Category: Lenovo

Introduction

Lenovo PLC is a Personal Computer and technology company based in China. The company came to the limelight after the merger of IBM Personal Computer Division with Legend Holdings, which had been in operation since 1984 (Lenovo, unpaged).

The company name was changed in 2004 from Legend Holdings to Lenovo as part of a global strategic move aimed at expanding the business (Lenovo, unpaged). Currently, the company is the fastest growing in the PC market globally for the past three years.

The company has recently diversified into other PCs (Lenovo, unpaged). These include smart phones and tablets.

In this category, the company has recently registered tremendous growth especially in China where it currently holds the number two spot in that market. It is diversifying this market globally having created operating stores in countries such as Indian, Russia, Singapore, and Brazil (Jerry, 93).

The company is unique in its business operations as it is a mixture of two different manufacturing cultures. This blend of West and East has created a remarkable market position. Lenovos second headquarter is in USAs state of North Carolina (Lenovo, unpaged).

It also has operations in other countries, which form a mixture of both developed and emerging markets, such as Brazil (John, 514). This is part of Lenovos evolving strategy. The company wants to have specific manufacturing bases in various countries to meet the needs of localized markets specifically.

This paper will have a holistic look at Lenovo, including its operations, shareholding, stock performance, location of operating bases among others. It will also detail the manner in which Lenovo is undertaking certain social initiatives under CSR.

Shareholding

The company has a mixture of corporate and individual shareholders. However, the shareholding, though remaining constant in terms of majority and minority, has been altered over the years. Lenovos parent company, Legend Holdings owns 33.75% of the company (Jerry, 93).

An investor called Yang Yuangqing is the largest individual shareholder with 8.44%. The company is listed in the Hong Kong bourse with the public owning 57.57% (Lenovo, unpaged).

The other directors own the rest, which is around half a percent. The companys shares have been performing quite commendably as will be shown further in the paper under stock performance. The following table is a summary of Lenovos shareholding (Lenovo, unpaged).

It is crucial to note that this shareholding has evolved over time. Additionally, the company has made several share repos and acquired stakes in various companies over the years. The busy nature of movement of shares at the bourse has added to the value of Lenovo to the advantage of shareholders (Ahrens & Zhou, unpaged).

Overall Operations

Lenovo is a global company with presence in over 160 countries (Yu, unpaged). In some of the countries, the company has regional operations. This has been the model of operations, which had helped the company to trounce major players in the PC industry such as Dell (Lenovo, unpaged).

However, since the global economic downturn, the company has experienced major reshuffle in its operations strategy to remain relevant and competitive. The company has developed two business groups with different focuses. One focuses on the developed market while the other focuses on the emerging markets (Yu, unpaged).

The two market groups are christened the mature market group and the emergent market group respectively. The former covers traditional markets such as United States and Australia. The latter covers emerging markets such as Brazil, Africa and a huge part of Asia (John, 514).

Using this two-pronged strategy the company has continued to localize its operations. The localizations have gone a notch higher whereby the company is producing some of its products in certain nontraditional countries such as Russia and Brazil (Lenovo, unpaged).

According to the companys strategy, this is to cater for localized markets and to retain local jobs, which is what immediate governments need. This ultimately creates loyalty and drives sales levels of Lenovos products (Jerry, 95).

The magnitude of Lenovos operations requires a coordinated and focused supply chain. The company is decentralizing operations with the view that this will strengthen the supply chain even further.

While the company is steadily gaining markets globally, it still treats its headquarters (China) as an emerging market with vast untapped potential. Hence, the company is still finding ways to continue appreciating the potential of Chinas market (Jerry, 94).

The companys long-term focus is to be the best producer of PCs in terms of sophistication of design and engineering. Hence, the company taps into innovative resources such as research and personnel (Yu, unpaged).

In recognition of the ever-growing interest in other gadgets apart from PCs and the declining nature of appeal of personal computers in traditional and emerging markets, the company has intensified its productivity and creativity to create relevant products (Yu, unpaged).

The companys tablet and smart phones are featuring second in the Chinese market with a notable appreciation outside the Chinese market.

Hence, the company needs to continue its steadfast adherence to operational efficiency to understand the performance of all these products in the various markets (Yu, unpaged).

Investment Plans

Over the years, the company has evolved to be the number two PC manufacturer and seller in the world after HP (Xing, unpaged). Market analysts and experts argue that Lenovo is likely to trounce HP in the recent years to be the number one seller of PCs.

It is also notable that its affiliate businesses are performing quite commendably. This is not because the organization has grown from a company in China (Xing, unpaged). The company has acquired various strategic Competitors and Strategic Partners its bid to be the best producer and seller of PCS.

The most notable merger and arguably the most crucial was the acquisition of IBMs PC division in 2004 (Lenovo, unpaged).

Happening against a backdrop of the hosts declining appeal the world over and a shakeup in its internal operations, Lenovo was quite a shock purchaser of the division. However, it quickly turned this misfortune into profits and fortunes (Xing, unpaged).

In light of previously commendable acquisitions and mergers, Lenovo has continued this business practice in various countries. The companys global presence desire is the most compelling factor in this endeavor (Lenovo, unpaged).

Hence, the company continues to acquire small and strategically placed players in local markets where they ship camp. This is quite helpful with amalgamation into the local markets and eventual appreciation of its products (Xing, unpaged). Entry into new markets from a local position is easier that from main headquarters.

Production Sites

Lenovo, as noted before, has a commanding global presence. It is headquartered in China and North Carolina, USA. These are the main production sites. In recent years, however, the company has diversified these sites in a bid to enhance its supply chain and tap into local markets (Xing, unpaged).

It is also quite convenient as this blend well with the immediate government and citizens need for job creation and employment respectively. In the end, this creates product loyalty and enhances Lenovos position in those particular markets.

Hence, the company has mini production sites situated in emerging markets such as Brazil, Russia, Singapore, Canada, and UAE. Although this creates a somewhat complicated coordination headache, it is quite beneficial to the immediate needs of the company (Xing, unpaged).

It helps the company to fight competition from both local players and international players such as Samsung and Apple. According to Lenovos management, this approach is likely to be new modus operandi as the company considers its future operations.

It comes with inimitable benefits such as cutting of taxation and creation of subsidies as governments try to cure the ripples created by the global economic downturn (Ahrens & Zhou, unpaged).

