Lenovo case study

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Lenovo case study

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Abstract

IBM was founded in 1911 and had a rapid growth during the following years. In 1981, IBM created the Personal Computer. Nowadays, IBM is one of the most famous IT companies. In the beginning, IBM specialized in selling computers. Then the company expanded its business to software and services. In 1941, IBM announced that there is no future for IT electronics. So we can think that IBM wanted to develop the software and services part from this time and then, to cede the computer parts. Legend had been created in 1984 by 11 computer scientists. At the beginning, Legend was selling IBM computers and HP peripheral. Then the company started to build its own computers. In 2003, Legend became Lenovo and held 12.6% market shares in the Asia-Pacific region (Japan excluded).This makes Lenovo rank as the leader in this sector.

Tags: Lenovo international strategy, Lenovo case analysis, Competitive advantage of Lenovo, Lenovo merger and acquisition, IBM Lenovo alliance

The logic of the mergers & acquisitions and alliances that Lenovo have undertaken to-date.
Evaluation of Lenovo's competitive advantage.
Evaluation of the strategic development directions undertaken by Lenovo by using Ansoff's matrix.
Conclusion.
Bibliography.

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[...] Yuanqing Yang, ex-CEO of Lenovo, declared that this merger will help Lenovo to acquire a real international stature while being based on the powerful public image of IBM through a licence agreement of five years and the detention of the famous brand name Also, Lenovo will be the favorite supplier of IBM for Personal Computers. In addition Lenovo will have the possibility of learning and using techniques and methods new and/or patented by the alliance with IBM. Within the framework of strategic alliance between both companies, IBM will provide a commercial support and services of demand generation for Lenovo products through its sales force of approximately people and via IBM.com. [...]

[...] Lenovo accessed rapidly to a big brand name, very famous and with know-how and technologies very reputed. Today, the power of this brand name is flagrant in PC markets. Thanks to these evolutions, Lenovo will carry out in the PC sector a total sales turnover annual of approximately 12 billion USD, with 11.9 million units, based on the figure of 2003. This is an increase of compared to its current PC activity. Indeed, the pooling of resources enables the group to achieve a higher objective. [...]

[...] Also, the PC market is much more standardized so, if they wanted to keep being competitive, they had to reduce costs and develop their services. The cost is the only factor which can be changed. In other words, labor costs have to be reduced. Today, China enables companies to hire qualified persons with low costs. This logic is actually the best for computer companies such as Lenovo and its competitors. In other hands, this is a way for the Big Blue to be introduced on the Chinese market. Indeed, Lenovo is not only a local partner. [...]

[...] But the arrival of cheaper products on the market was threatening IBM products, even if they were still the best quality products of the market with more innovations. So, they absolutely had to find a way to reduce costs by keeping a similar philosophy. Now, Lenovo has bought IBM PC division. We have seen that they can sell cheaper products. There are still innovative features on their new products but materials are not built with the same quality. We can hope that the innovative features will [...]

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