Strategic Analysis Of Lenovo Processing Company Commerce Essay

Lenovo, the Chinese language name means "association" or "connected thinking" but can also imply creativeness. According to the reviews of night out, Lenovo is the fourth major word's PC makers. Lenovo Group is employed in the production of computers (PCs) related IT products, and services. The group also provides a range of notebook computers, desktop pcs and mobile handsets, computer accessories and enhancements, computer software and services, which includes services for small, medium and large businesses. The Company is building exceedingly engineered computers. The business model of the Company is built on innovation, functional efficiency and customer satisfaction and a concentrate on investment in appearing markets. The business founded through Group's acquisition of the former IBM Personal Computing Division. The business has strategy that advances, manufactures and market segments reliable, high-quality, secure and easy-to-use technology products and services worldwide. The business model is: Innovation, Client satisfaction, Sustainability and operational efficiency.

The group documented revenues of $14, 590. 2 million through the fiscal year finished March 2007, a rise of 9. 9% over 2006. The group's performance was driven by strong development in the notebook computers in consumer and small organization sections. The operating earnings of the business was $194. 7 million during fiscal yr 2007, a rise of 74. 3% over 2006. The web income was $161. 1 million in fiscal year 2007 compared with $22 million in fiscal 2006. Lenovo is focusing on a greater bite in to the consumer and small & medium business (SMB) sections to tide over slowdown in commercial Personal computer sales within the last fiscal 12 months.

The Chinese language company, which purchased IBM's PC division in 2005, has mainly been positioned as an enterprise-level player. THE BUSINESS is making new 'protect and invasion' approach to drive success and growth. The company is guarding market talk about in China and bolstering success in venture business may also be attacking new expansion sections such as consumers and SMBs.


Chronologically, Lenovo record can be described as follows

During the year 2005 Lenovo completes the acquisition of IBM's Personal Processing Division, rendering it a new international IT competition and the third-largest personal computer company in the world. Lenovo establishes a new Innovation Centre in Research Triangle Area, N. C. , to permit customers, business associates, solution providers and self-employed software sellers to collaborate on new personal processing solutions. Lenovo introduces the industry's thinnest, lightest and most secure Tablet Computer, the ThinkPad X41 Tablet.

During the 12 months 2006 Lenovo introduces the first dual-core ThinkPad notebook PCs, improving productivity and extending battery pack life for up to 11 hours. Lenovo technology flawlessly supports the 2006 Olympic Winter Video games in Torino and Italy. The first Lenovo-branded products outside of China debut worldwide. Lenovo has used the services of the Researchers, scientists and product design teams from throughout the world combine Lenovo's heritage in business and consumer Computer technology to design the Lenovo 3000 products, which features new desktop and notebook models specifically made to provide worry-free processing to the tiny business market segment.

To endure and flourish in the global business environment, Lenovo does not have any choice but to become an international organization in the PC business. With China joined up with the WTO, Lenovo surely would lose its good thing about government involvement (tariff or other limitation of other Laptop or computer companies, ex. Horsepower, IBM) to ensure its market show and profitability in China Market. Lenovo's market show of 30% in 2001 was number one in the Chinese language market, but Dell computer, upstarts, as well as PC clones also placed strong difficulties to its leading market share. Lenovo must expand to the worldwide market that this didn't have. With the acquisition of IBM Personal computer division released in Dec 2004 offered Lenovo a great chance to expand its territory outside Asia. To leverage this great acquisition, Lenovo had a need to set up itself as an international company that could convert itself from a Laptop or computer brand was little known globally to a firm that not only can flourish in innovation to carry the legendary Thinkpad brand but also strengthen its strengths of your innovative Laptop or computer brand that's highly efficient.

IBM allowed Lenovo to make use of its logo for its PC products (Laptop and Desktop) for 5 years, but Lenovo only used IBM logo on its Thinkpad series. The sole connection between Lenovo and IBM was the IBM logo design on its Thinkpad brands. It is very clear that Lenovo was wanting to build its grasp brand using synergy approach. Its strategy was to secure the devotion from Thinkpad current owners and audience by contracting IBM for service and fastened an IBM brand to ensure customers that Thinkpad would be in good care event with changing of the ownership. According to their strategy, Lenovo distanced itself from IBM for the purpose of establishing its own get good at brand with the help from Thinkpad sub-brand. This is a good decision for Lenovo to do something and move quickly part with IBM. There were several known reasons for this separation,

1) Lenovo had a need to develop itself as an innovative company. One example cited by the newspaper was the announcement Thinkpad Z60, that was considered the advancement by IBM not Lenovo in Apr 2005.

