n

o
g
a
r
D
e
s
e
n
i
h
C
g
n
i
s
i
r
p
ategy
r
t
An U
S
l
a
b
lo
G
s

o
: Lenov
Case Analysis

e 2015 Mr.
S
o
S
t
n
e
m
e
g
a
n
a
International M
ler, Mika Bes r,
Welvers
Sabh, Markus Ml
ra El Sa
presentated by Ba
irten
Erol and Marius H

Introduction

Case summary
Established in 1984, by 11 employees, with a total
capital of 25,000 US $
Providing innovative consumer, commercial, and
enterprise technology
Largest computer maker on the world scale by
units sold
The dominant Chinese computer marketer for
over 10 years
Changed the name from Legend to Lenovo
Aquired IBMs computer business in 2005

Corporate History

Products

Servers

Keyboard&
Mice

Lenovos IBM take

over

Strategic Analysis- Porters Five Forces

Strategic Analysis- Top 5 pc vendors in

China

Strategic Analysis Global market share

2004

 Lenovo of China is going to be

Lenovo of the world. We wont be
satisfied with the number three
position
- Yang Yuanqing (Chairman and CEO) after
announcement of IBM acquisition in 2004

Lenovo takes over IBM

Characteristics

Lenovo

IBM

Year of incorporation

1984

1991

Operational age before

acquisition

20

93

Market value at acquisition in

US $

46,009,788 $

513,279,155 $

Rank of worldwide PC seller

9 (2 % market share)

3 ( 5.2 % market share)

Key characteristics

Top and most recognized IT

brand in China
Major customers are
Chinese personal
consumers and SMEs
Products: Desktop (82 %)
and notebook (18 %)
Efficient operational
platform and extensive
retail network

Premium Global PC Brand

Major customers are
worldwide large and
medium enterprises
Products: Desktop (40%)
and notebook (60%)
Global network in sales,
financing, and service
support

Chinese Snake swallows Western Elephant

Lenovo takes over IBM

Effects of the acquisition
> 4 times higher
revenue through
acquisition
Operations in 65
countries
High commitment entry
mode
High geographical and
cultural distance

Opportunities and Risks

3rd biggest
manuf.

1,75 Billion US
$

IBMs skills

new
customers

IBMs
reputation

Lack of
Innovation

Lenovos
low -cost

clash of
cultures

 We have a $3 billion business with 27 %

market share in China. Theres not much
room to expand. The global PC market is
$200 billion , so theres still a lot potential.
IBM has all the things we need. This deal
brings us market share, management know
how, technology, and international reach
-Liu Chuanzhi, Lenovo Founder

Challenges
Acquisition of the IBM PC Division brought: Integration challenges
Problems Faced:
1.Differences within culture
Chinese culture, American Culture
2. Workforce integration
3. Supply chain issues and the Financial
Distress
4. Brand recognition

Lenovo today

SWOT Analysis
Strengths

Weaknesses

- Know
Cost structure and supply
chain
-Partnership with Intel

-Lacks strong worldwide

service and support channels.
-No independent architecture
R&D.
-No Enterprise class systems
management capability.

Opportunities

Threats

-Growing smartphone market

of emerging countries
-Growth of tablet market
-Obtaining patents through
acquisitions

-Exclusive technology
partnership with Intel may limit
innovation.
-Top 3 server vendors still
preferred in enterprise.

Conclusion

Lenovos key factors to success

Recommendations

Expected future plans

Launching the PC+ approach globally

Entering the market with Motorola Tablets
and Smartphones
Outsourcing manufacturing