Lenovo Case Study

1041 Words3 Pages
bulb-icon

Recommended: Critically analyze Lenovo globalization strategy

Company Focus: Internationalization of Lenovo
Lenovo belongs to the Legend holding group from China, and is the world third largest manufacturer of personal computers (PC) after Dell and HP. Lenovo is highly recognized in domestic market for its success against the well-known Multinational Companies (MNEs) such as AST, Compaq, HP and IBM in domestic market.
Lenovo currently have the largest PC market share in China with around 30% of the market under their control and internationally recognized for their acquisition of IBM’s PC business in 2005 followed by the complete restructuring and change in ownership of the foreign company following the acquisition.
Merger and Acquisition (M&A) and its effect on Lenovo

Yannan, T (2011) explained that China’s entry to WTO, has brought many challenges for Chinese enterprises which was overshadowed by opportunities presented for local companies to go global. The circumstances was strongly explained by the author using the example of Lenovo. Lenovo’s internationalization process was fast tracked due to China’s entry to WTO. As shown in the figure, the company maintained a continuous process of M&A strategy to build its own brand image. A more explicit case has been presented in later section of the essay about Lenovo’s acquisition of IBM’s PC business.
Lui, C (2007), explained that lenovo realized that they were lacking several factors for going global, including a brand name with worldwide recognition, a strong presence in the world market, and the human talent to run and manage the global company. Hence, the M&A route taken by Lenovo has benefitted in three ways
• It has manage to successfully develop an international brand
• Gather manufacturing Technology
• Gain other International resourc...

... middle of paper ...

...up Executive, IBM Software and Systems) (Lenovo.com, 2014).
• In the words of Phillipe de Marcillac at technology market researcher IDC, “ Lenovo gets what it wants-a worldwide presence. And IBM gets what it wants”. Lenovo’s purchase of IBM’s PC business ensures that Lenovo will enjoy success, as there is 9.44 percent rise in its shares. IBM, on the flipside enjoys second largest server business with 22.9 percent share. Therefore, IBM, through its strategic outsourcing deals, will continue to sell and market Lenovo PCs through IBM Global Services and Lenovo with the help of IBM, will be selling its products under IBM’s name (Lenovo.com. 2014).
• This acquisition has not only proved beneficial to Lenovo for its global entrance to other nations but has benefited both the companies to achieve economies of scale under low labor cost with IBM focusing on other areas.

Show More
Related

  • Home Depot's Failure in Chile

    1372 Words  | 3 Pages

    ...choices for executives, and gaining rapport with local suppliers, the corporation stands a good chance of achieving success in their foreign expansion.

    Read More

  • China Enters the World Trade Organization

    930 Words  | 2 Pages

    ...here. In doing so, they can take benefit of the country's vast business opportunities by entirely exploiting their competitive advantages and thus further augment their capabilities. This is particularly significant given that China is and will most likely linger a major goal for direct investment in the world. However, the entry of China in world’s main international trade business is contributing a lot to the opening of overseas capital, highly developed experience, in addition to organization proficiency addicted to the enterprises of Chinese, in totaling up altogether, it would give forward motion to technological novelty and structural modification in the enterprises of the Chinese. References http://english.peopledaily.com.cn/special/WTO/2000031400W103.html http://www.8thnetwork.com/translation.html http://www.wto.org/english/news_e/pres01_e/pr243_e.htm

    Read More

  • Italy and Analysis

    5266 Words  | 11 Pages

    ...Italy. Therefore, out of these main competitors, Toshiba is the main threat but you can never tell what will happen with future generations of a product.

    Read More

  • Foreign Direct Investment in China

    1419 Words  | 3 Pages

    The article also give snap shot of the foreign companies who misjudge the Chinese culture, competition, size the market, and some other factors, have been badly affected by investing in china.

    Read More

  • Dell's Business Case Study

    1426 Words  | 3 Pages

    Dell is one of the renowned companies in the world. If someone is asked to name the companies, which sell computers, he/she will definitely include the name of Dell (Martin 2002). In fact, it is widely accepted brand in the world. However, with the arrival of rival companies, post 2007, for Dell, it was testing to stay alive in the race in the computer industry. Dell in effect is acknowledged by some experts as one of the vulnerable brands. Hence, it would be preemptive for the corporation to continue to exist in the contest, where big companies, such as Apple and Acer have dominated the market by this

    Read More

  • How have some Chinese companies achieved success in foreign markets?

    602 Words  | 2 Pages

    Over the last 30 years the world has seen drastic changes in the Chinese way of making business. Nowadays, China has opened its businesses to the rest of the world, especially America and Europe (Teagarden & Cai, 2009). As a result, their economy has increased and the evolution of the companies have changed to be from closed doors to be international and multinational (Teagarden & Cai, 2009). This essay will analyze, first of all, how some Chinese companies have had success abroad, looking at the strategy that they applied to expand and to improve their products. Furthermore, this essay will show examples of successful Chinese firms, such as Lenovo and TCL Group, and how they achieve it.

    Read More

  • Dell Computers Strategy

    1587 Words  | 4 Pages

    Global companies play an important role in the business environment, because they connect their business together around the world. A good example of a global company is Dell Inc., an American computer-hardware company, headquartered in Austin Texas, which develops, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. They design, build and customize products and services to satisfy a range of customer requirements: from the server, storage and Premier Services needs of the largest global corporations, to those of consumers at home. According to the Fortune 500 2006 list, Dell ranks as the 25th-largest company in the United States by revenue.

