Using the concept of diamond model, we can define the national advantages that Lenovo drew from its presence in China as follows:
Specific conditions
After a long isolation, the whole nation seemed to want to show the world its ability to adapt and prosper in the global economy. The nation holds an advantage as the companies are constantly trying to be leaders in their industry and especially to rapidly expand their activities on an international level. The main advantage remains the low cost of labor.
Local demand
We may highlight the fact that to meet the demand of the Chinese market, businesses need to know how to minimize their prices, with low sophistication of products, and respond to a request that is exploding with respect to quantity (and flexible production in large quantities).
Mutual stimulation
For Lenovo, this stimulation seems limited, although the company was initially closely linked to the Institute of Computer Science, and the Chinese Academy of Sciences.
Competition and corporate strategy
Playing a large role in creating more national industries: Chinese companies in the sector are generally financed in their early days, and are oriented with Western customers. The youth leaders who have emerged due to the Cultural Revolution can also be an advantage, especially in the IT sector and internationally.
Tags: Lenovo's globalization strategy, Lenovo's growth in the US market, Competition in the PC industry
[...] market for Lenovo was a very difficult market to conquer due to its wider environment which is very different from China, and the high reactivity of the competitors who have great expertise and global weight. But the strong appeal of the U.S. market in terms of dimensions of strategic importance to extend to other countries, as well as the attractiveness of American know-how in the computer industry has meant that Lenovo has chosen this market despite significant challenges, and perhaps at the expense of others. [...]
[...] In short, with respect to cultural distance, Lenovo has managed to reduce the distance from its customers quite well in maintaining the brand (for 5 years), and the know-how of IBM. However, the cultural distance was a major obstacle to the teams of Lenovo and IBM despite attempts to adapt, especially on the part of the Chinese. A profound political and administrative distance The shock is fierce between a communist country with an administration deemed cumbersome and corrupt, with one-party which is politically non- existent, and a fundamentally capitalist country with a strong administrative system judged on its morality and its effectiveness, and with a democratic political life where the game of parties is free, and where lobbies, minorities, etc., have a role to play. [...]
[...] But the large cultural, geographical, and to a lesser extent, administrative and economic distances have been major obstacles to the effectiveness of the company internally. These problems have also been responsible for less fragmentation over time. Although the American market seems to be one of the most opposed to the Chinese one, it is particularly attractive for Lenovo due to its size, its importance in the computer world (historical model, innovation), and the opportunities presented by the acquisition of IBM's financing options. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
