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Lenovo - a chinese dragon (Case Study)

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Hitesh Babani

on 25 February 2014

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Transcript of Lenovo - a chinese dragon (Case Study)

Background
Lenovo was founded in 1984 establishing a base in the Chinese market.

Lenovo produces desktops, laptops, servers, handheld computers, imaging equipment, and mobile phone handsets.

The company has a large diverse workforce of about 27,000 employees.

The company earns most of its revenues from the personal computers and notebooks.

IDC reported that Lenovo reached 16.7% global PC market share in 2Q 2013, up from 15.0% in 2Q 2012, one year ago.

Strategies for going Global
Porters Five Forces
PESTEL Analysis
BCG Matrix
Political / Legal
Political Instability

Government Grants

Encouraging FDI in developing economies

Easing of government policies (e.g. India)

Government motivation to go global (e.g. China)

US law to restrict purchases of IT equipments

Protection Laws.
Economical
GDP

Increase in afforability

Expo 20-20 – Encouraging brands infiltrate the UAE market, due to the growth forecast in the UAE.

Financial recession 2008.

Tariffs and taxations

Rise in SME’s

Rise in labour cost in China – Decrease in working population

Social
Consumer attitude

Consumer buying habits - change in trends

Education
Technological
Innovation

Investment on R&D's for innovation

Short span of Product Life Cycle
Acquisitions
Lenovo’s acquisition of IBM’s PC division was the main stepping stone for them to reach global potential.
Lenovo hired PC managers, many from Dell, to run its global operations.
Lenovo learnt from HP about product technology, business models, management practices and strategic planning
Product alliance with Google Andriod OS for Lenovo’s smartphones and tablet
Rivalry among existing firm
MEDIUM – HIGH

3 major players contributing to 90% of the market share

Very less differentiation in products due to saturation of PLC
Threat of New Entrants
LOW

Capital Requirements

Economies of Scale

Brand Identity

Bargaining Power of Suppliers
MODERATE

Volume is key

Lenovo No. 1 PC maker brand

Lenovo – purchases chips, graphics, OS, boards from suppliers in large volumes

Bargaining Power of Customers
MEDIUM – HIGH

Switching cost is Low

Many players in the market (Dell, HP)
Substitute Products
LOW – MEDIUM

Many substitutes available such as Smartphones, Tablets, etc.

Other local brands (e.g. China)
SWOT Analysis
Strengths
No. 1 PC brand maker in the world
Good quality of goods and services
Expanding into emerging markets
Good relations with Governments
Low cost production
Knowledge of Chinese market
Vertical integration – keep cost low
Competencies with mergers and acquisition
Patent Protection
Synergy of knowledge and diverse workforce
Focusing more on E-marketing instead of tradional marketing
Cost innovation
Weaknesses
Distribution channels through tradional stores, very little for Lenovo e-store.

Poor brand perception in developed economies – Chinese brand

Low differentiation – Saturation in PLC

Commodity products

Debts
Opportunities
Using ecommerce as a cost effective sales channel to reach B2Bs and B2Cs

Poor brand perception in developed economies – Chinese brand

Commodity products - Tablets & Smartphones
Threats
Decline in profit margin of hardware products

Slowing growth rate of the laptops market

Saturated smartphone markets in developed countries

Rapid technological change – Low PLC

Intense Competition

Government regulations and censorship
Internal Analysis
External Analysis
Strengths - Opportunities
No. 1 PC brand maker in the world - Target more B2Bs (governments, educational institutes, etc.)
Strengths – Threats
Competencies with mergers and acquisition - Intense Competition
Weaknesses – Opportunities
Low differentiation – Saturation in PLC - Growth of smartphones and tablets market
TOWS Analysis
Alliances & Acquiring Expertise
Acquired Motorola from Google for hardware's in smartphones and tablets
Ratio Analysis
Liquidity Analysis
Solvency Analysis
Return on Investment Analysis
Profitability Analysis
Investment Income Analysis
Human Resource Key to Lenovo Success
Diversity Management

Women in Lenovo Leadership

MBA programme to attract new talent

Inspiration for good retirement plan from the US

Employee stock programme
Hazel Monterio - M00378989
Hitesh Babani - M00375896
Mustafa Mufaddal -M00377404
Nur Hazwani - M00385748
Full transcript