Premium Essay

Lenovo

In: Business and Management

Submitted By dropatrv
Words 474
Pages 2
LENEVO – BUILDING A GLOBAL BRAND
Why did IBM want to sell its PC business? Why did IBM sell to Lenovo?
Some of the main reasons why IBM decided to sell its PC business in the year 2004 are as follows,
1. UnprofitableOperations 2. MaturedPCMarket
3. Focusonservices
Unprofitable operations: IBM experienced a great loss in its PC business between the period 2002 to 2004. The company lost almost one billion dollars selling personal computers during that period even after outsourcing most of its PC manufacturing in the year 2002. Also IBM failed to protect its PC intellectual property when the company outsourced its processor and OS development activities to Intel and Microsoft respectively. This allowed Intel and Microsoft to emerge as vigorous competitors for IBM, which in turn impacted IBM’s market share. This clearly indicates that IBM’s operational activities were not up to the mark.
Matured PC Market: Many leading competitors started slashing the PC’s price and the average price of the PC system kept decreasing by 6% every year. Since IBM’s product were more innovation oriented, the company could not sell the premium product for a cheaper price. This scenario also increased the market share of leading vendors at the expense of IBM. IBM considered that the PC’s were more and more at the fringe. Clearly, IBM did not want to trade off the brand image by selling PC’s for cheaper price because of the saturating market.
Focus on Services: IBM was getting out of the PC manufacturing business because it saw greater profits in the services market which included consulting services and outsourcing IT operations to their enterprise, and small & medium business clients. They also saw a greater potential in the software solutions bundled with IBM servers compared to their personal computer segment.
The reasons why IBM sold the personal computer segment to Lenovo are,
1....

Similar Documents

Free Essay

Lenovo

...Lenovo Problem: Lenovo worked on the strategy to build a master brand while leveraging the ThinkPad product brand name, thereby implying an immediate challenge of maintaining the loyalty of existing customers, specifically the ThinkPad, while sustaining innovation at the same time.  Moreover, the much thought out first innovation in the form of the X41 Tablet series from Lenovo after the acquisition, led to IBM being given all the credit owing to the less popularity of Lenovo. The association of Lenovo with China and the Chinese Government  was a potential downside for it to compete in price competitive products with the fear of being recognized as the company from China providing cheap products. This not only had the potential to devalue the Lenovo master brand, but could also damage the premium ThinkPad brand. While a relatively low budget on worldwide marketing as compared to its competitors also proved to be a reason for its market share to that of the PC market leader being as low as 1:3. Competition: Dell was Lenovo’s greatest competitor, being the market share leader with a strong global footprint. The direct sales approach rather than the retail store distribution model led to its rapid growth in China. Similar to Dell, HP, another competitor of Lenovo, also focused on providing standardized products while maintaining a low cost and supply chain. Moreover, Apple and Sony concentrated their energies on innovation and providing premium products. Other competitors......

Words: 1266 - Pages: 6

Premium Essay

Lenovo

...| Assignment Handling ServicesDivision of Information ServicesNathan CampusGRIFFITH UNIVERSITY QLD 4111 | ASSIGNMENT COVER SHEET | DATE RECEIVED: Postmark: DATE RECEIVED: Postmark: Please complete all sections below Course Code:   3033IBA Course Name:   Managing People in Global Economy Due Date:   27/04/2015 Assessment Item #:   3 Enrolment: Off Campus On Campus Campus (Enrolled) Nathan   GC   Logan   Mt G   SB   Course Tutor:   Dr Anne Christie Course Convenor:   Dr Anne Christie Please provide your STUDENT NUMBER:   s2681179 Student Name:   Joshua Grima ACADEMIC INTEGRITY DECLARATION Breaches of academic integrity (cheating, plagiarism, falsification of data, collusion) seriously compromise student learning, as well as the University’s assessment of the effectiveness of that learning and the academic quality of the University’s awards. All breaches of academic integrity are taken seriously and could result in penalties including failure in the course and exclusion from the University. Students should be aware that the University uses text-matching software to safeguard the quality of student learning and that your assignment will be checked using this software. I acknowledge and agree that the examiner of this assessment item may, for the purpose of marking this assessment item: reproduce this assessment item and provide a copy to another Griffith staff member; and/ submit this......

