Lenovo's Strategic Analysis: Internal & External Business Environment

This report offers a comprehensive analysis of Lenovo's business environment, examining both its external and internal factors. The external environment is analyzed using PESTEL and SWOT frameworks, highlighting political, economic, social, technological, environmental, and legal factors, alongside strengths, weaknesses, opportunities, and threats. The internal environment analysis delves into the company's resources-based view, differentiating between tangible and intangible assets, and assesses its innovation strategy, including value chain analysis and continuous improvement processes. The report evaluates Lenovo's innovation strategy, recommending adjustments and new strategies to capitalize on innovation opportunities, and concludes with the implications for stakeholders based on the analysis and recommendations. The report emphasizes the importance of innovation, strategic approaches, and the need for continuous adaptation in a competitive market.

Strategy

EXECUTIVE SUMMARY
In this summary there are external and internal environment of Lenovo company. In this
report is critically analysis internal environment of a company by resources based review in this
tangible and intangible assets can be analyzed. In tangible assets can be touch and feel while in
intangible assets it cannot be touch such as Brand image etc. internal environment also include
value chain analysis and innovation. In external environment there are various factor affects the
company
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
1. Critically analysis of External business environment..................................................................5
2. A critical analysis of the internal environment of the firm and how it impacts its strategic
position and in particular its strategy of innovation on Lenovo company.......................................7
3. Evaluation of the company innovation strategy........................................................................10
4 Recommendation that would allow Lenovo company to adjust/re-invent or develop a new
strategy that takes advantage of innovation opportunity...............................................................11
5.Summary on the implications for stakeholders based on analysis and recommendation...........13
Conclusion.....................................................................................................................................14
REFERENCES .............................................................................................................................14
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INTRODUCTION
Strategy is a method of achieving a particular goal over along period of time. Different
skill are used for carrying out the plan. In this present report selected organization is Lenovo
Group Ltd. It is a Is a Chinese multinational company with headquarter in Beijing, China, and
United States. It sells personal computer, smartphones, servers, tablet computer, IT management
software and smart television. In 2015. Lenovo was the worlds largest personal computer vendor
by unit sales.
The present report is based on macro and micro business environment and the challenges
they face in innovating new strategy. A critical analysis on internal environment objectives and
current approach to innovation. Further in this report also recommend the strategy for reinvent or
adjust by taking advantage of innovation. Also identify the stakeholder and the implication for
them of recommendation.
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1. CRITICALLY ANALYSIS OF EXTERNAL BUSINESS ENVIRONMENT
For survival in the competitive business environment , Lenovo has to critically analysis
its business internal and external environment factors. which affect the company's innovation and
overall business activities and functions. Lenovo is providing the high tech products in the
almost field (Liu, 2015). It has laptops, LCD's, mobile phones etc. Company have faced the
innovation challeges in the production and manufacturing. Regular increase in the price of
material and changes in the consumer preference in technology is the major challenges for
lenovo (Grünig and Kühn, 2015). Continuous development in the new technologies is another
biggest innovation challenge for company. PESTEL analysis is a strategic tool which has been
utilized by the strategic and marketers to determine and analysis the external and macro
environmental factor which affect the company in positive as well as negative ways.
 Political factors- Political factor includes legal and government policies and rules
regulation which company has to follow when it operate its business in the country.
Lenovo has to keep its business strategy in line with global and local politics (Anton,
2015).
 Economic factors- It has been include the country's economic condition. Lenovo has to
determine their price of the product according to country's economic conditions. It has
includes the rate of interest, inflation, market condition.
 Social Factors- It has been include the population of country and their income
level,cultural level and occupation level. Social factor affect the lenovo sales and
production. If people of there has literate than they will need more connectivity and high
tech product (Grünig and Kühn, 2015).
 Technological factor-This factor affect the Lenovo largely because if in the market there
are available the large numbers of competition in technical field than it is the very huge
challenge for lenevo.
 Environment factor- Lenovo is one of the most environmental friendly companies where
all the operations and product packaging is recyclable. By using PCC materials lenovo
is saving considerable amount of natural resources (Bull and et.al., 2016).
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 Legal- There has include laws to protect the rights of consumers, legal and restricted
rules and regulations.
For survival in the technological competitive environment, Lenovo has also use the tool
of SWOT analysis which determine the company's strength, weakness , opportunity and threats
in the market (Niederwieser and et.al., 2016).
Strength- Low cost of production,vertical
integration is the major strength of Lenovo
Weakness- It have low differentiation and poor
brand perception in the developed economies.
Opportunities-Growth in the world's largest
smartphone market and tablet market.
Threat-Rapid technological changes and
intense competition is the huge threat for
Lenovo.