Destination of Sales

Lenovo has recorded a continued rise in sales for the past two years. In the 2012/2013 financial year, the company recorded a 12% increase in total sales bolstered by the exemplary performance of the tablet market (Lenovo, unpaged).

Although the companys destination of sales cannot be singled out, tremendous growth in the market for tablets in china is notable. The company came in second in tablet sales in china after Apple. The company also recorded a steady performance in PC sales (Lenovo, unpaged).

Although there was not significant growth in traditional markets, the sales of PCs in emerging markets was quite notable (Ahrens & Zhou, unpaged). For example, shipments in Asia and Middle East and to some extent Africa increased.

This trend is likely to continue as more governmental effort is directed towards improvement in digital penetration across those nations. In future, it is likely that Lenovo will record more and more sales of PCs in these emerging markets (Suranovic, unpaged).

Regarding the sales of tablets, smart phones and other technology leaning gadgets that replace PCs, traditional markets are the main attractions. However, in emerging markets Lenovo is struggling to market its new gadgets effectively because of the disadvantage created by second mover (Lenovo, unpaged).

First movers such as Apple and Samsung have entrenched themselves in these markets with notable authority. Hence, it is incumbent upon Lenovo to continue its two-pronged approach towards market penetration to tap into these markets exhaustively with its new products (Buck, 172).

Location Choices

Traditionally, Lenovos location choices have been in selected countries. Production has previously been carried out from these locations and shipments made to the relevant markets.

However, since the economic downturn of 2008, the company has taken an about turn strategy and adopted a different route where they have formed localized production areas in various countries (Buck, 172). The countries include Brazil, Russia, Singapore, and Australia among others.

It is crucial to note that Lenovos main area of focus is the emerging markets. Though traditionally its main market and the location of its headquarters, the company categorizes China as an emerging market (Ahrens & Zhou, unpaged).

The company is quickly reshaping its market strategy to tap into new markets in Africa and Asia. It is also radically changing its manufacturing strategy to factor the local needs of specific markets.

In its new smart phone and tablet market among other new technologies, the company prefers to initiate the products in traditional markets such as China and USA first (Ahrens & Zhou, unpaged).

Stock Performance

The company profits and cash flows represent a financially healthy company. Lenovo has a huge asset base though it is in technology market. In a random portfolio analysis of ten viable stocks, Lenovos stock is among the most volatile (Lenovo, unpaged).

With a Beta value of 34.17%, the stock response to market changes and dynamics is quite high. The most stable stock is IBM at close to 6% volatility. This means that investment in Lenovo may present a risk in a situation where global markets go south (John, 510).

In the recent years, the global downturn has presented a situation where investing in such a stock would have been dangerous. The economic crises witnessed in United States and Europe was a pointer for any investor to be careful with long-term stocks (Buck, 172).

However, governments and world organizations are making efforts to ensure a stable global economy. Hence, a long-term investment in Lenovo is likely to present some good tidings (Kan, 110). From the portfolio, the nature of business the investor should focus on is quite evident. The Beta ratios are all above one.

This indicates a highly volatile market characteristic of the technology world. This is because of the ever-changing nature of the industry.

Companies record high prices over a short time, which culminates in comparatively new and trendy products. However, the technology market remains quite open with massive investment opportunities (Buck, 172).

Lenovos stock is quite volatile. To mitigate the risk of the sensitive nature of this stock, an individual may invest in the list of portfolio provided where stocks such as Apple inc. and HP are less volatile.

However, when a stock responds rapidly to market changes it shows how well management can notice opportunities (Suranovic, unpaged). Hence, investment may be directed towards growing shareholder value.

Additionally, this volatility is crucial since it helps management to identify potential pitfalls in investment decisions. Hence, management can avoid some management decisions they embark on to mitigate corporate risk (Ahrens & Zhou, unpaged).

Corporate Social Responsibility

CSR obligation surpasses what the law requires a firm to do. It is the responsibility an organization takes upon itself to better the social lives of both the workforce and society. Currently, this is a worldwide trend (Ahrens & Zhou, unpaged).

This is because of the pressure from society and governments for organizations to feel more responsible for the sources of their resources. The members of society are also more sophisticated than sometime back.

The competitive environment is also cutthroat with more companies joining the framework (Ahrens & Zhou, unpaged).

Lenovo has committed to undertake various corporate responsibility initiatives. Lenovo is a major player in a quickly evolving industry. The industry is sometimes at the center of various quality and safety antagonism.

In this regard, the company has undertaken to be at the forefront of fighting for the highest attainable levels of safety and quality (Lenovo, unpaged). The company is also at the forefront in safeguarding the environment by undertaking various futuristic green initiatives (Ahrens & Zhou, unpaged).

This mitigates the environmental impact of manufacturing. The company also strives to form a green supply chain in which production and transfer of commodities caters for the various processes (Lenovo, unpaged). The global supply chain is an initiative that reduces wastages and enhances productivity.

The company is also at the forefront of ensuring preservation of the highest ethical standards in business. This includes fair business practices and adherence to legal standards (Ahrens & Zhou, unpaged).

Competition

Lenovo operates in an environment in which many players abide. The following were the PC shipments in 2011.

From the above, it is evident that Lenovo was on the path to becoming the number one pc producer in the world (Ahrens & Zhou, unpaged).

The following sales forecasts indicate that the market is quite ready for even stricter competition from the players.

However, according to recent strategic shifts, Lenovo is better placed to tap into these markets as opposed to competition. It has formed various production units in different countries to tap into local potential (John, 514).

The forecast also shows that the market for tablets is likely to continue growing while the market for PCs is likely to continue stabilizing. Hence, the recent strategic shift by Lenovo to enter into and market its new business is likely to bear fruits in the near future as people shift from PCs to tablets (John, 514).

Conclusion

Lenovos global presence and meteoric rise is quite remarkable. The company has recorded rising sales in PCs, tablets, smart phones, and other technologically oriented products in both traditional and emerging markets (Ahrens & Zhou, unpaged).

The company has been the leading PC producer for the past three years edging out traditional players such as Hewlett Packard, Apple, and Dell (Lenovo, unpaged).

Since its acquisition of the PC division of IBM in 2004, the company revived this operation and strategically placed itself in an advantage over competitors by enjoying a multicultural approach to markets because of the East and West connections.