Words: 1836 - Pages: 8

Premium Essay

Lenovo

...| 4. Place | 3 | 5. Promotion | 3 | 6. Conclusion | 4 | Background of Lenovo Lenovo is a Chinese multinational computer technology company that was founded at 1 November of 1984 and was also approved by the Chinese government on that day. The headquarters of Lenovo Group Ltd was located in Beijing, China, and Morrisville, North Carolina, United States. Lenovo’s first major success was developing a circuit board that would allow IBM-compatible personal computers to process Chinese characters after several of failed plans. Reason of the failure was because they were compounded by the fact that its staff had little business experience. After keep on improving , Lenovo company eventually managed to manufacture and market computers using its own brand name on 1990.Since then , Lenovo had develop magnificently and also was listed in Hong Kong was incensement of nearly US$30 million on year 1994. Because of its good management, strong brand recognition, and growth potential , Lenovo’s stock market had been keep on raising until many analysts were optimistic about Lenovo. Lenovo issued a secondary offering of 50 million shares on the Hong Kong market in March 2000 to fund its continued growth and it was raised up to US$212 million. In year 2015, Lenovo Group Ltd had now become one of the most improved and famous computer technologies in this world. Product of Lenovo Lenovo expanded in a far-reaching way in 2005 through its obtainment of IBM's PC business,......

Words: 978 - Pages: 4

Free Essay

Lenovo

...19, 2006 JOHN QUELCH CARIN-ISABEL KNOOP Lenovo: Building a Global Brand The brand essence of Lenovo is innovation that makes a difference to customers. Branding is not a marketing issue for us, it is a business issue. We have to deliver on products and services.1 — Deepak Advani, Chief Marketing Officer Announced in December 2004, the $1.75 billion acquisition of IBM’s personal computer (PC) division by 20-year-old Lenovo, China’s largest PC maker, made headlines around the world. A relative upstart in the business, founded with $25,000 of seed capital from the Chinese Academy of Sciences, Lenovo was acquiring the IBM division that invented the PC in 1981. While Lenovo was arguably the best known brand in China and had some brand presence in Asia, it was virtually unknown to the rest of the world. In 2004, over 90% of Lenovo’s revenues came from China (see Exhibit 1 for financials).2 But with this major deal, Lenovo aimed to become a global technology giant. Annual revenues would triple to $12 billion, making Lenovo the third-largest PC maker in the world after Dell and Hewlett-Packard. As a new multinational with 20,000 employees operating in 138 countries, Lenovo needed a global marketing and branding strategy to match its new reach. This meant determining what Lenovo stood for and designing products that supported that claim. In January 2006, 13 months after the deal was announced and eight months after it closed, Lenovo was preparing for the intense limelight that......

Words: 9176 - Pages: 37

Premium Essay

Lenovo

...Lenovo is the number one PC maker in Chinese PC industry which gained 35.8 percent of market share in 2007. In recent year, it started to operate businesses out of greater China such as Asia Pacific, Americas, Europe, Middle East and Africa. Lenovo’s current pillar strategy is that strive to grow faster and more profitably than the industry by delivering best-engineered PCs and unequaled ownership experience in the global PC market. Since the Lenovo decided to go international, the Europe becomes as part of battle for Lenovo to explore. In this paper, the market of Lenovo in Europe will be focused on the UK. The growth of in UK was achieved through improve sales to large firms and growth in the mid-market segment through a strengthening of the Group’s sales resources. Europe is a key strategic market and battleground for Lenovo. 1. Introduction Lenovo was set up in 1984 as a reseller in China and Hong Kong for the members of the Chinese Academy of Sciences like IBM and Hewlett-Packard. By 1989, now known as Hong Kong Legend has branded out into motherboard manufacturer and it has changed its name to Lenovo and launched itself on the Hong Kong Stock Exchange in 1994 (Malone, [n.d]) . Since 1996, it beat the foreign giants to be the best-selling PC brand and outsell many foreign brands (not just PCs) in the Chinese market. Since Lenovo decided to go abroad and diversify its products and try to produce high tech products, the market share in China were approximately 30......

