organizational structures using worldsourcing to harness the power of innovation across our global team. We design innovative and exciting products and services to meet our customers’ needs. Lenovo’s official slogan is: New World, New Thinking. BASIC OBJECTIVE

Lenovo wants to change how business is conducted on a global scale. It is an innovative, global technology company dedicated to developing, manufacturing and marketing the highest-quality PCs in the world. Lenovo is also a blend of legendary products and cultures creating our future in a dynamic new way. STRENGTHS

Lenovo has several areas of strength when compared to its main competitors. Firstly, Lenovo’s market share in China is dominant over Dell and HP. Lenovo’s history has helped it become one of the leading brands in for over 10 years. According to research firm IDC in July, 2009, Lenovo is the largest seller of PCs in China with a 28.6% market share. A 2009 survey by outsource.com states that 20% of Asian consumers prefer Lenovo, followed by HP (11%), unbranded computers (9%) and, Dell (7%). The survey also reported that 30% of Asians didn’t know which manufacturer they would choose when purchasing a PC. Furthermore, Lenovo has a superior distribution network across China which enables it to provide contract manufacturing services to customers. Lenovo certainly holds a position of strength as the emerging Chinese market grows. Secondly, the company’s product brands achieve greater recognition amongst consumers than many of its competitors. Lenovo is selling the ThinkPad brand notebooks which are considered to be the most engineered and reliable PCs in the world. The ThinkPad brand has a large numbers of loyal customers all over the world. On January 3, 2008, Lenovo officially announced the entry into the global consumer PC market with its new...
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