2) US PC market/Global PC market were dominated by Dell, HP, IBM was not the main element player in this PC market.

3) IBM was moving into service areas, the Laptop or computer sector was not as favourable as a profitable business.

4) The explanation for Lenovo's acquisition of IBM Computer division was not limited to the IBM brand but also for the global Computer stations as well as its flagship Thinkpad portable computers.

These reasons discussed why the utilization of IBM logo was on the Thinkpad. This is the right move since IBM's brand in Laptop or computer was not the dominated factors besides Thinkpad. Though without needing IBM's logo design or brand more, Lenovo lost the opportunities to keep IBM's current customers and potential buyers for a while trends and wanted to contend with a perceived better brand that is more efficiency and impressive in Lenovo if established. Lenovo took a brief term risk for a permanent gain. It had been thought use the mixture of marketing/branding efforts to create a position impression of an improved new master brand of both efficiency and technology by using Thinkpad sub-brand.

Lenovo brand can be used to target a particular customer sector. The product as Lenovo defined was the product that would for small business owners. While using computer solutions changing so fast, and lacking step would create disaster for a Personal computer product. The usage of different brands, Lenovo could have the options to build differentiated product lines with their own characteristics. This process would preserve the brand electricity of Lenovo and can meet diversified customers with a broad expectation if needed. In its first launching of new product besides ThinkPad, Lenovo should have use "names" instead of numbers.

To increase the market share, to cover up the previous time down fall and also to improve the brand image the business has made approaches for different countries. For instance for India the CEO has directed to check out a four-pronged strategy to make inroads into the consumer market. It has generated a new management team to handle the market; would build a "commitment and ownership culture" one of the leadership, create the right product profile and come up with a sophisticated route strategy to increase Lenovo's share of quantity with channel companions. The company has a occurrence in 350 Indian metropolitan areas now and is also aggressively targeting to broaden its footprint to 580 districts. THE BUSINESS has plans to increase the quantity of stores to 250 this season. The top management is of the view that they can replicate the China model in India for success. Under this course of action the company will undertake dual business design where they will serve companies and federal government customers as well as SMB. The business has planned to adopt a differentiated making, sales and marketing, besides services way, which will be different from the peer group and rivals.


The Company is working in more than 60 countries and focus on offering the needs of customers, shareholders, employees and local neighborhoods. The business's performance in United Kingdom was also afflicted during the prior year. It is pertinent to say that SOHO can be an section of the City of Westminster, and the central business region of the Western world End of London, Britain. It was proven as an entertainment region, for nights life and film industry. Because the early 1980s, the region has undergone considerable transformation. It now is predominantly a classy district of upmarket restaurants and marketing offices. To improve the market share the business made strategy to promote the merchandise using Voluntary Service Belfast (VSB) and SOHO. In addition to the above the consumers in the UK can now buy direct from their website (www. lenovo. com/shop/uk). This strategy of the company has enabled the Company and promoted for new customer portion for Lenovo product in UK. The business found it additional approach to marketing to check its traditional indirect path to market. Making use of the new web shop, Lenovo customers can configure no more than five PCs which are designed to order and sent within 10 working days. Customers can pick from latest IdeaPad S10 Netbooks, and a selection of ThinkPad and ThinkCentre PCs and accessories. Tourists who register for special offers will also receive extra discounts on future orders. As per multimedia studies 16 percent of UK PC sales to homes and SOHO are immediate. This is one of the methodologies used by the business in UK which has resulted Lenovo web shop expands horizons beyond the original SMB customer base in to the homes and offices of the SOHO, VSB and consumers. This path has enabled the Company to add to the existing indirect sales through route business companions. This move is not regarded as contradiction to the indirect path to market, it is utilized to offer customers more choice and extending the customer bottom part. The Route sales strategy getting the same importance for the company. The Company estimates higher demand for both immediate and indirect marketing channel. The customers are benefitted with more special discounts through business partners for the clients making indent to acquire more than five Personal computers & support services. In UK the client service was not appreciated through the previous year. Exactly the same could have effect on the sales. There is negative information about PC's in UK regarding the usage of dangerous chemicals. As per media record in UK: Greenpeace has accused three of the world's biggest Personal computer manufacturers of failing woefully to live up to their offers to make more green computers. The media reports gives that though Hewlett-Packard, Dell and Lenovo stated they have failed to deliver new machines that do not count so intensely on harmful chemicals. Though Horsepower, Lenovo and Dell got promised to eliminate vinyl plastic (PVC) and brominates fire retardants (BFRs) using their company products by the finish of 2009 but they were not able to fulfil their dedication during 2009.