Words: 6469 - Pages: 26

Premium Essay

Lenovo Report

...RA G PC+ E IN E RM TH FO OR NS O F RA OV T N LE ual Ann 3 2 /1 2 2 01 Code 99 ck Sto o nov t Le or Rep ited Lim up Gro ov rso NV L e n R : L ion pe any – to l ( A D 34 bil comp o PC ted $ dica siness g y p t w and e US nolo to bu s. D ld h ng t e c o f t h e he wor P l u s untrie novo’s d stro e o n M t o n e ers in n g P C 160 c vices, L chain a rmer IB d i mak m e r g re than rnet de supply f the fo ures an s e t o ct te lobal o an ufac odu ition ile in nm rs i d mob ficient g acquis s, man logy pr ercial e ’s tom an mm no -ef op s, cus d PCs highly Group devel e tech ed co tation d s o ng ere a y s i n, Lenov an -to-u -bran work serv gine mp atio y k , er – ally en t innov ed by the Co nd eas ry Thin ervers a lead ption oduc Form ion, da l as s en r ure e . exc ilt on p cution g Divis ty, sec ude leg as wel e l e l u in quali inc obi Cs, is b egic ex mput ho t ig ct lines mer P y o f m ding stra onal C able, h odu u mil inclu s. i ons r s Per ets rel . Its p ded c d a f a evices, phone e s k n rt n a n net d mar service ea-bra ortu sma r Id inte ts and lobal F major d an and g e tabl vo, a ny, has mato, PCs eno ompa rs in Ya ghai L c te an 500 rch cen ng, Sh a; and in ea Beiji . res n; lina , Ch pa enzhen h Caro Ja Sh ort and igh, N e Ral O NOV 2 ) LE 9 OUT K S E : 9 i s a B A ) H o ( nal GY N ENT REHE P EM TAT COM E S OF T OM ITY INC EMEN HEET QU TED STAT CE S ENT S IN E DA D LI AN TEM NGE SO IDATE BAL STA A ON D OW OF CH NTS 2 C NSOL IDATE T FL 11 CO E......

Words: 80647 - Pages: 323

Premium Essay

Rebuilding the Lenovo Brand

...Rebuilding the Lenovo Brand By Wei Cai According to a research report conducted by International Data Corp (Beijing) in October, 14, 2011, Lenovo has overtaken its international rivals to rise to the No.2 slot globally for the first time, the US-based research company IDC said in its latest report. Obviously, after the acquisition, it isn’t the first good news about Lenovo. Let’s look back to May, 1, 2005, Lenovo bought IBM’s PC unit for $1.75 billion, and then, it suffered a dark period. At that time, its share price languished, it lost an numerous of previous customers of IBM and it had an extensive of managerial problems between the two different cultures. At 2008, the board took actions to rebuild the Lenovo brand, and the changes appeared to be working until today. According to the Knowledge@Wharton article and based on my personal research, the actions and strategies can be separated into two parts: the internal executive strategies and the marketing strategies. Moreover, Lenovo still have some actions not mentioned in the article, there are some potential problems as well, I will present them and give my opinions in the following statement. Internal Executive Strategies Ordinating New CEO and CMO Yang Yuanqing back to Lenovo be CEO again. Yang Yuanqing, who was chairman of Lenovo's board from 2004 to 2008 and had been at the helm of the Lenovo brand building and IBM PC acquisition, one of his major achievements has been......

