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on 21 November 2013

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Lenovo - IBM Acquistion of thinkpad PC DIVISON
LENOVO'S BRANDING DECISION ? CHALLENGES EMERGING MARKETS
ADVANTAGES & DISADVANTAGES : LENOVO ACQUIRING
ACQUIRES IBM
Lenovo Group Acquires IBM PCs Division as an :
International expansion strategy
. How did it go?

How good Was this deal for Lenovo?
DISADVANTAGES
a Short overview developments.
ADVANTAGES
THE ACQUISITION: A QUICK LOOK
Disadvantages
IBM low profits
Financial Distress
Wage gap
Culture conflict
Difference in human resources strategy
Supply chain issues

EXPECTATIONS
Future Forecast
Synergies
Unique marketing and Services Alliance
Globalisation

Disadvantages

shrinking profit margins.
Exit the PC business.
Brand Image : Threat
Huge differences in corporate culture.

Conclusions

What is IBM Doing?
Focusing on Services
IBM is getting out of the PC manufacturing
Our strategy is clear, to be the world-leader in high-value solutions,"
$9 billion to acquire over 30 companies
LENOVO'S Strategy
ADVANTAGES & DISADVANTAGES IBM: SELLING
ADVANTAGES
DISADVANTAGES
BRANDING DECISION EVALUATION
MAJOR CHALLENGES INCURRING
HOW GOOD WAS SELLING FOR IBM?
conclusions
1. lenovo's Advantages - Disadvantages
SIM -
Suggestions
Pricing strategy
Global Market Position
Productive marketing team

Third largest PC maker
Knowledge and Technology
Access to foreign markets
IBM brand
Risk Share
B to B opportunity
IBM’s senior manager
ThinkPad Brand

ADVANTAGES FOR LENOVO
ADVANTAGES & DISADVANTAGES IBM: SELLING
Major challenges in the emerging Markets
Low profit margins
Brand building takes time
Competition
Regional differences in the markets, involving requirements for customer interactions, go-to-market structures, and pricing practices
Overcoming the lack of qualified HR.
Cultural differences

LENOVO'S BRANDING DECISION ? CHALLENGES EMERGING MARKETS
NO!
was a good decision?
Low quality
Brand loyalty- no trust
Bad timing- IBM on the top its life cycle
Strong logo of IBM

WHY NOT?
IBM Advantages
IBM : financial Profile.
Synergy : Recognition in china
Stronger Relations to chinese Government
Selling to Change : SWITCH
inroads into the Chinese market by working with Lenovo.
IBM focus on interprice
Transaction Summary
Market share
conclusions
Synergistic Effect : Complementing IBM’s and Lenovo’s advantages, Lenovo are able to increase its market share, the revenue and reduce the cost.
the synergy of distribution channel. Lenovo has an internationalization strategy that "Attracting-In" and "Walking-Out" while IBM which is an international mature large enterprise has tones of successful distribution channels around the world and the corresponding sales teams and managing groups.
Lenovo May not survive after the M&A if it cannot provide valuable product, so it should focus on further research and development.
Even though Lenovo has a global marketing channel after the acquisition of IBM PC unit, it needs a more proactive marketing team. The sales team of IBM just issued orders for Lenovo but never take active steps to find new customers.
Lenovo should deepening it’s internationalize achievements.
After the positioning, Lenovo should rationalize their pricing strategy. The value of the product is an important factor to concern; Lenovo can no longer make low-price strategy to survive in the global market. Lenovo should rather concern about the demand of their target customers, and make valuable product for them.
Lenovo's business strategy
IBM -LENOVO
Lenovo Identified acquiring IBM as the fastest Way to expand, due to the Brand Value, skills and the importance of the AmericanMarket
instant Presence
Global size
Cultural
Dominant Market position

lenovo
$3b revenue
27% of Chinese Market
No. 8 global PC maker
Founded 1984, HK listed 1994

IBM
$10b revenues (IBM total: $96b)
8% of global market
No. 3 global PC firm
IBM founded 1911


$1.75b deal: 600m equity (19% stake), $650m cash, take over $500m liabilities

Lenovo takes over IBM PC Division
Right to use IBM brand name for 5 yrs
IBM provides sales and support services
IBM will be preferred vendor for financing and maintenance services
10,000 IBM employees join Lenovo

IBM was no longer interested ...
Cultural differences present “double-edged sword”
The ability to manage the sociocultural integration process.
Resolve the difficulty of blending two brands

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