Before we discuss about the drop in financial performance of the business there is need for awareness of the reason why causing exactly like it provides better understanding of the Company. The impact of the global economic problems in 2008 didn't spare anything and shows its impact in every countries. PC market was similarly affected as almost all of the projects were delayed and the institutions delayed purchase decisions and reduced IT budgets. The second biggest impact was the costing. According to the universal style the costs were drastically reduced which induced low sales turnover and worse impact on profitability. Predicated on the market reports and tendency in acquisitions it was recognized by the analysts that during FY 2008-09 the Computer market shipments decelerated to around 4 percent universally. Lenovo being founded and established in China it also confirmed worse impact as Computer market in China was slowed down to large scope. The reason why was economic turmoil, as the amounts of sales of all type of PC's were impacted during this time period. The Levono was not really the only company to show the deteriorating trend. Third main reason for the drop in financial performance of the Company was their inadequately worldwide orders section outside China, specifically the consumer market. It had been a fact that Lenovo reported lower-than-market growth in the worldwide Personal computer shipments, which only increased by around 2 percent year-on-year. The reasons are the identical to reported above in the paragraph.

In view of the above mentioned facts the marketplace share of the business decreased just a bit to 7. 6 percent, ranking No. 4 worldwide through the fiscal year (earlier it was reported to be third). In value conditions, the Company's overall sales for the FY 2009 decreased by 9 percent year-on-year to around US$14. 901 million. In value terms, gross margin performance was seriously affected credited to decline in pricing. The gross margin (excluding one-off items) for the FY 2009 dropped to 11. 9 percent from 15. 0 percent while gross revenue (excluding one-off items) decreased 27 percent year-on-year to about US$1, 779 million. Considering all these factors the Company has undertaken a worldwide resource restructuring plan in January 2009 to reduce costs and enhance operational efficiency. The Company was compelled to adopt decision to lessen the staff strength. These activities of the business were performed in anticipation of annual savings of approximately US$300 million. Despite Lenovo's attempts to control expenditures during FY 2008-09, the decrease in sales and pressure on gross margin resulted in 95 percent year-on-year decline in our income before taxation (excluding the price tag on restructuring activities and one-off charges) to roughly US$29 million for the entire year.

The company's worse financial performance induced loss to shareholders of around US$226 million. The company needed to incur cost of 116 million dollars in the fourth fiscal one fourth and a one-off items demand of 71 million us dollars for executing restructuring. The above results are compared to profit attributable to shareholders (including US$20 million online benefit from discontinued businesses) of US$484 million in the previous fiscal year. There was change in top management in the Company after drop in financial performance. The shake-up employs its first quarterly reduction since 2006.

As mentioned above the Company runs in large numbers of countries. The impact of slowdown was different in each country due the conditions prevailing therein.

China accounted for approximately 43 percent of the overall sales in FY 2008-09, continuing to be the greatest sales contributor. The progress of the China Personal computer market was negatively impacted by earthquake, floods, softer consumer demand and, later in the fiscal calendar year, the global economical slowdown.

In FY 2008-09, the Americas contributed approximately 25 percent of Lenovo's overall sales. The Personal computer market in america was sluggish, and specifically the commercial segment was hard hit by the monetary turmoil. The commercial market conditions in the Americas deteriorated significantly in FY 2008-09 as much large business customers postponed their purchase decisions and lower IT spending to reduce costs.

