Lenovo

Introduction

The Lenovo Group was founded in 1984 by a group of eleven engineers in Beijing, China. The company, formerly known as Legend, makes a variety of products for worldwide sale such as desktops, laptops, servers, handheld computers, imaging equipment, and mobile phone handsets. They are also providers of information technology integration and support services. Lenovo is a publicly traded company (Honk Kong Stock Exchange) as well as partially owned by the Chinese government.

Lenovo opened the new era of consumer PCs in China and became the largest personal computer maker, controlling 27% of the Chinese PC market. With their innovation they developed the pioneering Legend Chinese Character Card that translated English operating software into Chinese characters, and achieved breakthroughs like PCs with one-button access to the Internet. With all the success in their domestic market, Lenovo felt they were ready to penetrate the global market and in 2005 purchased IBM's Personal Computer Division which transformed them into a major international PC manufacturer. As a result of the acquisition, Lenovo gained the rights to the product lines as well as licensed trademarks such as ThinkVision, ThinkPad, ThinkVantage, ThinkCentre, Aptiva, and NetVista.

The acquisition made Legend the world's third largest computer manufacturer (after Hewlett-Packard and Dell). The main issue of concern now is whether Lenovo could become the globally player it wants to be by retaining IBM's customers while at the same time successfully integrate their Asian operations with the US operations of IBM.

 

Key Issues

Levono had its largest customers concentrated in China (90%), being the market in the US and Europe its main opportunity since together they account for more than 70% of the global PC market revenues.

Below are the relevant key issues that can have an impact in Lenovo’s strategy of accessing the global distribution and sales network.

General Environmental Analysis

The global PC market has being performing well. The market value recorded a compound annual growth rate of 5.2% from 2001 to 2005. But the sales growth is forecasted to decelerate or even decrease in the following years. This is mainly because of a saturated market and price competition.

The Porter five forces analysis has been used to analyze the PC industry.

S.W.O.T. Analysis

Strengths

• Excellent national image in home country, currently the largest PC manufacturer in China.

• Strong research and development infrastructure.

• Admirable knowledge insights on local market.

• Outstanding mass manufacturing capabilities.

• Possesses licensed to manufacture PC parts in China.

• Quick responsiveness to adapt to market.

• Powerful distribution and sales network covering 160 countries.

Weaknesses

• Difficult in communicating and coordinating ideas with new merging company.

• Average age of Lenovo employees is below 30.

• Poor brand perception globally.

• Global