Lenovo's Globalization Strategies

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Case Details:

Case Code : BSTR156
Case Length : 15 Pages
Period : 1998 - 2005
Organization : Lenovo
Pub Date : 2005
Teaching Note : Not Available
Countries : China
Industry : Computer Hardware

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

The Reasons for Success

By 2000, Lenovo had emerged as the market leader in the personal computers (PCs) industry in the Asia Pacific Region except Japan (APEJ), with a market share of 11.3% (Refer Exhibit III for leading PC companies in terms of market share in APEJ)...

Losing Market Share

From the fiscal 2003 onwards, Lenovo started losing market share amidst fierce competition from both local and foreign players (Refer Exhibit VI for Lenovo's market share for the period 1996-2004). After China joined the World Trade Organization in 2001, custom tariffs on imports came down significantly, and this helped Lenovo's foreign rivals. The company faced aggressive pricing from foreign PC manufacturers like Dell and HP as well as other local players. Dell's market share in China doubled to 7.2 per cent between 2002 and 2004. Dell was particularly successful in selling PCs to corporate clients and government agencies. In November 2004, the Government of China awarded a US$ 20 million contract to Dell over Lenovo.

Going Global

Lenovo's first foray in international markets started in 1991, with the establishment of Lenovo Germany. However, the company's major efforts to globalize came in 2001, when it started selling consumer PCs in Hong Kong for the first time, and laptops under its QDI brand name in Spain, Germany, Italy and Greece...

The Road Ahead

Lenovo faces tough challenges ahead in its plans to globalize successfully. Many industry experts felt that changing its name from Legend to Lenovo would not benefit the company. Bryan Ma, senior manager with IDC stated, "It is a shame they can't use the Legend name overseas, as it carries a lot of weight and brand equity."...

Exhibits

Exhibit I: Top Ten PC Companies in the World (January 2004 – September 2004)

Exhibit II: Lenevo - Business Segments Information(2003-2004)

Exhibit III: Market Share of PC Makers in APEJ

Exhibit IV: Top Five PC Manufacturers in China(2003)

Exhibit V: Lenovo - Five Year Financial Summary

Exhibit VI: Lenovo - Market Share in Chinese PC Market


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