Lenovo enjoyed sound growth in Europe, Midsection East and Africa (EMEA) until the economic problems hit in the summertime of 2008. The Company reported a lower-than-market Personal computer shipments development of 6 percent year-on-year for FY 2008-09.

The contribution of Asia Pacific (excluding Greater China) during FY 2009 was about 11 percent to overall sales. The development of the Personal computer market in this geography slowed significantly because of the negative growth of the Indian market as well as the impact of the global monetary problems. Lenovo reported a year-on-year decline of approximately 14 percent in Computer shipments for the entire year. It is to be mentioned that even though Lenovo achieved the No. 1 position in the training portion in Australia and New Zealand in FY 2008-09, PC shipments was under great pressure in the second half of the year when the market showed proclaimed slowdown.



The company is result of the merger of two of the most established companies in technology and business: Lenovo Group in China and IBM's Personal Computing Division in the United States. In view of the merger the business has unique market alternatives in combining the best of East and West-joining North American and China-based technology players in the creation of a unified global Personal computer leader with growing market positions in developed and emerging markets alike. The business's greatest market durability isn't just market geographies but also the world's consumer and business PC market segments. The sales turnover being endemic mover so many wide spread geographical countries won't have same economical impact in normal circumstances.

The company is one of the world's largest makers of personal computers and makes the world's most ground breaking PCs. The numbers of products is not limited and with the latest industry situation produce various products considering Information and Communications Technology (ICT) which is a powerful drive for change in the world. The business has involved itself in interconnecting and combining many areas and civilizations with a deep effect on all areas of the economy, society and the surroundings. The types of products include famous brands like the renowned ThinkPad notebook etc, in a business model based on a concept and strategy.

The company is amongst the top five Laptop or computer manufacturers and functioning in more than 60 countries and providing businesses and consumers in more than 160 countries surrounding the world with progressive products.

The Company has well established global procurement policy. The policy takes into consideration cost, quality, technology and invention to supply the greatest value to our customers.

The management of the business is multicultural which enables to convene business wherever and whenever it makes the most sense. The company has businesses hubs in Beijing; Raleigh, N. C. ; Singapore; and Paris; a marketing hub in Bangalore, India; and major research centers in Yamato, Japan; Beijing, Shanghai and Shenzhen, China; and Raleigh, N. C.

The company has 1, 700 designers, researchers and engineers, representing a broad collection of nationalities and dialects and has proven the technical advantages in providing a perfect performance that fulfilled the unprecedented demand of the Beijing Video games. A network of 30, 000 devices, including desktop and mobile computing, touch-screen devices and printers supported by more than 600 Lenovo engineers. Building on the success of sponsorships of the Beijing Olympic Games, Lenovo has been decided on to perform a similar role in providing technology and support for the Shanghai World Expo this year 2010.


The financials of the business didn't improve in the first one fourth of the FY 2010 as reported in the press accounts. It booked a online loss of US$16. 01 million in the fiscal 1 / 4 ended in June, compared to a revenue of US$110 million a year ago. The company needs to improve the strategies further.

The company acquired undertaken restructuring in the last 12 months and even incurred huge expenditures but the reorganization did not bring down costs and increase efficiency internationally according to the estimates. The business is shrinking by 30-40% but the company retained its basic framework on higher size and higher scale. The company had to cut down the top count to meet these new scales. Source chain, service, amongst others and there is still room to boost; not only to reduce the expenditure to income but also to improve customer satisfaction and overall efficiency of management. The IT system needs further improvement, to review the inventory on a regular basis which allows to respond to market competition quickly. The business has comparative weakness in this aspect as compared to other peer group and must improve this in the future.

The company has weakness in its route problem. Despite a few of the strongest lines the company has ever had, it continues to be channel bound, rendering it difficult for clients to get the products in retail. The peer group Acer, Asus, HP and Dell have broad netbook lines improved upon but Lenovo lacks breadth here. It does have an chance to have one of the first enterprise-ready netbooks, however the time for that is running out. It requires to carried out sharply.


During the FY 2008, Lenovo completed access in to the server market with the introduction of the ThinkServer profile, which was created to deliver an improved server experience for small and medium business customers. This will enhance the company's market share in future.