The another tool for analysis the external environment of the Lenovo is the marketing
mix. With the help of marketing mix company can analysis its overall company as well as
product image in the market (Pavlou and Stewart, 2015).
 Product- There are a large varieties of products in the Lenovo such as smart hones,
desktops, servers and accessories, tablets, LCD's etc.
 Price- Lenovo has fixed its products price competitively when compared to other top
brands. The key factor of Lenevo is to balance price as well as the brand value (Adar
and et.al.,2016).
 Place- Lenovo has exclusive showrooms as well as multi brand showrooms.it has sell the
product through modern retail and through online channels. Promotion- Lenovo has sp[end the large amount of investment in promotional activities.
It has been used the advertisement in indoor media as well as outdoor media. Company
has used the online marketing channel for enhance their sales (Bahadir, Bharadwaj and
Srivastava,2015).
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Situation analysis for Lenovo- Lenovo is the world largest growing electronic and
hardware company. Which survive in the market by facing many challenges of technological
changes, large amount of competition. Company's strengths to low cost of production. Lenovo
operate its production and manufacturing in low price but low product differentiation is the big
weakness for lenovo.
2. A CRITICAL ANALYSIS OF THE INTERNAL ENVIRONMENT OF
THE FIRM AND HOW IT IMPACTS ITS STRATEGIC POSITION AND IN
PARTICULAR ITS STRATEGY OF INNOVATION ON LENOVO
COMPANY
A strategic approach for innovation
Both innovation and business objective are equally valued. Innovation is a key driver for
success of Lenovo company (Baumann, 2015). Lenovo company innovate new ideas to meet
future demand, on other hand it also respond to current market demand. Innovation is a
challenging with no guarantee of success unless company adopt systematic approach by hiring a
strong leadership and a right team for achieving their target.
Lenovo core competencies techniques focus on an organization internal resources for identifying
what makes company unique. It involve competencies and expertise, whole staff team and as
individual team member (Buckley, Burton, and Mirza, eds., 2016). It is a way for identifying
organization strength and weakness. Portfolio analysis is way to look existing product and
services and to rate them demand. It also analysis how much of market each service hold their
product. Production of their product depend on the market requirement.
Tools to assess the internal environment are
 Value chain analysis: value chain is a various range of activities it includes design,
production, marketing and distribution. Lenovo company produce goods its value chain
start with the raw material used to make their product. The process of organizing all
activities for properly analyzing is known as value chain management. It is an strategy
for analyzing internal firm (Chen, Prestonand Tarafdar, 2015). Lenovo through this
activity recognize activities which are most valuable. The firm can improve through
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competitive advantage. When Lenovo company compete with cost advantage, then they
will try to perform internal activities at lower cost.
Competitive advantage cannot be understood by looking at the company. There are many
discrete activity preforms in designing, producing, marketing, delivering and supporting its
product
Primary activities include following
 Inbound logistic: Lenovo in this involved each and everything in receiving, storing and
distributing the raw material used in production process.
 Operations: In this stage of Lenovo company all products are turned into final product.
 Outbound logistic: in this activity Lenovo distribute all its final product to customers.
 Marketing and sales: In this stage of activity of Lenovo company involved advertising,
promotions, selecting distribution channel, pricing sales force organization (Cummings,
and Worley, 2014). Also managing customer relationship so that final product is targeted
to the correct customer.
 Service: At Lenovo company this activity is required to maintain the product
performance , when they produce (Durand, and Paolella,2013). In this stage of activity it
include training, repair, warranty and installation.
Support activity helps the primary function and it comprise the following:
 Procurement: At Lenovo through procurement raw material for the products are
obtained.
 Technology development: Technology can be used across the board in the development
of a product at Lenovo company. It include the research and development stage for
developing a new product and designed them and process automation.
 Human resources management: At Lenovo this are the activities involved in hiring and
retaining the proper employee to help design, and market the product (Huis,
Schoonhoven, and et.al.,2013).
 Firm infrastructure: it is refer to Lenovo structure and its management, accounting,
finance, accounting.
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Resources- based view (RBV): In resources based model are the major role for
companies to achieve higher organizational performance. There are two types of resources
tangible and intangible.
Tangible: Tangible include physical assets such as land building, machinery, and capital.
This asset can be easily bought form market for long run business (Johnston, and Bate, 2013).
Through using this assets Lenovo can easily manage their productivity and make changes in their
product with changing technology.
Intangible assets: Intangible assets are those which presence cannot feel but company
owned it. Lenovo company brand reputation, trademark, intellectual property are its intangible
assets. This all assets company cannot buy from market it stay within a company (Kortmann, S.,
2015). If Lenovo product such as mobile, laptop etc are of good quality with advanced
technology customer like to buy their product. It help to create image in market of organization.