    Read More

  • Dell In China

    1666 Words  | 4 Pages

    In 1995 Dell entered the Chinese market. With a population of 1.3 billion this was a great new market for Dell to tap into. IBM, Compaq, and Hewlett-Packard had all ready realized this and had opened offices in China in the early 1990s.

    Read More

  • The Impact of Multinational Corporations (MNCs) on Developing Countries

    1004 Words  | 3 Pages

    Gilpin discussed the MNC’s evolution through the lenses of a number of business economic theories. Using Raymond Vernon’s Product Cycle Theory, the overseas expansion of American companies until the 1960s was shown as a means of preempting foreign competition and preserving monopoly positions, which was possible then because of the wealth and technology gaps that existed between the US and the rest of the world (282-83). Following the closing of such gaps, Dunning and the Reading School’s Eclectic Theory explained the next stage of the MNC’s evolution as propelled by the great leaps made in technology and communication, which made internationalized management both possible and viable (283). Michael Porter’s Strategy Theory, meanwhile, asserted that the MNC is now in the era of strategic management, wherein activities and capabilities spanning borders allow it to “tap into the value chain” in the most advantageous positions (285-85). Gilpin made an interesting point, however, that MNCs are oftentimes the result of market imperfections and unique corporate situations. In many instances, the decision to expand a firm’s operations in another country was a means of circumventing protectionist measures and trade barriers, or simply to curry favor with governments, as practiced by IBM (280...

    Read More

  • China's Development

    1177 Words  | 3 Pages

    China's development is praised by the whole world. Its developments are not only in the economic aspect, but as well in its foreign affairs. Compared with other developed countries, China is a relatively young country. It began constructing itself in 1949. After 30 years of growth, company ownership had experienced unprecedented changes. Entirely, non-state-owned companies can now be more involved in sectors that used to be monopolized by state-owned companies.

    Read More

  • Philips Vs Matsushita

    1739 Words  | 4 Pages

    N.V. Philips (Netherlands) and Matsushita Electric (Japan) are among the largest consumer electronics companies in the world. Their success was based on two contrasting strategies – diversification of worldwide portfolio and local responsiveness for Philips, and high centralization and mass production for Matsushita.

    Read More

  • Top Competitors in The Personal Computer Industry

    1477 Words  | 3 Pages

    The PC industry is highly competitive and constantly changing as technology evolves and customer needs change. Some of the top competitors in the PC industry are IBM, Hewlett-Packard, Dell and Apple. Theses rivals are constantly jockeying for the top competitor’s position. They compete in prices, product innovation, advertising, etc.

    Read More

  • Modes of Foreign Entry

    1603 Words  | 4 Pages

    All research fully carried out on Entry nodes on the long run remain limited to large manufacturing firms. The foreign market selection and the choice of its entry modes drastically ascertain the performance of a specific firm. Entry mode can be defined as an arrangement for an organization that is organizing and conducting business in foreign countries like contractual transfers, joint ventures, and wholly owned operations (Anderson, 1997). Internationalization is part of a strategy which is going on for businesses and organizations transfers their operations across the national borders (Melin, 1992). The firm that is planning to have the operations across the border will have to choose the country that they are planning to visit. Anderson (1997) argues that the strategic market entry decisions forms a very important part of an organizational strategy. The decision to go international is part of the internationalization strategy of the firm. Multinational Corporations that desire to have international operations will find the strategy to go international, the mode of entry is very important. Even though there are studies which have shown that the main effect of being pioneers in a market promises superior performance in terms of market share and profitability than the late movers, Luo (1997) and other researchers have found out that the effect of the first mover may be conditional and will depend on the mode of strategy that is used (Isobe, & Montgomery, 2000). There are different strategies that MNCs can use to enter new foreign markets; they include exporting, licensing/franchising, full ownership and joint ventures. The mode of exporting entails a company selling its physical products which are usually manufactured outside the...

    Read More

  • International Marketing Essay

    963 Words  | 2 Pages

    International Marketing, at its simplest level, involves the firm making one or more marketing mix decisions across national boundaries (Jobber, 2010). At its most complex level, it involves the firm establishing manufacturing facilities overseas and coordinating marketing strategies across the globe (Jobber, 2010). There are various reasons for going global, some of which are: to find opportunities beyond saturated domestic markets; to seek expansion beyond small, low growth domestic markets; to meet customers’ expectations; to respond to the competitive forces for example the desire to attack an overseas competitor; to act on cost factor for example to gain economies of scale in order to achieve a balanced growth portfolio. The methods of market entry that could be used are indirect exporting (for example, using domestic –based export agents), direct exporting (for example, foreign –based distributors), licensing, joint venture and direct investment. I found this par...

    Read More

  • Case Study of Dell Computer Corporation

    1652 Words  | 4 Pages

    Even during the Asia economic woes of the early 1998, Dell’s sales in Asia rose 35%. Its sales at the Internet Web site were about $5 million a day and expected to reach $1.5 billion annually by the year-end 1998. Since 1990, Dell’s stock price had exploded from 23 cents per share to $83 per share in May 1998 with a 36,000% increase and was the top performing big company then. Dell’s principal products include desktop PCs, notebook computers, workstations, and servers. Its products and services are sold in more than 140 countries.

    Read More

More about Lenovo Case Study

Open Document