Lenovo: Challenger to Leader




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Excerpts

Globalization Strategies

Lenovo believed that in order to become a global brand, it was not enough to just be identified as a global firm. Establishing a presence in more developed and highly globalized areas such as the US and Europe was essential for Lenovo’s overall strategy. During this time, in 2002, the Chinese government announced its ‘go global’ policy. This policy encouraged Chinese companies that had the capability and expertise to expand abroad.

Lenovo was quick to respond to this government initiative. However, the company soon realized challenges to its global expansion: it did not have a brand name that was recognizable worldwide, a strong presence in the world market, or the human talent to run and manage a global company.

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Ruling The China Market

In the 1990s, Lenovo was the first company to introduce the home computer concept in China and grew into a national company cornering a market share of 27 percent in the domestic market. Lenovo’s competency stood in its deep understanding of the domestic market and quick response to local demands of the consumers........

Protect And Attack Strategy

Despite ruling the Chinese PC market, Lenovo suffered a setback due to the global economic slowdown in mid-2008 which led to Lenovo posting a loss of US$ 226 million. During this time, the company’s CEO William Amelio stepped down in favor of Yuanqing, who took over as CEO, while Chuanzhi returned assuming the role of Chairman......

The Results

The company’s Protect and Attack strategy started reaping benefits in 2010. The company said that for the FY ended March 2011, its profits had risen to US$ 273 million from US$ 129.4 million in 2010. The company’s global sales also increased by 30 percent to US$ 21.6 billion during the same period. While China contributed to 46.4 percent of its sales, or US$ 10 billion, other emerging markets contributed 17.9 percent, or US$ 3.9 billion. ......

The Challenges

According to a survey in 2009 by Shaun Rein, head of China Market Research Group, on Chinese consumers’ brand perceptions, “Five years ago, consumer satisfaction rates of Lenovo were extremely high–consumers felt proud that China had a global brand in consumer electronics that they felt was better than Dell and HP and closer to the Chinese consumer.” But as Lenovo neglected the Chinese market to focus on other markets from 2006-2009, domestic consumer satisfaction rates began to decline......

Looking Ahead

In April 2013, Lenovo restructured itself into two business groups – Lenovo Business Group and Think Business Group –in a bid to target mainstream (PC, laptop, and tablet) and high-end segments respectively. According to Yuanqing, the restructuring aimed at streamlining operations and management to better fit the company’s expanding business worldwide. The company positioned the Think brand to compete against Apple and planned to open fancy showrooms like Apple’s.......

Exhibit

Exhibit I: Lenovo’s Milestones
Exhibit II: Early History of the Chinese PC Industry
Exhibit III:Globalization Timeline of Lenovo
Exhibit IV: Lenovo’s Financial Summary
Exhibit V: Protect and Attack Strategy (FY 13/14)
Exhibit VI: Lenovo in Brandz List of Top 50 Most Valuable Brands in China (2013)
Exhibit VII: A Note on the Global PC Market