Case Study of Lenovo
Strategic Marketing Process
Post Graduate Diploma in Management Studies
May 28, 2010
Table of Content
Chapter3: Research Findings6
3.1 Strategy Process6
3.1.1 Lenovo’s current situation6
3.1.2 Analysis based on Kano Model7
3.1.3 Porter’s Five Forces Analysis9
3.2 Development of Strategies Alternatives12
3.2.1 Strategy I: Lenovo as a new brand focusing on the brand strategy12
3.2.2 Strategy II: Lenovo focusing on the particular market13
3.2.3 Strategy III: Lenovo focusing on differentiation strategy14
3.3 Strategy Choice15
In 2006, driven by the notebook PC market and growth of the European and Asia-Pacific markets, the global computer market continued to grow. In terms of trading pattern, the EU, U.S.A, China and Japan are in a dominant position. In the overall market, as dual-core processor gets into the field of personal computers, LCD display becomes the mainstream, more and more people use notebook PCs, and all accessories are upgraded, new momentum has emerged in the computer industry. With enhanced functions and lower price, notebook PC becomes the hardware product with the greatest growth potential in the field of IT.
For Lenovo in recent years, the personal computer (PC) industry has been developing by leaps and bounds. Global sales of PCs totalled 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 December 2004, 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.
At the same time, the previous CEO of Lenovo took the position of Chairman of board, and the new CEO of Lenovo is the previous manager of IBM personal system division department --- Stephen M.Ward.Jr. and Liu Chuanzhi, the Chairman of Lenovo Group, chose to retire backstage
However, Lenovo Group had turnover of 14.9 billion dollars in whole 2008, which decreased by 8.9% compared with the turnover in 2007. This made a deficit of 226 million dollars, which compared with the profit of 470 million dollars in 2007. (Lenovo Financial Report)
Due to my personal interest is related to IT. So I am interested in the reason companies like Asus and Acer, the best two Taiwan companies who lead over the electronic, computer hardware and laptop computer industry, are so successful in occupying the big market share in Europe. Nevertheless, the local Chinese name brand like Lenovo fails to get a good market when they enter the Europe in 2005.
After the 4th quarter of 2008, Lenovo faced the first deficit from last 11 quarters. Now Lenovo begins to restructure in their top management level. The previous Chairman of Lenovo, Liu Chuanzhi, came back from the...