Lenovo: Building a Global Brand
Lenovo, the leading PC (Personal Computer) manufacturer in China, acquired IBM PC division in December 2004 for $1.75 Billion. The acquisition was a marriage of 2 great companies with complementary strengths and the operations effectiveness was expected to benefit both companies. IBM at that stage wanted to shed its PC business and concentrate on the service industry while Lenovo wanted to expand its market presence. Growth of the PC market: IBM introduced their first PCs in 1970s and since then IBM has been a major first to market player in the industry. IBM relied on other third party software to launch their desktop computers. IBM allowed third parties without any restriction of exclusivity and thereby allowing for commonality in software. Meanwhile other competitors including Dell, HP and Compaq started introducing PCs which started using standard software and hardware combination – Microsoft and Intel processors to gain footprint through operational efficiencies. Towards the early 2000s many manufacturers started consolidating the industry by doing mergers – HP – Compaq, Gateway – eMachines. Towards 2004 50% of computers around the globe was sold by 5 major vendors – Dell – 17.9%
HP – 15.9%
Lenovo – IBM – 8%
Acer and Fijitsu-Siemens – 3.5% each.
Legend started its journey as a distributor of imported PCs with customized Chinese language operating system by converting English based operating systems. The popularity of these cards gained footprint for Legend to start making their own PCs in 1999 which were mainly targeted for average Chinese home users. Legend was focused on functionality more than innovation. With more domestic companies spurring in China early 2000, Legend was facing intense competition and had to choose between expanding globally with specialized products or locally with a range of products. Legend goal was to achieve a Fortune 500 company status by 2010. With...
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