Despite Lenovos stock volatility and risk, it promises high returns in future (Ahrens & Zhou, unpaged). Additionally, the economic conditions and technology business has massive opportunities which greatly mitigate the risks involved (Lenovo, unpaged).

This is in light of the shrewd management at the company as demonstrated by the continued registration of high profits and shareholder wealth maximization (Buck, 172). Therefore, the companys future prospects look bright for any investor and current shareholders.

Works Cited

Ahrens, Nathniel & Zhou Yu 2013, China Competitiveness: Myth, Reality and Lesson from United States and Japan: Case Study Lenovo. PDF file. 13 February 2012. Web.

Buck, Trevor. The internationalization strategy of Chinese firms: Lenovo and BOE. Journal of Chinese Economics and Business Studies. 7.2 (May 2009): 170-177. Print.

Jerry, Biedeger. A Strategic Action at Lenovo. Organizational Dynamics. 34.1 (2005). 92-95.

John, Quelch. Lenovo: Building a Global Brand. Harvard Business Review. 9.1 (2006): 507-514. Print.

Kan, Michael. 2011. Lenovo Expands Research, Production Operation In China. 2011. Web.

Lenovo. 2012. Driven By Tablets, Consumer Electronics Revenue to Reach New Milestone. 2012. Web.

Lenovo. 2007. Lenovo Announces Actions to Increase Global Operational Efficiency and Competitiveness. 2007. Web.

Lenovo. 2012. Lenovo Reports Third Quarter 2011/2012 Results. 2012. Web.

Lenovo. 2012. Lenovos Commitment to Social Responsibility. 2012. Web.

Suranovic, Steven. 2012. International Finance. 2012. Web.

Xing, Wang. 2012. Lenovo Restructures Business Operations. 2012. Web.

Yu Zhou. Synchronizing Export variation with Import Substitution: Creating Competitive Indigenous Companies in China. World Development. 36.11 (2008). 2364-2365.

Executive Summary

Lenovo is Chinas 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. Lenovos 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 companys 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 firms 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 firms businesses, which would help to attract more customers. R&D may help to increase the firms efficiency, because a well-researched market will help to better develop the firms 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.

Introduction

Lenovo Group Limited is a large Chinese multinational corporation that specialises in computer technology. It manufactures and distributes various electronic products in the global market. According to the study conducted by Zhijun (2013, p. 92), Lenovo was ranked the world’s leading vendor of personal computers in terms of unit sales.

The company currently has active offices in over 60 countries around the world. Its products circulate in over 160 countries according to the report by the Global Reporting Initiative (2011, p. 88). Currently, the management of this firm has been working on ways of improving its supply chain management strategies.

This has been done through the decentralisation of processing plants and management centres from Beijing in China to various locations around the world. The decision to decentralise production plants and management centres was influenced by the desire to shorten the distance between the manufacturing plants and the market.

The management of this firm realized the need to end-to-end supply chain visibility as a way of improving efficiency in its product delivery method. Lean Six Sigma may be very useful to this firm in its efforts to achieve this sustainability. Not only will this tool help the firm improve the quality of its products, but also help in reducing the cost of production (Kamauff 2010, p. 56).

In this study, the researcher will focus on determining how Lenovo can use Lean Six Sigma to achieve sustainability in its supply chain management. The first part of this report will be the introduction; the second part will be the analysis, while the last section will be a conclusion of the findings of the study.

In this study, Lean Six Sigma refers to a quality management tool that seeks to streamline the processes in order to achieve near perfect products (Brockett & Rezaee 2012, p. 77). The study will determine how adoption of this tool will help enhance sustainability of Lenovo’s supply chain.

Analysis

Lenovo’s Supply Chain

The management of Lenovo has been keen on streamlining its supply chain to not only eliminate costs but also improve the quality of the products they deliver to their customers. The firm has employed a number of strategies in its supply chain.

However, in this study, the focus will be on End-To-End Supply Chain Visibility Strategy that was employed in 2013 using E2open software to enable the management to monitor all the activities in its supply chain (Qiao & Conyers 2014, p. 59). According to this scholar, Lenovo had previously been using various strategies to manage its supply chain.

However, David Gillon, who is the current Executive Director of Lenovo’s Global Supply Chain, realized that besides having superior tools and equipments to improve supply chain at this firm, it was necessary to have a new system at the firm that will make it possible for the management to track down all the activities within the supply chain in real time.

This was necessary so that the management can detect any problems within the supply chain as soon as they occur. As Lan and Unhelka (2013, p. 74) say, End-To-End Supply Chain Visibility strategy has become popular in the recent past because it gives a firm control over the activities taking place within its supply chain.

End-To-End Supply Chain Visibility was meant to support a strategy employed by this firm the previous year that eliminated all the intermediaries when accessing most of the raw materials. The firm developed a new strategy that emphasised on dealing directly with the producers of the raw materials other than brokers.

In order to use this strategy, the management of Lenovo had to employ the use of E2open software that not only helped in monitoring the activities within the supply chain, but also integrated the communication system within the firm. This made it possible for all the stakeholders responsible for various activities to know when there is a problem within the supply chain so that they can know the best course of action.

For instance, the production manager at Lenovo’s plant in Beijing will know when there is a problem in the supply of a given raw material. With this knowledge coming as soon as this fact becomes a reality, the production manager is able to re-strategize its production activities to avoid serious negative consequences that may arise because of the unavailability of the needed materials.

According to the report by Qiao and Conyers (2014, p. 78), the management of Lenovo has been able to reduce losses within its supply chain that is always associated with lack of information and coordination between various departments because of this new technology-based strategy. According to Qiao and Conyers (2014, p. 81).

Lenovo’s top management committed HK$ 6.35 billion to help expand the Beijing’s 200,000-square feet production facility in early 2014 to help sustain its increased production due to improvement of its supply chain. This is a clear indication that this new approach to managing its supply chain has been a success.

Need for Sustainability and Factors Involved In Achieving It

According to Wisner, Tan and Leong (2011, p. 67), the issue of sustainability has gained relevance as firms struggle to secure their future in the turbulent market. In order to understand steps that have been taken to promote sustainability at Lenovo, it will be necessary to analyze various stages of supply chain where sustainability is necessary. Sourcing is one of the most sensitive areas of management in the supply chain.