The company can utilize its durability in our global employees as a chance for future trends. The company has plan of recognition by bringing together employees with different perspectives and encounters which gives opportunities creativity and better decision making, which contribute to our long-term success. As disclosed in past paragraph, the business has a internationally dispersed, multicultural management team with wide-ranging experience that sponsors key culture initiatives.


The company has performed the restructuring and incurred loss in the previous 12 months. The financial performance has not improved during the first quarter of this fiscal year resulting in poor financial ratios like come back on collateral etc. The strategy of the business is yet to be put in place completely for better financial performance and better customer service. If the loss continue the company will take additional time to compete.


This examination is very helpful for the business as the new management has made the strategy to enter new market segments and use various types of marketing tools to increase the revenue. The business is definitely in the machine of volume level sales and low margins. For example in India the business is currently using the marketing methodologies found in Greater China. the assumptions are now made predicated on the economical realities of the countries wherein working. The impact of slow down in the economy is currently reversing slowly which is the best time for the business to reduce the costing and raise the revenue.

The company has made Strategy Committee which is in charge of assisting the table of directors in determining the eye-sight, the long-term strategy and intermediate goals. In addition, it reviews the twelve-monthly targets of the Company. Being constituted by senior management, the Committee has been made in charge of the examination of the performance of the Chairman of the Mother board and the principle Executive Official.

The company's strategy functioned in America with increased execution, establishment of an integrated business management system and expansion into the consumer segment. The pattern in growth in the Americas' business deal business space was relatively better than peer group. It achieved 14 percent year-on-year growth in PC device shipments during FY 2008-09 by gaining grip in consumer and SMB market segments and in Latin America. In European countries, Midsection East and Africa, regardless of the challenging market environment, the company stayed focused on enhancing the purchase business model which is level based.

The company has considered the GDP progress pattern and financial conditions and federal government insurance plan while estimating the sales income. Especially in India and other producing countries and in US the interest fixed with a central banks underwent changes to enhance the economy. Such techniques of the federal government guidelines in China, India and Middle East countries will increase the revenue for the business.

The company has prepared to diversify in the companies proposed as partner with as subcontractors. The initiatives are to refine the U. S. marketplace and supplier variety strategy. The management is of the opinion the diversity increase usage of diverse ability, increasing access to a diverse company base and aiding entrepreneurship in local neighborhoods.

As per the business's declaration: In springtime 2009, Lenovo donated computers to Freedom Phone calls, a project that provides free videoconferencing to military at bases in Iraq. The service allows service workers to virtually see and speak with their families frequently and participate in parent-teacher conferences. Lenovo is an integral sponsor of girls in Anatomist program and the Global Marathon, which gives education and awareness to encourage ladies to consider occupations in anatomist and technical areas.

Under the environmental management, the business is under process of

Strive to constantly improve environmental management system and performance.

Work with resource chain to improve environmental coverage and promote the utilization of environmentally more suitable technologies.

Be an environmentally dependable and act immediately and responsibly to improve conditions which may endanger health, safeness or the environment.

Provide appropriate resources to fulfil these goals.

It can be concluded from the Infestation examination that the satisfactory steps have been initiated by the business and the prospects of early recovery are brighter. Brand image has been retained and everything the steps for the sustainability have been initiated by the business. The steps are anticipated to prove fruitful for the entire performance of the group based on the competence, recruiting available and the expected improvement in overall economy of the countries which add significant show in the overall revenue of the business.


The company's research has been done under SWOT and Infestation and even if we consider the Anssof Matrix the conclusion is not different form the sooner mentioned analysis. The company has various products under their umbrella. Notebooks, desktops, workstations, servers, displays, accessories and improvements. The existing products are improved based on locations and customised according to orders specifications. It has helped the business to keep the brand image and also bring in new products with upgraded technology. The market penetration has been around more than 60 countries and through multiple marketing channels. Market talk about has been prior majorly in Greater China and then it was diversified into other Asian Midsection East countries. The penetration in US market, UK market using through marketing channels, big shopping malls, stores and admittance into France shows that the company has technique for the future earnings generation.

