Lenovo: Analysis of International Business Operations and Strategy

This report provides a comprehensive analysis of Lenovo's international business operations. It begins with an introduction to Lenovo's organizational background, including its founding, acquisitions (such as IBM's PC business and Motorola Mobility), and its evolution into a global technology company. The report then delves into the industrial background, focusing on the computer hardware industry and its segments, including smartphones and tablets. It examines Lenovo's business culture, highlighting the blend of Eastern and Western values, Confucian principles, and the importance of relationships in its operations. The report also discusses Lenovo's historical moments, including its sponsorship of the Beijing Olympics and its emergence as a global brand, outlining key strategies such as aggressive acquisitions and assimilation of business principles. It analyzes Lenovo's position in the industry, its market strategies, and its financial performance, including pre-tax income and earnings per share. Furthermore, the report explores environmental challenges faced by Lenovo, such as the decline in the PC market and competition in the smartphone sector. It then discusses strategies for overcoming these challenges, including diversification into software and services. A competitor analysis is provided, comparing Lenovo with rivals like Dell, HP, and Samsung, along with an examination of Lenovo's competitive advantages, such as its unique strategic model and access to distribution networks. Finally, the report outlines future challenges, including difficulties in breaking into the US data center market, and provides recommendations for future success, such as focusing on market stabilization and building trust with partners and customers. The report concludes with a list of references.

International Business
Lenovo

 Lenovo group Limited is a multinational Technology company
based in China with headquarters situated in Beijing. The
organisation operates in designing, development,
manufacturing as well as sales of personal computers,
smartphones, workstations, electronic storage devices tablet
computers, service and so on.
Introduction of Lenovo: Organisational background

 The Organisation was founded in the year 1984 named Legend. Later,
they acquired the personal computer business of IBM in the year 2005
and also agreed to acquire their Intel based server business in the year
2014. Lenovo entered the market of smart-phone production and sales in
2012 and within three years they had become the biggest vendor of
mobile phones in Smartphone category in the Mainland China.
 In the year 2016, it was announced that Lenovo bought Motorola Mobility
from Google. Much of the reporting in the United States centered on the
financial loss made by Google, which bought the company in 2012, for
$12.5 billion and sold it for less than a quarter of that amount. But, also
interesting is what the acquisition says about Lenovo’s strategy for
growth and becoming a global powerhouse.
Continued…

 Lenovo operates in the computer hardware industry
 The product categories of this industry are desktop computers,
laptop, and peripherals, including webcams, ATMs, data
storage devices used by small and large corporations and so
on.
 A rapidly growing segment of the computer hardware industry
is in multipurpose handheld communication devices, such as
smartphones and tablet computers, which allow consumers to
have phone conversations, send electronic text messages and
e-mail, surf the Internet, or access media.
Industrial Background

 The aspect of business culture at Lenovo is
very important considering how the
organisation blended Eastern as well as
western culture in order to take them up to
a global level.There are handful of Chinese
companies like Lenovo, xiaomi and Huawei
trying to climb up the ladder to become a
global tech giant giant (Segers, 2016).
 However, Lenovo had to stay away and
head of the Other competitive
organisations and it had been possible
because of their new organisational
structure.
 In order to take the business to a global
level Lenovo had to depend on acquisition
of smaller organisations for department of
big organisations like the PC manufacturing
section of IBM. In this context Lenovo faced
Business culture and traditions of Lenovo

 Another fundamental Confucian value that is reflected in the working culture
of Lenovo is development of relationships. I
 n these organisations business relationships are based on independence.
 However, Confucian values reflect business relationships based on trust,
reciprocity as well as mutual obligation.
 The organisation also depended largely on 23 factors in order to which
standard the volatility as well as change they were going through (Schmid &
Polat, 2018).
 After integration of workers from big organisations like Motorola mobility for
IPM, Lenovo was having workers from different countries, speak in different
languages as well as coming from different ethnic backgrounds.
 Under these circumstances, Lenovo emphasized on development of the
values like trust (Chakravarthy & Yau, 2017).
 The working groups constituted of a combination of Chinese Commission as
well as the newly acquired western employees.
 The message that the organisation trusted in there capabilities was
Continued…

 Emerging Asian brands like Samsung or xiaomi
have a innovation based organisational culture.
 The employees are empowered in order to
emphasize their knowledge, skills as well as
ability so that they are able to innovate in terms
of product Technology or organisational working
methodology.
 These companies have put in large amount of
responsibility as well as austerity on the shoulder
of lower orders of Hierarchy in the initial stage.
 On the contrary, Lenovo follows a much more
balanced pattern where the employees go
through the stage of refinement of organisational
relationships in order to occupy authoritative
position.
Continued…

 The confucian culture of in circle trust and relation development has
been deliberately practised by Lenovo.
 This kind of organisational trust development has been practised by
them with both their internal as well as external stakeholders.
 This is the reason why their market popularity is always high and
local working groups like governments, employee unions, pool of
workers and so on always favours them in their business procedures
(Jensen, 2017). In the first place, Lenovo had already developed a
concentrated position in the Chinese Technology industry before
venturing out for becoming a global organisation. This is reflected in
achieving the rights of sponsoring the Beijing Olympics as the lead
sponsor, designing the Olympic torch along with provision of 20000
infrastructure components for the Olympics.
Historical moments of Legends of Lenovo