As Shah (2009, p. 23) observes, a firm needs to ensure that there is a reliable source of raw materials to ensure that the production process is not interrupted due to shortage of inputs. According to Aras and Crowther, (2009, p. 280), the management of Lenovo has formed strategic partnerships with its suppliers, especially those who supply sensitive products such as rare earth metals through long-term contracts.

These long-term contracts bind these suppliers to this firm and reduce chances that the suppliers can suddenly stop their business transactions with this firm. The management has also been keen on fostering a close relationship with these suppliers. As Taylor (2003, p. 56) observes, in most of the cases they are considered integral part of this firm. These steps were taken to ensure that the suppliers remain loyal to this firm. It realised that it needed to do this in order to protect its sources of raw materials.

Manufacturing is another sensitive process in the supply chain management. In the current competitive market, it is very critical to have sustainable manufacturing strategies that can help a firm secure its future in the market (Timans et al. 2013, p. 340).

The management has embraced technology in its manufacturing processes as one of the main steps towards achieving efficiency in its supply chain. As mentioned above, the firm is putting up a 200,000-square meter production complex in Beijing that has state-of-the-art machines to help in running its production processes. The society has become so sensitive about environmental conservation.

If this firm fails to embrace environmental-friendly manufacturing strategies, it may have a bleak future due to the regulations that are expected in the near future. Similarly, the issue about packaging will need to be re-evaluated. Many firms are now considering using bio-degradable materials to package their products in order to protect the environment.

Lenovo will need to take a similar path in order to remain relevant in the market that has become very dynamic. The distribution centre management that has been embraced by Lenovo is in line with the changing environmental factors (Liu 2009, p. 574). Devolving the management and setting up various offices across the global market is needed so that this firm can act locally based on the prevailing market forces in different regions around the world.

According to Mahadevan (2009, p. 37), waste management is a factor that firms can no longer ignore, especially at the production plant. Lenovo will need to find proper ways of managing wastes according to the international standards given that it is operating in the global market. This will mean recycling its wastes or finding better waste disposal methods for the products that cannot be recycled.

Another sensitive issue is the emissions control. According to Gorman (2011, p. 570), many countries around the world are reducing the limit of emissions of greenhouse gases per given time. With these new developments, Lenovo will need to find a way of reducing its emission rates despite its increasing levels of output in order to remain sustainable.

Tools and Techniques Associated With Lean Six Sigma

Lean Six Sigma is one of the management tools that many firms are using to improve their operations and enhance sustainability. At this stage, it will be important to critically analyse what can be achieved through Lean Six Sigma and to determine how it applies to Lenovo.

According to Tompkins and Harmelink (2004, p. 45), Lean Six Sigma refers to “A methodology that relies on a collaborative team effort to improve performance by systematically removing waste.” The term lean in production context means maximum elimination of wastes and unnecessary processes.

The current environmental forces may require Lenovo to employ lean manufacturing in order to improve quality and eliminate wastes as much as possible. The following are some of the tools and techniques associated with Lean Six Sigma at Lenovo.

According to Bolstorff and Rosenbaum (2012, p. 56), when using Lean Six Sigma there are eight kinds of waste that must be eliminated in order to manage the costs of production, and each requires different tools and techniques. The first kind of waste is the problem of defects.

The study by Qiao and Conyers (2014, p. 112) reveals that Lenovo has embraced the use of modern technologies as means of reducing defects at its production plants. These defective products always have very little value because they cannot be sold and some cannot be recycled (Sarkar 2005, p. 427). The management of Lenovo emphasises on the zero-defect production techniques using the standardised modern equipment and quality management tools. The aim is to ensure that defects are eliminated completely in the manufacturing process.

Overproduction is another form of waste that Lean Six Sigma seeks to eliminate. Several stages are involved in the production of electronic products. Products at each stage go to the next stage of production till that time when the finished product is produced.

At Lenovo, there is a coordinated approach to the production process where only the needed amount of products are processed and delivered to the next stage to eliminate the problem of overproduction (Lan & Unhelka 2013, p. 125). When using Lean Six Sigma, emphasis is laid on ratios to ensure that only the needed amount of products comes from one stage to the next (Antkiewicz & Whalley 2007, p. 210). This involves close coordination of various units of production within the manufacturing plant.

According to Ivanov and Sokolov (2010, p. 78), the third type of wastage is the waiting time. There are cases when a stage in the supply chain is kept on hold because what is needed at that stage is not available. This is commonly seen when the needed raw materials are not available.

The integrated communication system at Lenovo’s production plant and other stages in its supply chain has helped reduce waiting time. Waiting time can be very costly when all the needed resources- including human resource- are available, but the process is kept on hold because of the absence of a given component.

When using Lean Six Sigma, a firm will be required to align all the stages in the production process with the capacity of the firm (Coyle & Coyle 2009, p. 121). This will ensure that what is produced at stage A is exactly what is needed at stage B. This way, cases where stage B is forced to wait for A to produce enough materials needed for stage B processes are eliminated.

This has been evident at Lenovo following the implementation of End-To-End Supply Chain Visibility strategy with the help of E2open software. The strategy is meant to ensure that there is a smooth flow of production without any wastage. It also requires a reliable source of supply.

The fourth kind of wastage is the non-utilised talent within the firm. Balmer (2012, p. 30) says that the cost of labour forms one of the leading costs of production. According to Qiao and Conyers (2014, p. 118), the management of Lenovo always insists on having a lean workforce. It is illogical to pay this cost if the talent is not put into use.

For this reason, it may be necessary to eliminate the excess workforce at all the stages in the supply chain in order to remain with a lean workforce. The fifth form of wastage occurs during transportation (Panneerselvam 2012, p. 57). At this stage, issues such as breakage and pilferage are very common. Using the modern means of transportation such as containerisation may help solve this problem.

The issue of inventory wastage is affecting various companies, and Lenovo is not an exception. When the inventory is not properly managed, they may expire or be damaged before they can be utilised, and this will be costly to the firm. Constant motion within the production plant and extra-processing are other factors that lead to waste. When using Lean Six Sigma, it is possible to develop effective plans that may help eliminate these wastes.

Steps that Have Been Taken To Promote Sustainability at Lenovo

Based on the above analysis, it is important to note that the management of Lenovo Group Limited has a lot to do in order to ensure that its operations in the market are sustainable. The management has done a lot to improve its supply chain. However, it will need to ensure that its operations remain sustainable in the market.

