Lenovo Case Study
Question 2: Lenovo seems to be "stuck in the middle"? What does it need to be a leader both in China and internationally?
After acquiring IBM, Lenovo achieved great benefits and became a well-known private computer brand in the global market, expecially in China. However, this company had to face with "stuck in the middle" when integrating IBM Corporation's PC division. The differences between two national cultures were the reason why that Lenovo failed in implementing strategies for Chinese market into US market. While the sales of private computers in greater China region in 2008 increased 12 percent in comparison to 2007, the sales in United States reported a 4-percent-decrease at the same period. This negative result led to doubts about the wisdom of Lenovo's acquisition. In addition, after market was opened to competition, this third- largest global personal computer manufacturer felt heat from foreign firms and the government started to purchase computers from Dell and other foreign competitors. These changes caused to certain disadvantages for Lenovo. While small vendors served the low-end market with generic competitors built from components of different brand, big brands such as Dell and HP served the big corporations. All of them are the reason that left Lenovo getting stuck in the middle.
In order to escape from this bad situation, Lenovo need to establish a global brand, leading-edge technology and highly efficient operations. Through the acquisition of IBM's PC division, this need could be met by leveraging the two company's core competencies. Lenovo should utilize IBM's global sales capability and international management to achieve more product differentiation and brand building to make Lenovo of China become Lenovo of the world as the chairman Yang Yan-qing stated.
Question 3: On page 4 & 5 it list potential problems resulting from the different cultures of the companies. Address each one of the problems. Are they solvable? How ?
Potential
After acquiring IBM, Lenovo achieved great benefits and became a well-known private computer brand in the global market, expecially in China. However, this company had to face with "stuck in the middle" when integrating IBM Corporation's PC division. The differences between two national cultures were the reason why that Lenovo failed in implementing strategies for Chinese market into US market. While the sales of private computers in greater China region in 2008 increased 12 percent in comparison to 2007, the sales in United States reported a 4-percent-decrease at the same period. This negative result led to doubts about the wisdom of Lenovo's acquisition. In addition, after market was opened to competition, this third- largest global personal computer manufacturer felt heat from foreign firms and the government started to purchase computers from Dell and other foreign competitors. These changes caused to certain disadvantages for Lenovo. While small vendors served the low-end market with generic competitors built from components of different brand, big brands such as Dell and HP served the big corporations. All of them are the reason that left Lenovo getting stuck in the middle.
In order to escape from this bad situation, Lenovo need to establish a global brand, leading-edge technology and highly efficient operations. Through the acquisition of IBM's PC division, this need could be met by leveraging the two company's core competencies. Lenovo should utilize IBM's global sales capability and international management to achieve more product differentiation and brand building to make Lenovo of China become Lenovo of the world as the chairman Yang Yan-qing stated.
Question 3: On page 4 & 5 it list potential problems resulting from the different cultures of the companies. Address each one of the problems. Are they solvable? How ?
Potential