Lenovo: The History and Corporate Strategy

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Table of Contents

Executive Summary
Objectives
Works Cited

Executive Summary

Lenovo is China’s largest personal computer manufacturer, as well as the producer of mobile phone handsets, imaging equipment, desktops, etc; it needs a new corporate strategy that would help it to internationalize. Its range of products is quite wide, which with time might affect the quality of separate products. In order to have good reputation on the market the firm is planning to enter, it is better for it to narrow the range of the manufactured products and to concentrate on the development of a particular product and its quality.

Lenovo History

Lenovo has emerged in China as a distributor of personal computers, but during the first 20 years of its existence it grew into the leading computer firm in the country. Its first original product, the Legend-Chinese character card, was introduced in 1987; it brought the company 46% of profit and boosted its PC distribution. The growth of the company led to its acquiring a new name, Legend Computer Company, in 1989. The company managed to launch its own brand of PC into the Chinese market and sold 17,000 units of it in a two-year period of time. The company became the fifth-largest manufacturer of motherboards in 1995.

Corporate Strategy

Scope, Mission, and Intent Lenovo should be involved in the IT business for in this way it will be able to diversify the range of its products or, on the contrary, narrow it and start specializing on a separate one, just like PepsiCo focus only on package foods and beverages once (34). It is better for the company to concentrate on the national market segment for the competition in the global market will be too high for it. Lenovo’s enduring strategic purpose intent is to build international brand and become known outside Asia.

Objectives

If the company is planning to internationalize further, its business units and employees should focus on such performance dimensions as flexibility and application of standards. They will have to evoke trust in the consumers. The target levels of performance should be the same as the current in the case with application of standards and higher but achievable in case with flexibility. The frame for each target should be no more than two years, because the company will not be able to handle the competition otherwise.

Source of Competitive Advantage

Human resources form the company’s competitive advantage. China itself is a densely populated country this is why a number of people can be engaged in turning the firm into an international one.

Development Strategy

To achieve the desired level of growth, the firm has to clearly set objectives and work out a plan of actions to follow. It seems that narrowing the businesses rather than expanding them would help the company enhance its reputation worldwide. Diversification into new businesses will make the company weaker this is why it is better for it to concentrate on the improvement of the current businesses to achieve its growth objectives.

Resource Allocation

The firm’s financial resources should be allocated by means of applying the BCG matrix method. This means that the firm should compile a portfolio of its high-growth products which should be invested into and low-growth products which bring low market share and should be either liquidated or used to generate a maximum of cash. In order to maximize returns from its investments, the firm should develop a return-on-investment strategy.

Sources of Synergy

The firm should make high quality of the products its main rule. Only by earning the trust of the customers will the company be able to internationalize. Brand recognition should be developed across the firm’s businesses, which would help to attract more customers. R&D may help to increase the firm’s efficiency, because a well-researched market will help to better develop the firm’s businesses and find out which products will be in demand.

Works Cited

Walker, Orville, Mullins, John, Boyd, Harper. Marketing Strategy: a Decision-Focused Approach. New York: McGraw-Hill, 2007.

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