The analysis done above reveals that the electronic market has remained very dynamic over the past few decades. The market needs keep changing and the technology used in the production process is also changing. One of the parts of Lenovo’s operation that is vulnerable to the current market forces is the manufacturing process. According to Liang, Marler and Cui (2013, p. 56), China is currently the leading nation in the emission of greenhouse gases.

The effect of this pollution is already evident in the major cities such as Beijing and Shanghai where the air has become harmful to human health. This country hosts most of Lenovo’s production plants. The government of China is already developing policies to help reduce the level of emission of greenhouse gases from manufacturing companies (Lan & Unhelka 2013, p. 57).

This initiative is going to affect mega manufacturing companies in this country such as Lenovo. The management of Lenovo has been focused on finding effective ways of production that are in line with new policies about environmental conservation. As Qiao and Conyers (2014, 74) say, the current manufacturing processes at Lenovo are not sustainable.

The processes involve massive emission of greenhouse gases. Some of the by-products from this manufacturing plant also pose serious environmental threats. Using Lean Six Sigma, the management of this firm is currently redefining its production processes in an attempt to reduce the rate of its greenhouse emissions.

In order to minimise this vulnerability, Lenovo should develop a strategy that will help it achieve sustainability in its operations. Based on the environmental factors, the researcher proposes that this firm should employ green-production strategy.

In this new strategy, the firm will commit itself to protecting nature not only through using better techniques of production, but also helping in environmental conservation programs in its corporate social responsibilities. According to Reverte (2009, p. 355), this firm will need to use a theoretical model that will help support the change in its production strategies.

Using change theories such as freeze-change-unfreeze models may be very beneficial when introducing these new systems. This model will help reduce any form of resistance to change among the employees. According to Wieriks (2013, p. 46), employees may resist change for fear of the unknown. When the employees resist change, it may not be possible to implement new approaches which are in line with the new sustainable policies.

It is a justification as to why the proposed change model above would be necessary. The model will help in implementing various changes in the supply chain processes that will be necessary when using Lean Six Sigma to enhance sustainability at Lenovo (Spulbe 2012, p. 34).

From the above analysis, it is clear that Lean Six Sigma will help this firm address most of challenges it is currently facing. However, it is important to note that Lean Six Sigma has a number of limitations that make it necessary for the firm to look for other solutions to enhance sustainability. According to Jeffery (2010, p. 67), sustainability has three main pillars which are all equally important.

They include planet, people, and profits. However, Lean Six Sigma overemphasises on planet and profits while giving less emphasis on people. It gives a clear explanation about the relevance of and how to protect the environment in the production process. It also explains how a firm can eliminate wastes in the manufacturing process in order to lower the costs and increase profits.

However, it lays little significance on how to manage the workforce to ensure that they remain highly productive (Chary 2004, p. 56). This practical limitation may need to be addressed in order to develop a comprehensive solution for this firm. Using Theory of Transformational Leadership may help address this limitation.

The management can use this theory, alongside Lean Six Sigma, to ensure that its employees remain motivated and ready to manage the changes that will be proposed when trying to enhance sustainability of the firm (Kumar & Labib, 2008, p. 485). This will help the firm achieve sustainability in its supply chain.

Conclusion

Lenovo is currently one of the leading electronic firms in the global market. The management unit has made an effort to ensure that its supply chain remains efficient in order to lower the costs of production. One of the ways of improving efficiency at this firm introduced by the top management is the decentralisation of power from the headquarters to various offices in the global market.

Despite this initiative, the management still finds it challenging to improve some of the areas in its supply chain. Waste has been one of the major areas that this firm has been struggling with in the recent past. This problem can be addressed using Lean Six Sigma. The discussion above reveals that Lean Six Sigma is one of the widely used tools in managing supply chain.

It helps an organisation to identify and eliminate wastes such as defects, waiting time, overproduction, underused or unused talents, and breakage among other forms of wastes. In order to enhance sustainability in its supply chain, Lenovo will need to develop new strategies that will not only lower the cost, but also reduce environmental degradation.

This means that the firm will need to embrace production and transport strategies that minimises the amount of waste products released into the environment. To achieve this in practical context, it is recommended that the management of this firm should embrace the emerging technologies in its production process. The management should involve its employees in its change management strategies.

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Introduction

Lenovo PLC is a Personal Computer and technology company based in China. The company came to the limelight after the merger of IBM Personal Computer Division with Legend Holdings, which had been in operation since 1984 (Lenovo, unpaged).

The company name was changed in 2004 from Legend Holdings to Lenovo as part of a global strategic move aimed at expanding the business (Lenovo, unpaged). Currently, the company is the fastest growing in the PC market globally for the past three years.

The company has recently diversified into other ‘PC’s’ (Lenovo, unpaged). These include smart phones and tablets.

In this category, the company has recently registered tremendous growth especially in China where it currently holds the number two spot in that market. It is diversifying this market globally having created operating stores in countries such as Indian, Russia, Singapore, and Brazil (Jerry, 93).

The company is unique in its business operations as it is a mixture of two different manufacturing cultures. This blend of West and East has created a remarkable market position. Lenovo’s second headquarter is in USA’s state of North Carolina (Lenovo, unpaged).

It also has operations in other countries, which form a mixture of both developed and emerging markets, such as Brazil (John, 514). This is part of Lenovo’s evolving strategy. The company wants to have specific manufacturing bases in various countries to meet the needs of localized markets specifically.

This paper will have a holistic look at Lenovo, including its operations, shareholding, stock performance, location of operating bases among others. It will also detail the manner in which Lenovo is undertaking certain social initiatives under CSR.

Shareholding

The company has a mixture of corporate and individual shareholders. However, the shareholding, though remaining constant in terms of majority and minority, has been altered over the years. Lenovo’s parent company, Legend Holdings owns 33.75% of the company (Jerry, 93).

An investor called Yang Yuangqing is the largest individual shareholder with 8.44%. The company is listed in the Hong Kong bourse with the public owning 57.57% (Lenovo, unpaged).

The other directors own the rest, which is around half a percent. The company’s shares have been performing quite commendably as will be shown further in the paper under ‘stock performance’. The following table is a summary of Lenovo’s shareholding (Lenovo, unpaged).