Words: 1641 - Pages: 7

Free Essay

The Globalization and Ihrm of Lenovo

...The Globalization and IHRM of Lenovo ⅠIntroduction Lenovo Group Limited is a Chinese multinational personal technology company that develops, manufactures and markets desktop and notebook computers, workstations, servers, storage drives, IT management software, and other related products and services. Lenovo was incorporated in Hong Kong in 1988 under its previous name, Legend.[1] Lenovo's principal operations are located in Morrisville, North Carolina, Beijing, China and Singapore. (Global Headquarters : The United States Raleigh ( North Carolina Research Triangle Park ) (The main R & D centers: Beijing, China, Japan and Japan, Shanghai, Shenzhen and the United States, North Carolina, Raleigh (Production base and assembly facilities: Beijing, Shanghai, Huiyang and Shenzhen; India's Pontiac Lee (Pondicherry,); Monterrey, Mexico (Monterrey,); the United States Greensboro (in Greensboro); and in the global contract manufacturing and OEM Lenovo is the world's second largest PC maker and markets the ThinkPad line of notebook PCs and ThinkCentre line of desktops. These brands became part of Lenovo's offerings after its 2005 acquisition of IBM's personal computer business. Lenovo also sells the IdeaPad line of notebook computers. Lenovo markets its products directly to consumers, small to medium size businesses, and large enterprises, as well as through online sales, company-owned stores, chain retailers, and major technology distributors and vendors. 1.Joint ventures,...

Words: 7302 - Pages: 30

Free Essay

Lenovo Group Ltd

...Lenovo Over Company [online] Available from: http://www.lenovo.com/lenovo/us/en/our_company.html [Accessed : 19th April 2015] Gartner (2015) Gartner Says Worldwide PC Shipments Grew 1 Percent in Fourth Quarter of 2014 [online] Available from: http://www.gartner.com/newsroom/id/2960125 [Accessed : 19th April 2015] Lenovo (2014) Lenovo Group Limited 2013/14 Annual Report [online] Available from: http://www.lenovo.com/ww/lenovo/pdf/report/E_099220140529a.pdf [Accessed : 19th April 2015] Lenovo (2014) Lenovo Statement on January 2014 Reorganization [online] Available from: http://news.lenovo.com/article_display.cfm?article_id=1763 [Accessed : 19th April 2015] Becker, J. ( 2000) The Chinese Oxford University Press Kirzner, I M. (2008) The Alert and Creative Entrepreneur: A Clarification [online]Available from: http://www.ifn.se/wfiles/wp/wp760.pdf [Accessed : 19th April 2015] Deakins, D & Freel, M. (2009) Entrepreneurship and small firms. 5thEd. Maidenhead: McGraw-Hill Higher Education Chao, L. (2012) As Rivals Outsource, Lenovo Keeps Production In-House [online]Available from: http://www.wsj.com/articles/SB10001424052702303302504577325522699291362 [Accessed : 19th April 2015] Klincewicz , K. & Ujwary-Gil, A. (2013) Perspectives on innovations management – environmental, social and public sector innovations [online]Available from: http://jemi.edu.pl/uploadedFiles/file/all-issues/vol10/issue2/JEMI_Vol10_Issue2_2014.pdf [Accessed : 19th April......

Words: 339 - Pages: 2

Premium Essay

Lenovo Case Rev.01.Docx

...Case: “Lenovo: Building a Global Brand” Analysis Problem Statement By facing more and more intensive domestic and international competition in the PC market, Lenovo’s global market share shrank by 6.8% in the average of first and second quarter of 2005. It can be said that this result came from the fact that they don’t have a specific, unique, and competitive marketing strategy in the world other than China. If this market share drop continued, it could be obvious that Lenovo would become a loser in global PC market, which result could have been consequently estimated $205 million decrease in revenues in the end of 2005 compared to the result of 2004 (see Exhibit 1). At that time, the Lenovo’s managements decided that they acquired IBM’s personal systems division in December 2004 in order to conquer this situation and become a global leading technology company. The primary challenge for the problem in this case was how to build a global marketing and branding strategy other than China by utilizing IBM’s brand and its well-established products such as ThinkPad laptop and ThinkCentre desktop. Situation Analysis (See Exhibit 2) Costumers needs and characteristics Although there are a wide variety of customers in the world, it can be basically said that individual customers are extremely price sensitive after PC became a commodity product like cell phones. In general, young generation in developing and developed countries pursues cheaper products regardless of PCs’......

