Human Capital

Running head: HUMAN CAPITAL
Human Capital
Name of Student
Name of University
Author Note

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Executive Summary
The report focuses on the human capital that exists in two organisations. Comparison is made
between two organisations like Lenovo and IBM. A case study is analysed that highlights the
problems that may be faced by both the organisations after Lenovo and acquired IBM. The
possible issues that are faced after the acquisition is discussed which includes language and
work culture. Hofstede’s model is analysed that provides an idea of the work culture that
exists between the two countries and the manner in which it the issues can be solved.

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Table of Contents
Introduction................................................................................................................................3
Organisational issues post acquisition.......................................................................................5
Theory behind the issues............................................................................................................9
Ensuring problems...................................................................................................................13
Recommendation......................................................................................................................15
Reference..................................................................................................................................17

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Introduction
Lenovo Group Ltd is a Chinese multinational business organisation, which is
currently headquartered in Beijing. The business organisation manufactures, develops and
provides support to personal computers, mobile phones, servers and electronic storage
systems. The business organisation operates in more than 60 countries across the world and
the key person of the business organisation is yang Yuanqing. When Liu Chuanzhi initially
founded the business organisation in the year of 1894, the organisation used to operate under
the name of Legend (Lenovo.com 2018).
Initially the company tried to import televisions but that venture was tagged as a
major failure and later on, they entered the market of computer and information technology
and started to experience profitability. When the business organisation started making circuit
boards for IBM, the organisation experienced success for the first time. After a few years, Liu
asked for permission from the government of China to form a subsidiary in HongKong and to
move there with five other employees of the business concern (IBM.com 2018). Liu moved a
part of his business to Hong Kong in the year of 1988 to reduce the production costs and
gradually started experiencing some profitability(Fu, Zhongjuan and Pervez 2018).
In the year of 1994, the management of the business organisation made the company
public and initially the stakeholders thought that going public was a move to raise more
funds, but it was for establishing the business organisation in an international way.
Eventually the management of the business organisation issued 50 million shares that earned
them a massive sum of 212 million US dollars in the year of 2000. Later on in the year of
2005, the directors of Lenovo acquired IBM’s personal computer division that accelerated the
management’s profitability (IBM.com 2018).

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International Business Machines Corporation or IBM is an American multinational
technology business corporation, which is headquartered in New York, and they currently
operate in more than 170 nations across the world. IBM manufactures and distributes
computer hardware and software and also provides impeccable customer services to their
target customer base and holds the record of most US patents generated by a single business
corporation. Charles Ranlett Flint founded the business organisation in the year of 1911. The
business organisation was widely recognized after their significant inventions like SQL
programming language, Automated teller machine, Personal computer, floppy disk, hard disk
drives and many more. IBM’s management has continually shifted their business mix by
commoditizing markets while focusing on the higher value, whichis more profitable markets.
It has been seen that IBM ranks among the top 30 business organisations that are known as
the largest recruiters in the private business sector (IBM.com 2018).
To define the organisational culture of IBM it can definitely be said that the
management of the business organisation aligns their organisational culture with the targets
and the goals of the business organisation for leadership in the IT industry. The corporate or
organisational culture exhibits the principles, philosophies and the values of a particular
business organisation (Zhou and Xueli 2014). Being an American company, IBM has a
specific organisational culture that differs from the organisational culture of IBM. In this
regard, it can be said that the cultural characteristics of the business organisation effectively
influences the workforce of the company in order to enhance the organisational performance.
The communication within the business organisation is good and that allows sharing
of knowledge and experience in the workforce that helps the employees to perform with
greater accuracy. It has been observed that IBM has a corporate culture of THINK and this
type of corporate culture is dependent on T J Watson Sr’s efforts to incorporate the
organisation, which was accepted or known as the Computing-Tabulating-Record Company

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(CTR), which was formed after the merger of four business organisations. Watson Sr’s
efforts significantly contributed to the current values, principles and beliefs of IBM and to
address the fundamental elements of the company culture of IBM it can definitely be said that
dedication to the success of each and every customer, radical thinking, innovation and the
trust and personal responsibility in the business related relationships (Cong and Yang 2018).
To describe the corporate culture of Lenovo, it can be said that long before the
acquisition of the personal computer making department of IBM, the management of Lenovo
was trying to shed off their typical Chinese culture and bring in an international
organisational culture in the business corporation(Liou, Rao-Nicholson, and Sarpong 2018).
Lenovo is one of the oldest Chinese companies which has rightly incorporated a global
corporate culture in the workplace and that has given a major boost to the productivity and
profitability of the business organisation. The director of Lenovo believes in an autocratic
leadership and only he takes all the important decisions for the business organisation and that
culture significantly differs from the corporate culture of IBM. Therefore, the management of
Lenovo had to incorporate a wider international outlook in the organisational culture after the
acquisition of IBM’s personal computer department (Cong and Yang 2018).
Organisational issues post acquisition
After the acquisition, the management of Lenovo faced the challenge to bridge the
east-west culture gap for sustaining the productivity of the business organisation. When
Lenovo started their journey as a business organisation, the company had a different set of
values, beliefs and ideas, which were steeped in Chinese culture. However, the management
of Lenovo faced some challenges post acquisition of the personal computer department of
IBM. The management of IBM analyzed the culture of both the business organisations and
got to know that two firms share almost same values and beliefs, but the only difference