It is crucial to note that this shareholding has evolved over time. Additionally, the company has made several share repos and acquired stakes in various companies over the years. The busy nature of movement of shares at the bourse has added to the value of Lenovo to the advantage of shareholders (Ahrens & Zhou, unpaged).

Overall Operations

Lenovo is a global company with presence in over 160 countries (Yu, unpaged). In some of the countries, the company has regional operations. This has been the model of operations, which had helped the company to trounce major players in the PC industry such as Dell (Lenovo, unpaged).

However, since the global economic downturn, the company has experienced major reshuffle in its operations strategy to remain relevant and competitive. The company has developed two business groups with different focuses. One focuses on the developed market while the other focuses on the emerging markets (Yu, unpaged).

The two market groups are christened the mature market group and the emergent market group respectively. The former covers traditional markets such as United States and Australia. The latter covers emerging markets such as Brazil, Africa and a huge part of Asia (John, 514).

Using this two-pronged strategy the company has continued to localize its operations. The localizations have gone a notch higher whereby the company is producing some of its products in certain nontraditional countries such as Russia and Brazil (Lenovo, unpaged).

According to the company’s strategy, this is to cater for localized markets and to retain local jobs, which is what immediate governments need. This ultimately creates loyalty and drives sales levels of Lenovo’s products (Jerry, 95).

The magnitude of Lenovo’s operations requires a coordinated and focused supply chain. The company is decentralizing operations with the view that this will strengthen the supply chain even further.

While the company is steadily gaining markets globally, it still treats its headquarters (China) as an emerging market with vast untapped potential. Hence, the company is still finding ways to continue appreciating the potential of China’s market (Jerry, 94).

The company’s long-term focus is to be the best producer of PCs in terms of sophistication of design and engineering. Hence, the company taps into innovative resources such as research and personnel (Yu, unpaged).

In recognition of the ever-growing interest in other gadgets apart from PCs and the declining nature of appeal of personal computers in traditional and emerging markets, the company has intensified its productivity and creativity to create relevant products (Yu, unpaged).

The company’s tablet and smart phones are featuring second in the Chinese market with a notable appreciation outside the Chinese market.

Hence, the company needs to continue its steadfast adherence to operational efficiency to understand the performance of all these products in the various markets (Yu, unpaged).

Investment Plans

Over the years, the company has evolved to be the number two PC manufacturer and seller in the world after HP (Xing, unpaged). Market analysts and experts argue that Lenovo is likely to trounce HP in the recent years to be the number one seller of PCs.

It is also notable that its affiliate businesses are performing quite commendably. This is not because the organization has grown from a company in China (Xing, unpaged). The company has acquired various strategic Competitors and Strategic Partners its bid to be the best producer and seller of PCS.

The most notable merger and arguably the most crucial was the acquisition of IBM’s PC division in 2004 (Lenovo, unpaged).

Happening against a backdrop of the hosts declining appeal the world over and a shakeup in its internal operations, Lenovo was quite a shock purchaser of the division. However, it quickly turned this misfortune into profits and fortunes (Xing, unpaged).

In light of previously commendable acquisitions and mergers, Lenovo has continued this business practice in various countries. The company’s global presence desire is the most compelling factor in this endeavor (Lenovo, unpaged).

Hence, the company continues to acquire small and strategically placed players in local markets where they ship camp. This is quite helpful with amalgamation into the local markets and eventual appreciation of its products (Xing, unpaged). Entry into new markets from a local position is easier that from main headquarters.

Production Sites

Lenovo, as noted before, has a commanding global presence. It is headquartered in China and North Carolina, USA. These are the main production sites. In recent years, however, the company has diversified these sites in a bid to enhance its supply chain and tap into local markets (Xing, unpaged).

It is also quite convenient as this blend well with the immediate government and citizens’ need for job creation and employment respectively. In the end, this creates product loyalty and enhances Lenovo’s position in those particular markets.

Hence, the company has mini production sites situated in emerging markets such as Brazil, Russia, Singapore, Canada, and UAE. Although this creates a somewhat complicated coordination headache, it is quite beneficial to the immediate needs of the company (Xing, unpaged).

It helps the company to fight competition from both local players and international players such as Samsung and Apple. According to Lenovo’s management, this approach is likely to be new modus operandi as the company considers its future operations.

It comes with inimitable benefits such as cutting of taxation and creation of subsidies as governments try to cure the ripples created by the global economic downturn (Ahrens & Zhou, unpaged).

Destination of Sales

Lenovo has recorded a continued rise in sales for the past two years. In the 2012/2013 financial year, the company recorded a 12% increase in total sales bolstered by the exemplary performance of the tablet market (Lenovo, unpaged).

Although the company’s destination of sales cannot be singled out, tremendous growth in the market for tablets in china is notable. The company came in second in tablet sales in china after Apple. The company also recorded a steady performance in PC sales (Lenovo, unpaged).

Although there was not significant growth in traditional markets, the sales of PCs in emerging markets was quite notable (Ahrens & Zhou, unpaged). For example, shipments in Asia and Middle East and to some extent Africa increased.

This trend is likely to continue as more governmental effort is directed towards improvement in digital penetration across those nations. In future, it is likely that Lenovo will record more and more sales of PCs in these emerging markets (Suranovic, unpaged).

Regarding the sales of tablets, smart phones and other technology leaning gadgets that replace PCs, traditional markets are the main attractions. However, in emerging markets Lenovo is struggling to market its new gadgets effectively because of the disadvantage created by second mover (Lenovo, unpaged).

First movers such as Apple and Samsung have entrenched themselves in these markets with notable authority. Hence, it is incumbent upon Lenovo to continue its two-pronged approach towards market penetration to tap into these markets exhaustively with its new products (Buck, 172).

Location Choices

Traditionally, Lenovo’s location choices have been in selected countries. Production has previously been carried out from these locations and shipments made to the relevant markets.

However, since the economic downturn of 2008, the company has taken an about turn strategy and adopted a different route where they have formed localized production areas in various countries (Buck, 172). The countries include Brazil, Russia, Singapore, and Australia among others.

It is crucial to note that Lenovo’s main area of focus is the emerging markets. Though traditionally its main market and the location of its headquarters, the company categorizes China as an emerging market (Ahrens & Zhou, unpaged).