Words: 1606 - Pages: 7

Premium Essay

Strategic Research About the Lenovo Technology Company

...Research About the Lenovo Technology Company Kehao Wang (Leo) 1011906 Northwood University MGT- 4800- 02 Doctor Susan Dennett Oct .11.2014 Abstract Lenovo is a Chines multinational computer. It leads Chinese electronic industry market because it has successful competitive strategy and excellent management. As a one of global the Fortune Top 500 enterprises, and became the world’s largest personal computer manufacturer in 2013. (1) The Lenovo is worth research. Introduction Lenovo Group Ltd. (stylized as Lenovo) is a Chinese multinational computer technology company with headquarters in Beijing, China, and Morrisville, North Carolina, United States. It designs, develops, manufactures and sells personal computers, tablet computers, smartphones, workstations, servers, electronic storage devices, IT management software and smart televisions. In 2013 Lenovo was the world's largest personal computer vendor by unit sales. It markets the ThinkPad line of notebook computers and the Think Centre line of desktops. Lenovo has operations in more than 60 countries and sells its products in around 160 countries. Lenovo's principal facilities are in Beijing, Morrisville and Singapore, with research centers in those locations, as well as Shanghai, Shenzhen, Xiamen, and Chengdu in China, and Yamato in Kanagawa Prefecture, Japan. It operates a joint venture with EMC, Lenovo EMC, which sells network-attached storage solutions. It also has a joint venture with NEC, Lenovo NEC......

Words: 1644 - Pages: 7

Premium Essay

Hp Swot Analysis 2013

...Name Industries served Geographic areas served Headquarters Current CEO Revenue Profit Employees Hewlett-Packard Company Computer hardware and software, IT services and consulting Worldwide US Meg Whitman $ 120.357 billion (2012) $ -12.650 billion (2012) 331,800 (2012) Apple Inc., Cisco Systems, Inc., Dell Inc., Fujitsu Limited, International Business Machines Corporation, Lenovo Group Limited, Microsoft Corporation, Oracle Corporation, Samsung Electronics Co., Sony Corporation and many others. Main Competitors SWOT HP SWOT analysis 2013 Strengths 1. Strong presence in China 2. Brand reputation 3. Diversified product portfolio Weaknesses 1. Poor competency in acquisitions 2. 29% of income comes from personal systems division 3. Poor presence in tablet market Opportunities 1. Expand services and enterprise solutions divisions 2. Increasing demand of cloud based services 3. Acquisition of more technology related patents Threats 1. Retaliation by incumbent firms in software services 2. Slowing growth rate of the PC market 3. Rapid technological change Strengths 1. Strong presence in China. The economy of China has been growing at a steady more than 8% rate every year. The growing economy accelerates corporate spending and HP is well positioned to benefit from it. The company has increased its investments in the market and expanded product and service offerings, especially its enterprise business and services divisions. These divisions offer the most...