 Lenovo followed the two specific models of Organisational
Management, namely the college shall model where by the
managers and executives to get the role of acting like coaches
as well as employees, working within the team to empower
others and that of the system model of organisational
behaviour which is the foundation of almost all positive
corporate values of the company.
 As unique foundation in the technology business, is like
working for the organisation because of the incentives,
flexibility and schedules, creative encouragement as well as
the leadership provisions.
Emergence as a global brand

 While developing themselves as a popular Global brand the organisation had
following 6 crucial strategies. The most important strategy was the development of
the stream of aggressive acquisitions which help them to come up with new
technology. In 2012 the PC division of IBM was purchased for 1.75 billion US dollars
and in the same year purchase of Digibras Industria was also done. The second
strategy for success was assimilation of the business principles of west and east to
develop recruit as well as retain talent in home as well as overseas market.
Continued…

 Lenovo those customers who have strong brand awareness. This group is mainly
constituted by city customers who have advanced concepts towards Technology.
 That is why there is a basic differentiation in the sales strategy of Samsung
which targets micro segmented markets emphasising on unit sales only.
 On the contrary Lenovo emphasizes on fostering of sales of their most ambitious
product units by means of which the volume sales value is higher than almost all
big Asian brands.
 For the third quarter of 2007/08, Lenovo reported pre-tax income of US$192
million (excluding restructuring) and basic earnings per share of 1.93 US cents,
or 15.01 HK cents.
 Lenovo's ability to achieve faster-than-market growth and profitability was a
direct result of the improvements to their competitiveness.
 In terms of personal computer market, the brand name of Lenovo is a
comparative advantage.
Position in industry

 Lenovo remains the biggest PC manufacturer in
the world but they have been trying to broaden
their smartphone market as the market size of
personal computers have been fizzling.
 As Lenovo concentrating more on diversification of
their laptop business their market share started to
fall.
 In the Hong Kong exchange, the market share of
Lenovo has recently experienced a 5% fall to come
down to HK$ 4.95.
 the organisation has been facing challenge in
three business documents which are data centre
mobile device production as well as PC and other
smart devices.
Environmental challenges

 Lenovo has decided to balance their losses by diversifying their
business in to software and services.
 Lenovo started to provide server, storage, software as well as
other services which was able to boost their sales by 20%.
 Nevertheless this helps organisation to acquire enough stock
capital to bring about innovative products in the tablet and
smartphone market.
 However in the service industry the organisation experienced
from growth in North America, as confirmed by the sources of
Lenovo.
Strategies for overcoming challenges

 Lenovo faces competition
mainly from Rival
organisations like Dell, Acer
group, Sony Samsung, Asus
and few other smaller
organisations of the
technology industry.
 The biggest threat in terms of
market share comes from HP
which operates in the same
technical peripheries where
Lenovo operates and
generates 129 % of the
revenue of Lenovo per annum.
Competitors analysis of Lenovo

 Lenovo implements the unique strategic model of protect and
attack.
 In the home market the organisation maintains attitude of
protecting their profits from encroachment by competitors.
 They have been able to achieve competitive advantage in the
home Market by establishing their access to more than 13000
sales points within the Chinese distribution network out of
which 80% are exclusive distributors associated with Lenovo.
Competitive advantage analysis

 The biggest challenges that Lenovo will face is in context to the
the difficulty in Breaking into the data Centre market of US
(Chakravarthy & Yau, 2017).
 They have recently acquired System X, bladecenter and flex
system blade servers and switches. Besides that, they have
partnership with idataplex servers, and other American businesses
like power systems, pure data appliances, power based flex
servers and so on, which falls under the acquisition of IBM.
 The major challenge in this regard is that most of the people
oriented partners have communication channels with poor
expanse. So they cannot help Lenovo to make the complex service
deals in the US market.
Description of future challenges

 Lenovo should focus on ensuring market stabilization of the
acquired smaller companies like Fujitsu of Japan.
 They have to convince the partners as well as customers that
starting from maintenance contracts to sales representatives
will remain the same brand name. This is how Lenovo can
avoid the initial hurdles to business expansion , related with
‘foreignness’.
Recommendation for future challenges

 Chakravarthy, B., & Yau, D. (2017). Becoming global leaders: innovation
challenges for five large Chinese firms. Strategy & Leadership, 45(2), 19-
24.
 Fan, P. (2018). China goes global: the impact of Chinese overseas
investment on its business enterprises.
 Fubini, D. G., & Snively, C. (2016). Lenovo to Buy IBM PC: Integration
Challenges.
 Jensen, K. R. (2017). Introduction: Achieving Innovation in a Global and
Dynamic Environment. In Leading Global Innovation (pp. 1-10). Palgrave
Macmillan, Cham.
 Kim, K. H., Lattemann, C., Il Park, B., & Zhang, W. (2019). New
international business theories for China goes global? The importance of
institutions, innovativeness and learning. International Journal of
Emerging Markets, 14(1), 2-5.
References

References
Schmid, S., & Polat, C. (2018). Lenovo: From Chinese Origins to
a Global Player. In Internationalization of Business (pp. 125-
154). Springer, Cham.
Segers, R. (Ed.). (2016). Multinational Management: A
Casebook on Asia’s Global Market Leaders. Springer.
Singh, N. P. (2017). Lenovo acquired Motorola Mobility in a
bipolar world of mobile phone makers. Industrija, 45(2), 149-
180.
Verbeke, A., & Kano, L. (2016). An internalization theory
perspective on the global and regional strategies of
multinational enterprises. Journal of World Business, 51(1), 83-
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Zakic, K., & Radisic, B. (2017). STRATEGIES OF CHINESE