The company is quickly reshaping its market strategy to tap into new markets in Africa and Asia. It is also radically changing its manufacturing strategy to factor the local needs of specific markets.

In its new smart phone and tablet market among other new technologies, the company prefers to initiate the products in traditional markets such as China and USA first (Ahrens & Zhou, unpaged).

Stock Performance

The company profits and cash flows represent a financially healthy company. Lenovo has a huge asset base though it is in technology market. In a random portfolio analysis of ten viable stocks, Lenovo’s stock is among the most volatile (Lenovo, unpaged).

With a Beta value of 34.17%, the stock response to market changes and dynamics is quite high. The most stable stock is IBM at close to 6% volatility. This means that investment in Lenovo may present a risk in a situation where global markets go south (John, 510).

In the recent years, the global downturn has presented a situation where investing in such a stock would have been dangerous. The economic crises witnessed in United States and Europe was a pointer for any investor to be careful with long-term stocks (Buck, 172).

However, governments and world organizations are making efforts to ensure a stable global economy. Hence, a long-term investment in Lenovo is likely to present some good tidings (Kan, 110). From the portfolio, the nature of business the investor should focus on is quite evident. The Beta ratios are all above one.

This indicates a highly volatile market characteristic of the technology world. This is because of the ever-changing nature of the industry.

Companies record high prices over a short time, which culminates in comparatively new and trendy products. However, the technology market remains quite open with massive investment opportunities (Buck, 172).

Lenovo’s stock is quite volatile. To mitigate the risk of the sensitive nature of this stock, an individual may invest in the list of portfolio provided where stocks such as Apple inc. and HP are less volatile.

However, when a stock responds rapidly to market changes it shows how well management can notice opportunities (Suranovic, unpaged). Hence, investment may be directed towards growing shareholder value.

Additionally, this volatility is crucial since it helps management to identify potential pitfalls in investment decisions. Hence, management can avoid some management decisions they embark on to mitigate corporate risk (Ahrens & Zhou, unpaged).

Corporate Social Responsibility

CSR obligation surpasses what the law requires a firm to do. It is the responsibility an organization takes upon itself to better the social lives of both the workforce and society. Currently, this is a worldwide trend (Ahrens & Zhou, unpaged).

This is because of the pressure from society and governments for organizations to feel more responsible for the sources of their resources. The members of society are also more sophisticated than sometime back.

The competitive environment is also cutthroat with more companies joining the framework (Ahrens & Zhou, unpaged).

Lenovo has committed to undertake various corporate responsibility initiatives. Lenovo is a major player in a quickly evolving industry. The industry is sometimes at the center of various quality and safety antagonism.

In this regard, the company has undertaken to be at the forefront of fighting for the highest attainable levels of safety and quality (Lenovo, unpaged). The company is also at the forefront in safeguarding the environment by undertaking various futuristic green initiatives (Ahrens & Zhou, unpaged).

This mitigates the environmental impact of manufacturing. The company also strives to form a green supply chain in which production and transfer of commodities caters for the various processes (Lenovo, unpaged). The global supply chain is an initiative that reduces wastages and enhances productivity.

The company is also at the forefront of ensuring preservation of the highest ethical standards in business. This includes fair business practices and adherence to legal standards (Ahrens & Zhou, unpaged).

Competition

Lenovo operates in an environment in which many players abide. The following were the PC shipments in 2011.

From the above, it is evident that Lenovo was on the path to becoming the number one pc producer in the world (Ahrens & Zhou, unpaged).

The following sales forecasts indicate that the market is quite ready for even stricter competition from the players.

However, according to recent strategic shifts, Lenovo is better placed to tap into these markets as opposed to competition. It has formed various production units in different countries to tap into local potential (John, 514).

The forecast also shows that the market for tablets is likely to continue growing while the market for PCs is likely to continue stabilizing. Hence, the recent strategic shift by Lenovo to enter into and market its new business is likely to bear fruits in the near future as people shift from PCs to tablets (John, 514).

Conclusion

Lenovo’s global presence and meteoric rise is quite remarkable. The company has recorded rising sales in PCs, tablets, smart phones, and other technologically oriented products in both traditional and emerging markets (Ahrens & Zhou, unpaged).

The company has been the leading PC producer for the past three years edging out traditional players such as Hewlett Packard, Apple, and Dell (Lenovo, unpaged).

Since its acquisition of the PC division of IBM in 2004, the company revived this operation and strategically placed itself in an advantage over competitors by enjoying a multicultural approach to markets because of the East and West connections.

Despite Lenovo’s stock volatility and risk, it promises high returns in future (Ahrens & Zhou, unpaged). Additionally, the economic conditions and technology business has massive opportunities which greatly mitigate the risks involved (Lenovo, unpaged).

This is in light of the shrewd management at the company as demonstrated by the continued registration of high profits and shareholder wealth maximization (Buck, 172). Therefore, the company’s future prospects look bright for any investor and current shareholders.

Works Cited

Ahrens, Nathniel & Zhou Yu 2013, China Competitiveness: Myth, Reality and Lesson from United States and Japan: Case Study Lenovo. PDF file. 13 February 2012. Web.

Buck, Trevor. “The internationalization strategy of Chinese firms: Lenovo and BOE.” Journal of Chinese Economics and Business Studies. 7.2 (May 2009): 170-177. Print.

Jerry, Biedeger. “A Strategic Action at Lenovo.” Organizational Dynamics. 34.1 (2005). 92-95.

John, Quelch. “Lenovo: Building a Global Brand.” Harvard Business Review. 9.1 (2006): 507-514. Print.

Kan, Michael. 2011. Lenovo Expands Research, Production Operation In China. 2011. Web.

Lenovo. 2012. Driven By Tablets, Consumer Electronics Revenue to Reach New Milestone. 2012. Web.

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Lenovo. 2012. Lenovo Reports Third Quarter 2011/2012 Results. 2012. Web.

Lenovo. 2012. Lenovo’s Commitment to Social Responsibility. 2012. Web.

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Xing, Wang. 2012. Lenovo Restructures Business Operations. 2012. Web.

Yu Zhou. “Synchronizing Export variation with Import Substitution: Creating Competitive Indigenous Companies in China.” World Development. 36.11 (2008). 2364-2365.

What is Lenovo’s current competitive position, and how can Lenovo maintain or increase its PC industry market share and margin over time?

