Lenovo Strategy

Introduction

Lenovo Group Ltd. or Lenovo PC International, often shortened as Lenovo is a Chinese multinational technology company with headquarters in Beijing, China and Morrisville, North Carolina. It designs, develops, manufactures and sells personal computers, tablet computers, smartphones, workstations, servers, electronic storage devices, IT management software, and smart televisions.

How does Lenovo use strategy to succeed in the global marketplace? What does Lenovo management do to foster organizational learning?

Key strategies

The Lenovo’s strategy has been the one called “protect and attack”. Lenovo protects its main business while increases its market share with the merge and acquisition of big companies from the same business sector, in order to improve scale economics and expand marketing in Europe. The company has succeeded introducing the organizational learning to optimize the value chain of the company.

What strategies does Lenovo employ to maximize company efficiency and flexibility?

Efficiency & flexibility

* Investment in R&D. Factor of great prominence in the company.

* Development of green technologies. Increasing tendency to use renewable materials.

* High Energy Efficiency. High performance designs with low power computing.

* Custom product. Its pattern consists of a standardized product but with differentiated components depending on the destination country.

* Social marketing. In order to adapt itself to the local traditions.

What does Lenovo management do to foster organizational learning?

Organizational Learning

It was a big challenge harmonizes all different cultures and organizations in a staff of 27.000 workers. Lenovo recruited the best executives with global economies knowledge and experts in other firms of high technology. Lenovo pull for its employees and developed internal promotions by career plans, offering development and growth opportunities in the company.

What are the characteristics of Lenovo’s organizational culture? How does the culture help Lenovo achieve its international goals?

Lenovo was visionary with the globalization concept, turning that vision into a clearly competitive advantage which it knew how to shape and get benefit from, getting ahead of its competitors. The bosses introduced their global spirit in the Lenovo’s culture and they socialized their managers creating a strong bond between their work and the company aims.

Lenovo´s culture

What is the nature of Lenovo's strategy?

Strategy's nature

Expanding its business worldwide facing a more competitive market in the technology sector

1) High demand in domestic market: huge market (massive populated and high growing economy) - Leader in China

• Taking advantage of China as export leader, economies of scale (manufacturing in China) low cost products

2) Global market: at first, focused on advance economies. Now it is also expanding in emerging markets.

• Global distribution network - Global suplly chain

• Partnering with other companies or investing in international companies (alliance with IBM)

Global strategy

• Regional headquarters in China (Beijing) and USA (North Carolina) witch take control for operations worldwide (> integration)

• Activities such as R&D are centralised at headquarters. The firm organises its international operations by major product line ("modular architecture")

• Each product division is responsible for producing and marketing a specific group of products (e.g. rural China)

Advantages

Disadvantages

Global strategy

Complex coordination

Need for a high level of communication head office - regional divisions

Transfer local responsability

Possible to lose responsiveness and

flexibility in local markets

Increasing global opportunities

Economies of scale and lower costs

Product quality and processes enhancement

Learning from different cultures

Global brand recognition

PRESSURES

Local responsiveness

Global integration

• International competitors forming alliance with local competitors

• Adapting products to fit local needs (márketing, hardware language...)

• Prize war competition with same sector companies

• Seek cost reduction through scale economies

• Capitalise converging consumer trends

• Global sourcing- parts and components. Flexibility in logistics and production

• High competitiveness

PRESSURES

Global sponsorship

Influence on its business

> Foster its core competency: innovating for costumers

> Striving to move to new emerging markets

> Generate cost benefits: keep manufacturing prices low