Global Strategy at Lenovo - Analysis of Operational Aspects and Market Conditions

This article discusses Lenovo's global strategy, operational aspects, market conditions, PESTLE analysis, SWOT analysis, Porter's Five Forces analysis, value chain analysis, risk management, and advantages of global strategy. The company's emphasis on organizational learning and optimization, relevant mergers and acquisitions, and a 'protect-and-attack' strategy have helped it become a global leader in the personal computer market.

Running head: GLOBAL STRATEGY AT LENOVO
Global Strategy at Lenovo
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1GLOBAL STRATEGY AT LENOVO
Table of Contents
1. Introduction............................................................................................................................2
2. How Lenovo became a global company................................................................................2
3. Analysis of different operational aspects and market conditions of Lenovo.........................2
PESTLE Analysis of Lenovo.................................................................................................2
SWOT Analysis of Lenovo....................................................................................................3
Porter’s Five Forces Analysis of Lenovo...............................................................................4
Value Chain Analysis of Lenovo...........................................................................................5
4. Risk Management in Lenovo.................................................................................................6
5. Advantages of Global Strategy..............................................................................................6
6. Conclusion..............................................................................................................................7

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1. Introduction
Lenovo, in the contemporary period, belongs to one of the dominant global producers
of personal computers, along with that of HP, Acer and Dell. With its base in China and
operations across the world, the company generates nearly $38 billion sales revenue, much of
which can be attributed to the robust global strategic framework and operations of the
company, over the years.
2. How Lenovo became a global company
The primary reason behind the global expansion of the concerned company, in an
increasingly competitive market of personal computers, is that of its emphasis on
organizational learning and also optimisation and continuous improvements in its value-chain
activities. The company mainly expands through relevant mergers and acquisitions, the
primary one of which was the acquisition of PC business of that of IBM in 2005 and the
merger with NEC, to infiltrate the Japanese market, in 2011. The company adopts a “Protect-
and-attack” strategy, thereby protecting and improving its business in core countries like
China and fiercely expanding in emerging markets of the developing economies, through its
diversified, user-friendly and affordable products.
3. Analysis of different operational aspects and market conditions of Lenovo
PESTLE Analysis of Lenovo
To understand the macro environmental factors affecting the business of Lenovo, the
PESTLE Analysis is conducted as follows:
Political Factors- The inherent political favour of the government of China, towards the local
brands can be seen to be benefiting Lenovo considerably. However, the political instability of
the developing countries, where the company tends to expand, being subjected to frequent
turbulence, can have adverse impacts on its business.

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Economic Factors- In the current period, the economies of the developing countries,
especially the Asian countries, can be seen to be growing, with the increase in the income and
standard of living of major share of the population. This, along with sectoral changes in jobs,
from agricultural to industrial, has led to increased demands for the products sold by the
company and is expected to increase even more, thereby benefiting the company. However,
economic challenges like currency volatility across the globe, increasing price competition
and others pose threats to the company.
Social Factors- The social acceptance of technology, internet, social media has increased
hugely in both developed and developing countries, thereby increasing the demands for the
products sold by the company, adding to its profits and business expansion.
Technological Factors- The constant development and innovations in technological aspects
and huge competitions in the PC business across the globe are one of the major issues to be
taken into consideration by Lenovo. The company is also expected to invest 1.2 Billion on
R&D in the coming years.
Legal Factors- Being a global brand, the company is subjected to legal frameworks and
diverse production, pricing, marketing and taxing rules in different countries, violation of
which can cause fines in millions of dollars.
Environmental Factors- With increasing global environmental awareness and the need for
sustainable production taking the centre-stage, Lenovo has also committed to raise its target
for carbon emission reduction by 40% in 2016 and has been working on usage of renewable
energy in its production chain.
SWOT Analysis of Lenovo
To understand the internal as well as external strengths, limitations as well as the
threats and opportunities of Lenovo, the SWOT Analysis is conducted as follows:

