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lenovo

unsw
by

Rosa MN

on 17 October 2015

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Transcript of lenovo

Introduction
External Analysis
Internal Factors
VRIO Analysis:
Conclusions
&
Suggestions

Lenovo is a US$34 billion personal technology company and the world's largest PC vendor. We have more than 33,000 employees in more than 60 countries serving customers in more than 160 countries.
Did You Know That...
Lenovo
is a fusion of "
Legend
" and "
Novo
", meaning new in Latin
Lenovo: A Chinese dragon in the global village
Valuable:
Effective management systems
Cost optimized production
Vast network of distribution and sales channels
High quality standard
Rare:
Communication with
their customers for feedback

Intimitable:
Tangible: international manufacturing plants
Intangible: management, processes, knowledge and talents
Organisational:
Large percentages of the salaries to bonuses that reflect the team’s efforts and contribution
Strong networks of suppliers, partners and distribution channels

$299
$699
MAIN COMPETITORS
Balancing localisation and globalisation?
" We are global company that thinks local"
Lenovo applies a Transnational Strategy:
Same basic competitive strategy theme in all country markets
Customize products and sell different versions in different countries
Local managers adapt the global approach to accommodate local buyer preference and are responsive to local market needs and competitive conditions.



Porter's Analysis
Existing rivalry: High
Threat of new entrants: Low
Power of suppliers: Medium
Power of buyers: Medium
Threat of substitutes: Low
Given this, it is suggested to address more the Public Sector. They should think better before choosing a global ambassador, since personal problems of their testimonials could be indelibly linked to the brand (Ronaldinho and its problems with escorts).
Lately consumers are more and more driven in their buying behavior by the possibility to self-customize their own products: Lenovo should improve their website selling option worldwide as more of its competitors are doing.
Potential market for expansion: Asia, as the U.S. is a slowly growing market.
Try to beat a stereotype: "Chinese-means low quality"
Strengthen its own brand after the expiration of IBM brand use.
Brendan
Kimberly
Rosa

Brendan Staun
Kimberly Shea
Rosa MN

SWOT
Weaknesses
Opportunities
Take advantage of the next phase of PC technology
What is Lenovo's current competitive position?
POLITICAL
Government stability
China member of WTO
Energy and environment policy
Economy
Social
Modern technological society
Population growth
Social mobility

Technological
Increasingly technology has become more cost effective and affordable
Legal
Environment
Both state pressure to adhere to environmental standards
Consumers increasingly environmental conscious
PESTLE ANALYSIS
Economic crisis
Chinese currency depreciation
Increased disposable income
Raised standards of living
Domestic and international obligations and opportunities
Scientific quality management and protection
Porters 5 Forces
Protect & Attack
Company culture
How can Lenovo maintain or increase its PC industry market share and margin over time?

Increasing Market Share
1) Aim to be the prestige PC brand
2) Target an emerging economy with high growth potential
3) Target the hybrid market

Citations
Aim to be the prestige PC brand
“A highly desirable brand or a completely unique product in heavy demand by your customer's customers will pull your products through the customer's own organization more easily.” Tech Target
Target the hybrid market
Target an emerging economy
1. We
PLAN
before we pledge.
2. We
PERFORM
as we promise.
3. We
PRIORITIZE
the company first.
4. We
PRACTICE
improving every day.
5. We
PIONEER
new ideas.

Core Capabilities:
Low Cost Production
Vertically Integrated Supply Chain

Pro
:
Larger Growth Potential
Easier to Establish Brand

news
Middle East & Africa
Attack

India: “Young India prefers specs over brand name” Huffington Post 12/06/15
Latin America: “a necessity for large corporations trying to accelerate their growth” Strategic Business