Innovation: Product of Lenovo was based on research and development and innovation.
It deliver hero product or services offering. Lenovo company consider innovation through three
ways by business strategies , entrepreneurship and organizational culture (Romanazzi, Murolo,
and Feliziani, 2013). Innovation will not thrive if the organization is change resistant. By
developing a innovation process in a company that are transparent, inclusive and secure.
Innovation of organization may fail if staffing strategy is based on a revolving door of casual.
Continuous improvement: continuous improvement some time also called continual
improvement is the ongoing improvement of product. At Lenovo it is an effort of ongoing
product, services or process. For using continuous tool improvement is a four step quality model.
 Plan: Identifying an opportunity and plan for change at Lenovo company.
 Do: Implement the change on a small scale of company for better production.
 Check: Use data to analyze the results of the change and determine whether it made a
difference in making their product or not.
 Act: At Lenovo if changes is successful, implement it on a wider scale and continuously
assess the results. If change not shown in work, it is required to begin the cycle.
 Continuous improvement is is more specific focus on linear, incremental improvement
within an existing process. All this improvement are based on small changes rather then a
radical change that can be arise in Lenovo from research and development (Simons,
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2013.). Ideas can be come from worker and and it is easy to implement. Small
improvement are less likely to require, major capital investment than major process
change.
3. EVALUATION OF THE COMPANY INNOVATION STRATEGY
For facing the innovation challenges Lenovo has been used the innovation strategies for
their company's production and distribution. Innovation is the part of Lenovo, under which
company focuses on the creativity and new development in the product and services. From the
above discussion on the factors which affect the company's growth and development.
Company has decide the new technological advancement which provide the large
satisfaction and growth in the market. For bringing the innovation in technologies, company
encourage their employees to share their ideas regarding to the new design and creativity in
product. Senior managers meets regularly to analyze technology trends and decide on the
company's innovation strategy (Mor, Kaur and Khaiwal, 2016). Its provide to delivering high
quality, reliable and durable devices that meet consumer demands.
Another innovation strategy is to produced Yoga Tablet product line. It is protected with
over 100 patents and design. from innovative structure and design and multi-mode conversion to
software, display adjustment and user interface. Similarly, Lenovo Yoga Laptop, which
combines its unique 360-degree rotating screen with standard tablet and laptop functionality,
boasts around 100 patent and design rights.
Lenovo has to consider the new design and new trend of product under which it includes
the low price of product. which attract the customers. It can purchase all income level of people.
The another strategy of lenovo is that it expand its product differentiation. When company enter
in the market it has produced only laptop product. After some time it has been growing with
Mobile phones and LCD's in the market.
For bringing these innovation in the company, it have face the economic factors and
technological factor. According to this factors company has faced the economic challenges such
as price of the raw materials, well skilled workers and inflation of the country. Lenovo is the
electronic and hardware brand so that it have face the technological factors at the time of
innovation. Company has to considered the technological advancement of country.
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Regular development in the technology and increasing the level of competition arise the
challenge for Lenovo. By using the employees idea in innovation and design the creative
product , Lenovo can face the competition in the market (Ward, and Peppard, 2016). It produced
the technology which can be differentiate its product from its rivals. The best strategy of Lenovo
is the product differentiation. Through using All above strategies, Lenovo has become the
largest growing electronica l and hardware company which has been build the strong brand
image in the market. These innovation strategies can be help to company in facing innovation
challenges.
4 RECOMMENDATION THAT WOULD ALLOW LENOVO COMPANY
TO ADJUST/RE-INVENT OR DEVELOP A NEW STRATEGY THAT
TAKES ADVANTAGE OF INNOVATION OPPORTUNITY
Strategy recommend for Lenovo company to allow the reinvent a new strategy for taking
a advantage of innovation company.
Recommend strategy for Lenovo company is to understand the different type of
innovation that they are trying to foster the degree of innovation in the organization. Through
employees encouraging for innovating ideas strategy employee of company should encourage to
think beyond the development of new products (Baumann, 2015). By highlighting the different
area in which employee can be involved with innovation. Innovation team are required to
encourage employees to get involved in different activities of innovation such as product,
business model and policy. Employees are focus how to work on good ideas
Recommended strategy is embrace social media and expand the sales. Through social network
such as Facebook, twitter, etc they can increase their sales. All the sales activity can be done
thorough social networking (Durand and Paolella, 2013). Sales can be increase if they describe
their product new changes in attractive way in front of public. Advertising their product is best
strategy for differentiating their product from others. Highlighting the new features of product
liked by customer because every time in technology customer want advance technology. Lenovo
should try to adopt advanced software with changes of time.
