Lenovo Case Study

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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.

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