Risks
Unpredictable Regulatory Environment
Volatile Currency Fluctuations
Higher Political Risk
Ahrens, N. & Zhou, Y., 2013, China's Competitiveness, Center for Strategic & International Studies, January 2013 Case Study
Biediger, J. et al., 2005, Strategic Action at Lenovo, Organizational Dynamics vol. 34, no. 1, pages 89-102
ChuanZhi Liu, 2007, Lenovo: An Example of Globalization of Chinese Enterprises, Journal of International Business Studies vol. 38, no. 4, pages 573-577
D'Andrea, G. et al., 2004, 6 Truths about Emerging-Market Consumers [online] available from: <http://www.strategy-business.com/article/04106?gko=cac3d>, accessed 10/08/15
Hoovers, 2015, Personal Computer Manufacturing Report Summary [online] available from: <http://www.hoovers.com/industry-facts.personal-computer-manufacturing.1105.html>, accessed 10/08/15
Jing, W., 2011, Global Strategy of Chinese Companies, University of Applied Sciences Bachelor Thesis,
Kay, R., 2013, The PC Industry is Digging its Own Grave [online] available from: <http://www.forbes.com/sites/rogerkay/2013/04/12/the-pc-industry-is-digging-its-own-grave/>, accessed 10/08/15
Pettey, C., 2015, Gartner Says Worldwide PC Shipments Declined 5.2 Percent in First Quarter of 2015 [online] available from: <http://www.gartner.com/newsroom/id/3026217>, accessed 08/08/15
Puri, K., 2015, With upbeat end-user sentiments, India PC Market show signs of improvement [online] available from: <http://www.idc.com/getdoc.jsp?containerId=prIN25465215> accessed 08/08/15
Sharma, S., 2015, 10 Key Insights On PC Usage in India [online] available from: <http://www.huffingtonpost.in/2015/06/12/what-indian-pc-users-want_n_7551024.html>, accessed 08/08/15
How might Lenovo develop its international strategy?

To recap

• Consistently declining margins in the PC industry
• Continuous exit of major industry players (e.g. HP)
• Lenovo’s initial opposition to PC industry trends
• Founded as an assembler for licensed computers
• Established as ‘Legend’, manufacturing PCs in-house

AAA Triangle
AAA Triangle
ADAPTATION
AGGREGATION
• Aim: to attain economies of scale and scope
• Approach: via global product standardization
• Subcategories: regional or geographic

In the case of Lenovo,
• First international expansion phase
• Focus on Asia-Pacific region for competitive position
• Attack strategy to introduce ‘Global Pad offering’


ARBITRAGE
• Aim: to achieve absolute economies globally
• Approach: via international specialization
• Focuses on diversity and differentiation

In the case of Lenovo,
• Third international expansion phase
• 2 International divisions (mature vs. emerging)


• Triple A Framework also depends on firm’s operations
• Advertisement-focused firms should use adaptation
• R&D-concentrated companies should use aggregation
• Labour-intensive corporations should use arbitrage



• Aim: to boost revenues and market share
• Approach: via local responsiveness
• Subcategories: variation, focus, externalization, design and innovation

In the case of Lenovo
,
• Variation: Business-purpose PCs vs. Consumer PCs
• Variation: attack strategy on global MIDH market
• Focus: vertical integration or internalization methods
• Externalization: joint venture with Japan’s NEC in 2011


SUMMARY
CLASS DISCUSSION
Competitive Landscape
What internationalization strategy do you think Lenovo should pursue?
(This doesn't need to be limited to the AAA Framework)
SOLUTIONS
Arbitrage - manufacturing plants located across regions
Aggregation - strong vertical integration and supply chain

Risks - psychic distance, regional incompatibilities, late-mover firm disadvantages
PC market is driven by:
Technological advances
Disposable income of the consumer
Corporate Spending cycles

Profitability is driven by:
Supply chain efficiency
Ancillary products and services
Economies of scale


What do you think are the main issues facing Lenovo?

Question...
Risks
Asus has first mover advantage.
41% of North America Market

However
Lenovo hybrid sales increased from 6% to 31% from 2013 to 2014
(Campus Technology 24/06/15)

Key Success Factors
Full transcript