Turn the ordinary into something beautiful Lenovo company should try to build standard
hardware for standard application (Buckley, Burton, and Mirza, eds., 2016). They should
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innovate not only the features of standard operating system and computer system but also
reinventing the design standard. They should focus on entire product. applications Lenovo can
invent advanced app capabilities and more functionality in their apps. It can include apps
connected and up to date across all Lenovo platform.
Recommended strategy: Ignore company critics it is required to reach out and listen out
what people want. it means listening your critics, often times. Lenovo should decides to flip the
script and build what customer want no matter the perceived cost (Chen, Preston, and Tarafdar,
M., 2015.). Organization should focus on customer demand and their need. Customer wants
more advance features in their product in a laptop, tablet mobile etc. innovation can be done bu
making android phone less flexible.
Is justify the price of Lenovo pricing strategy is all over the place. Lenovo should ignore
the standard by not only pricing their technology more than other competitor by building
beautiful product for an audience that loves them passionately (Romanazzi, Murolo and
Feliziani, 2013). Lenovo can justify their price with features and benefits that cannot matched.
New software which cannot match with other company software can increase price of product.
Lenovo should be advanced in technology and design world, customer will only pay because of
this reason. Advanced technology such as email sign up, get the latest news in android mobile etc
Break through innovation is something new bold and way ahead of the next best thing it
is combination of several different product all into one. There were a multitude phone that could
technically do many things Lenovo required to adopt new technology which differentiate it
feature from other company product. Sustaining idea is to improving current product by
developing generations 2, 3, 4, 5 and so on till the product reach to its end of life cycle ( Durand,
and Paolella, 2013). Lenovo is very good in creating new product with innovation because of
their resources. for example android version changes from android 4.4.1 to android version 5.1.1.
and so on of mobile phone and table from generation to generation. Mostly next generation
product can be made with a advanced technology. By innovating new windows for Lenovo
product for laptop and mobile are such Mac window is latest window which can be innovate by
Lenovo company to come in a competitive market
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5.SUMMARY ON THE IMPLICATIONS FOR STAKEHOLDERS BASED
ON ANALYSIS AND RECOMMENDATION
Stakeholders are the person, group or organization which have link with the business in
direct manner and indirect manner. Stakeholders can be two types that is direct or primary
stakeholders and indirect or secondary stakeholder. Primary stakeholders are those who have
connected with the company by internal business activities such as investors, employees and
customers (Stakeholder. 2016). If company have take any changes in the technology or bring
advancement in it than stakeholder will directly affect by this new innovation. The secondary
stakeholders are community,government and trade association. After bring the innovation in the
technologies within company. It has been affected to the primary and secondary stakeholders of
the company. There are some stakeholders of Lenovo which affect has been affected by the
innovation in the company.
 Customers-Customers are the primary stakeholders of the company which affect largely
by bringing the innovation in the business. Customer satisfaction is the objective of
Lenovo so if company have bring the new advancement of technology within company
than customers will highly beneficial by the products. They can be able to use the smart
designed product and highly technical product. Customers will highly affect by new
technology innovation because through this they can easily get multi technical resources
which can be helpful in their daily routine activities likes mobile phone, laptops, LCD's.
 Employees- They are also the internal stakeholders of Lenovo who have affected by the
internal activities and function of the company. When new innovation will bring in the
company than employees will required to taking the training and learning classes for
learn and get knowledge about the technology. Employees needs to take the learn new
criteria and methods for using the technologies in the operation of business. New
innovation may be arise some conflict between the employees but training session may
be overcome this issue (Liu, 2015). Employees need to focus to take initiate this training
session.
 Investors- They are those person who invest their large amount of capital in the business.
Investor have share their investment in the business for earning return after business
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success. If company have earn the large amount of profitability than it need to share the
profit to the investors according to their investment ratio. New innovation of technology
bring the profitability and growth of the company which affect the investors return profit.
 Creditors- A creditors is a person or company to whom one owes money. A creditors may
be a bank or another company. If company have bring the new innovation in the
technology of company than creditors will also profitable.
CONCLUSION
From the above report it can be concluded that innovation is important for Lenovo
company to remain in competitive market. External environment factor also such as political,
legal social etc are factor which effect the Lenovo company products and image. Through
SWOT analysis it come to know the weakness and strength of Lenovo company. Internal
environment there are tool to assess the production of company by resources based review to
identify the tangible and intangible assets of company. Value chain analysis included various
range of activities such as design, production, and distribution. Further it can be concluded that
there are various recommendation innovative strategy for a company so that they can increase
their profit and bring more new advanced technology product for a company. There are
Implication of stakeholder based on analysis and recommendation stake holder are customer,
employee, investor and creditor etc have a great impact on company innovation.
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