For market development the business has tried out to use various strategies like distribution of used computers and computer parts to Kramden Institute and organizes employees to volunteer in US. In October, at Lenovo's new fulfilment centre in Whitsett, N. C. , more than 130 volunteers worked collectively to refurbish computer systems for kids in need. The company also supported companies such as Opportunity International, Kiva and Entire world Funding, which bring much needed capital in the form of microloans to business people in Africa, Asia, Latin America and Eastern European countries. All these actions enabled the business to penetrate into the market at the turf root level.

Diversification was already mentioned in the previous paragraphs and the company hasn't only diversified the products but also the marketing channels. Based on marketing reporting by the business: The business formed a strategic romance with Alibaba, the major online Business-to-Business (B2B) market, to kick off a personalized Lenovo eCommerce PC model for SMB in China. In view of the powerful expansion of notebook demand in China, Lenovo targeted resources on growing control in this segment. Lenovo's alignment of your end-to-end business model, specifically tailored for high-end as well as mainstream notebook sections, resulted in spectacular sales performance of the ThinkPad brand through the time. Lenovo also saw significant improvement in customer acquisition functionality via relationship business, specifically in the general public sector.


Diversification of the merchandise as well as the geographical areas. The brand new marketplaces will be explored and on the basis of the latest strategy the business can improve the income as per estimations and avoid losses as incurred in the last year.

New Marketing stations will be developed and the company as discussed previously will be able to reach the grass root level. The business strategy of higher quantities will be maintained and the margins will show improvement with the decrease in cost.

Brand image will reach the users according to the social programs being launched by the business in a variety of countries.

Quality control has been strengthened with the benefits of the suppliers plan being implemented purely and the product quality audit and periodical visits to the devices of the suppliers is an insurance plan to ensure quality of products.

The company's technique to ensure to meet all applicable legal requirements and voluntary safe practices and ergonomics tactics of the countries wherever our products can be purchased.

Through stringent emphasis on product security and quality, Lenovo is obtaining high customer satisfaction and delivering quality products, alternatives and services.

It will ensure higher profits and success and the shareholders value and financial ratios will improve.

With the innovative products the probability of the business to increase the market share appears to be acceptable.

Introduction of training programs and the establishment of the Lenovo University is the business's personal educational development initiative made to give employees the chance to acquire primary competencies and skills necessary for the future, while aiding Lenovo sustain a competitive global employees.

The strategy of energy conservation attempts will also increase the costing and the gross margins.

As per the business's statement: Strengthening energy efficiency is a simple component of Lenovo's technique to meet its GHG reduction aim for. Proactive initiatives continue at facilities throughout the organization to reduce energy usage. During 2008, several energy assignments were completed that will provide continued energy reductions within the approaching years. More projects have been integrated during 2009.


The drawback of the examination in cases like this is the major contribution of sales to China, Midsection East countries and US markets. You can find no indications that the strategy as stated above has any undesirable impact on the business. Moreover, the business has estimated the future income in pessimistic scenario and therefore nothing specific must be described.


The company should concentrate on consumer and small & medium business (SMB) segments to tide over slowdown in commercial Personal computer sales.

The customer service needs to be further strengthened as the multimedia reports reveal negative response for some of the complainants.

The retail section to be strengthened in countries like India which is big market for the PC's.

New models to be launched globally so the improved technology is available to all sections at one time.

Sales to be increased by using the methodologies doing through microfinance.

The company should support corporations such as Opportunity International, Kiva and World Financing, which bring much needed capital in the form of microloans to enterprisers in Africa, Asia, Latin America and Eastern Europe far away also or must have tie up up with major lenders in such instances.


The company is able to contend with the peer group by replacing the units, lowering the cost of production and retaining the technical human resources. The company has made various strategies to enhance the revenue and increase the profitability. The comparative analysis with the peer group implies the superior system of procurement, less conservation of energy and the involvement in the sociable activities. Training the employees is much better than other peer group. Minimum training of eight hours per year for each and every staff is good standard in such industry. Lenovo also supports an active staff mentoring program. Mentoring human relationships are an outstanding way to grow an employee's skills and knowledge to be able to develop his / her full potential. Environmental factors and global supply string system initiated will demonstrate productive in long term.

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