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Strengths
 One of the leaders in global PC
market with huge market presence
 Diverse product lines with efficient
performance record
 Stronghold in Chinese and Asian
markets
 Constantly innovating product line
 Efficient and affordable pricing
Weaknesses
 Product recall numbers rising with
time
 Low presence and brand recognition
in the developed countries
 Does not attract high end customers
Opportunities
 Constantly growing demand in the
global market
 Cloud computing market expanding
 Strong potential of more merger and
acquisitions in developing and
developed countries to boost the
product portfolio
Threats
 Increasing competitive pressures
 Declining sales of PC due to
increasing sales of technologically
advanced and capable smartphones
and tablets
 Declining average prices, in the
pressure of increasing competition,
leading to decline in the profit
margins
Porter’s Five Forces Analysis of Lenovo
To understand the position of the company in the global market, this analysis is
conducted as follows:
Bargaining Power of Suppliers- Most of the suppliers of the company being small and the
suppliers also being high in number, their bargaining power is low.

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Bargaining Power of Buyers- Due to presence of many competitors and a decline in the
current sales of the PC market, the bargaining power of the consumers have increased and is
in a moderate level.
Threats of new entries- The oligopolistic and highly competitive nature and the huge
requirement of initial investment makes this threat very low and non-credible.
Threats of substitutes- Presence of other laptop and PC companies as well as increasing
usage of smartphones and tablets make the level of this threat high.
Rivalry among existing companies- The PC market being competitive and highly
oligopolistic, consisting of few dominant and powerful player, the market rivalry is high.
Value Chain Analysis of Lenovo
Primary Activities
Inbound Logistics- Components come from multiple sources and the PC division started with
acquisition of IBM’s business in 2005.
Operations- Uses the economies of scale of original equivalent manufacturers by outsourcing
production to them.
Services- Provides reliability and quality to the customers.
Outbound Logistics- Usage of various direct and indirect channel for distribution and
expands its capacities across the globe.
Marketing and Sales- Divides the markets into emerging and matured ones and acts
accordingly.
Support Activities

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Infrastructure- Has announced and established distinct business groups, each dedicated to
achieve connected but diverse goals.
Human Resource- Believes in hiring innovating minds and constant training and evolution of
the employees.
Technology Development- Needs to constantly innovate to stay sustainable.
Procurement- Emphasise on low cost products to achieve greatest competitive advantage.
4. Risk Management in Lenovo
Country risk- The company is hugely protective regarding its market and prosperity in its
base country China and keeping that sustainable tries to capture the emerging markets, where
the risk of competition is low.
Cultural Risk- Having its base in an Asian country, the company minimises cultural risk by
mostly venturing in the emerging Asian markets.
Currency Risk- Lenovo considers the high currency volatility and operates according to the
same.
Commercial Risk- Acknowledging the high risks of competition, the company keeps on
innovating and diversifying.
5. Advantages of Global Strategy
Standardization- Although the company divides its markets into emerging and matured and
adopt different pricing strategies, however, in terms of quality the company standardizes its
products as per the global mark-up uniformly.

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Adaptation- The company is highly interactive with the global customers and adapts as well
as incorporates their feedbacks and demands in their productions, thereby attracting greater
clientele.
Global Innovation- Acquisition of IBM’s business helped the company to acquire
internationally standardised technological base, which the company has improved by
constantly innovating and investing, as can be seen from their 6,500 patents and increasing
R&D activities. The company has also started investing in green technologies.
Global Brandings and Products- The company adopts modular architecture with
interchangeable components, which can be used for multiple devices. The prices are kept
affordable for the majority of the population and marketing is adjusted as per local
demographics, thereby increasing the brand presence. The company has acquired the IMB
brand name and also the name of ThinkPad, which the company has used to reach to a global
level of brand awareness, by using social media and other platforms.
Global Human Resources- The company has an employee strength of 27,000, comprising f
hugely diverse people from all national and organizational levels and it conducts global
training programs to develop the skill sets of its employees.
Global Culture- The company has a diversified employee base and encourages a culturally
inclusive environment by respecting work-place diversity. High socialisation across all tiers
also helps the company to facilitate global knowledge exchange and free flow of ideas and
innovations, coming from the employees with a global mind-set.
6. Conclusion
With a diversified employee base, an immensely innovative and dynamic product
chain, zeal to venture into global markets and explore new opportunities and with their cost-
effective and diversified products and huge supplier and client base, Lenovo currently enjoys

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the position of a global leader in the Personal Computer market and aims to remain so by
investing more in innovations, diversity, mergers and acquisitions and green technologies and
sustainability.