Words: 1025 - Pages: 5

Premium Essay

联想财务报表

...RA G PC+ E IN E RM TH FO OR NS O F RA OV T N LE ual Ann 3 2 /1 2 2 01 Code 99 ck Sto o nov t Le or Rep ited Lim up Gro ov rso NV L e n R : L ion pe any – to l ( A D 34 bil comp o PC ted $ dica siness g y p t w and e US nolo to bu s. D ld h ng t e c o f t h e he wor P l u s untrie novo’s d stro e o n M t o n e ers in n g P C 160 c vices, L chain a rmer IB d i mak m e r g re than rnet de supply f the fo ures an s e t o ct te lobal o an ufac odu ition ile in nm rs i d mob ficient g acquis s, man logy pr ercial e ’s tom an mm no -ef op s, cus d PCs highly Group devel e tech ed co tation d s o ng ere a y s i n, Lenov an -to-u -bran work serv gine mp atio y k , er – ally en t innov ed by the Co nd eas ry Thin ervers a lead ption oduc Form ion, da l as s en r ure e . exc ilt on p cution g Divis ty, sec ude leg as wel e l e l u in quali inc obi Cs, is b egic ex mput ho t ig ct lines mer P y o f m ding stra onal C able, h odu u mil inclu s. i ons r s Per ets rel . Its p ded c d a f a evices, phone e s k n rt n a n net d mar service ea-bra ortu sma r Id inte ts and lobal F major d an and g e tabl vo, a ny, has mato, PCs eno ompa rs in Ya ghai L c te an 500 rch cen ng, Sh a; and in ea Beiji . res n; lina , Ch pa enzhen h Caro Ja Sh ort and igh, N e Ral O NOV 2 ) LE 9 OUT K S E : 9 i s a B A ) H o ( nal GY N ENT REHE P EM TAT COM E S OF T OM ITY INC EMEN HEET QU TED STAT CE S ENT S IN E DA D LI AN TEM NGE SO IDATE BAL STA A ON D OW OF CH NTS 2 C NSOL IDATE T FL 11 CO E......

Words: 80647 - Pages: 323

Free Essay

Trans National Corporations

...shows the relative growth of FDI compared to international trade and GDP growth. The sharp downturn in the late 1990s is due, in large part, to the Asian financial crisis of 1997. Lenovo to Acquire IBM Personal Computing Division Creating New Leading PC Business with Global Market Reach - Creates world's third-largest PC business with approximately US$12 billion annual revenue for 2003 - Global business with worldwide reach, powerful brand name, balanced product offerings and leading R&D capabilities - Long-term strategic alliances between Lenovo and IBM in PC sales, service and financing worldwide - Worldwide headquarters in New York; principal operations in Beijing and Raleigh, North Carolina - Transaction of US$1.25 billion in cash, equity; total transaction consideration of approximately US$1.75 billion - IBM to take 18.9 percent equity stake in Lenovo; transaction expected to be completed in second quarter 2005 Lenovo Group Limited, the leading Personal Computer brand in China and across Asia, and IBM today announced a definitive agreement under which Lenovo will acquire IBM's Personal Computing Division to form the world's third-largest PC business, bringing IBM's leading enterprise-class PC technologies to the consumer market and giving Lenovo global market reach beyond China and Asia. Lenovo will have combined annual PC revenue of approximately US$12 billion and volume of 11.9 million units, based on 2003 business results - a fourfold increase in Lenovo's current PC...

Words: 1089 - Pages: 5

Premium Essay

Annual Report Project

...Annual Report Project | Lenovo, Fiscal Year 2012/13 | Accounting I Professor Jerome Newman By: Min Ki Kim August 24th 2013 | Lenovo is a Chinese computer company that primarily specializes in laptop computers, workstations and various other consumer electronics with an emphasis on catering to businesses, and government agencies with their Think line of durable laptops. Their 2012/2013 annual statement includes a quick business review from their management team that is composed of an: audit committee that independently review financial statements, internal controls, and risk management systems; compensation committee which decides compensation policy for the CEO and other senior management, nomination and governance committee whom help the board of directors organize and review the corporate governance principles and policies and finally the CEO who is responsible for the management and implementation of Lenovo’s strategy and policy (P.36). For the fiscal year of 2012/13 Lenovo boasted a 15.5% share in the PC market due to their PC+ strategy and achieved an overall number 3 ranking for total global market share in the smart connected device category (P.16). Lenovo has also begun penetrating into the smartphone market and is rapidly making headway into China, India, Indonesia, the Philippines, Russia and Vietnam. How successful this venture will be remains to be seen but initial impressions are showing promise. Tablet sales have been showing......

Words: 675 - Pages: 3