Lenovo is one of the best technology companies in the world in the field of producing innovative PCs and mobile Internet devices. Lenovo takes leading position as the PC manufacturer in the world, and it is the fourth largest supplier of smartphones. The company is listed in the Global Fortune 500 (Daft 118). Today, Lenovo is a corporation, which costs $47 billion. The growth of Lenovo is ahead of the average market indicators for more than four years.

Today’s impressive success of the Chinese Company was highly influenced by the acquisition of Motorola Mobility in July 2014. As a consequence, the company became the world’s third largest smartphone manufacturer, and also strengthened its leading position in the sphere of innovation. Motorola counted more than 2,000 engineers and technical specialists who were the industry leaders and the authors of thousands of patents (Griffin 200).

Thus, Lenovo makes the products that are the most relevant in the current market: PCs, smartphones, tablets, Smart TVs, servers, workstations and storage devices. The primary difference of Lenovo from the competitors is the comprehensive vertically integrated business model. This model is unique among major PC manufacturers. It provides a significant competitive advantage, helping them to produce more innovative devices, efficiently and actively pursue opportunities for the development of the PC market.

During global expansion, Lenovo consolidates its position in the international market significantly. They invest not only in sales but local production in various countries, research activities and other important areas. The combination of global reach and attention to local capabilities allows them to create a new type of company — “global-local” company (Segal-Horn and Faulkner 456). It helps to implement the strategy of defense and attack and to lay the foundation for long-term success. Innovation is the primary objective of Lenovo Corporation.

How should Lenovo develop its internationalization strategy going forward?

The main driving force of the internationalization is private enterprises. They are interested in the well-known brand and high technology. In this regard, Lenovo Company is an ideal example. In 2004, the company acquired the PC business from IBM and since then all the achievements of the company integrated into a single product line under the name ThinkPad (Yu 359). Cleverly using the existing well-known brands, Lenovo quickly establishes its presence and awareness in the global market by purchasing them (Johansson 194). Last year, Lenovo overtook HP, becoming the manufacturer number one. It is obvious that the strategy of the company proves its effectiveness.

Three years ago, the internal circulation of Lenovo reached about half of the total turnover. However, in the first half of the year 2014, the domestic turnover decreased to 36%, respectively, foreign incomes rose to 64 % (“Annual Report 2013/14” 192). According to the report of the company, the global share of PC Lenovo increased by 3 % and is close to 20% of the world market. In global sales of PCs, it takes the first place in the world; the third place in the sales volume of tablets; and the fourth place in the volume of smartphones sales.

In the Chinese market, the sales volume of the smartphones Lenovo is in the lead and even leaves behind Samsung Company (Yu 359). The turnover of Lenovo in the first half of the year increased 18%, to $ 10.4 billion; net profit reached $214 million and increased 23% (Annual Report 2013/14 190). Developing countries are the attractive objective for the development of Lenovo Corporation as they are more attentive to prices. Thus, Lenovo consolidates its position in emerging regions.

Works Cited

Annual Report 2013/14. Lenovo Group Limited. 2015. Web.

Daft, Richard. Management. 12th ed. Boston, MA: Cengage Learning, 2015. Print.

Griffin, Ricky W. Fundamentals of Management. 8th ed. Boston, MA: Cengage Learning, 2015. Print.

Johansson, Johny K. Contemporary Brand Management. Thousand Oaks: SAGE Publications, 2014. Print.

Segal-Horn, Susan, and David Faulkner. Understanding Global Strategy. Andover, Hampshire: Cengage Learning EMEA, 2010. Print.

Yu, Tony Fu-Lai. Handbook of East Asian Entrepreneurship. London, UK: Routledge, 2015. Print.

Abstract

The report presents an analysis of a case involving Lenovo in its formative years. The goal of this case study is to evaluate the decision-making of the leadership of the Lenovo company, which grew into a successful large-scale corporation, through a review of the organization’s goals, point of view, actions, and alternatives. As a result of analysis using criteria or opportunity creation/loss and economic impact, it became evident that the decision was indeed safe and optimal; however, the alternative was also viable.

Introduction

The case of Lenovo, as Shu presents and analyzes it, is an evaluation because it essentially describes the company’s path including somewhat controversial decisions (630). The case presents the decision-making process of the owners and key executives of the Lenovo company, known as Legend in its formative years. Thus, the company is an excellent subject for analysis. The goal of this case study is to evaluate the decision-making of the Lenovo company, through a review of the organization’s goals, point of view, actions, and alternatives, which allowed it to grow into a successful large-scale corporation.

Outline of the Situation

At first, Legend (later Lenovo) was a small company with no strategic development plan, goals, funds, or knowledge of how to run a business. At that time, the company’s owners invested their efforts into surviving in an external environment that was hostile toward small companies. As the business climate in China changed, Legend partnered with suppliers from abroad. Consequently, the company matured, acquiring skills and practices for running a business from their associates, allowing the company to grow and develop further in China and abroad by making strategic investments and choosing its course of action.

Thus, by experimenting and adapting strategies where appropriate, Legend has become competitive with large corporations such as IBM and has built a network of partnerships with companies like Microsoft and Hewlett Packard.

Point of View

The point of view adopted for this case analysis is that of the top management of the company. This position offers several strengths: first, the ability to make strategic decisions for the development of a company, and second, the availability of information about the company. The responsibilities of the board are also significant, as a company’s poor performance will not be rewarded by owners and shareholders. Besides being answerable for the delivery of short-term results, top management is also accountable to achieve strategic objectives. A possible blind spot was the absence of knowledge about managing a business, resulting in missed opportunities in the beginning.

Question

The evaluated item is the decision of Lenovo in its formative years to opt for production as a focal point of its development. The main question for the evaluating the case study is whether Legend’s decision to emphasize production was flawless or if it presented certain drawbacks. The responsible party in this process is the upper management. The long-term wellbeing of a company is at stake. The source of the research question is the existence of a specific strategic point where the company decided to act in a particular way.

In the late 1980s, Legend decided to aim at a manufacturing orientation rather than basing the company’s efforts on developing technology, which is the ground for speculation (Shu 630). The criteria for analysis include opportunities created by the decision, opportunities missed because of it, and the economic impact. The most important of these involves the “opportunities created” as this criterion allows weighing the solution in terms of tangible benefit for the company. The economic impact criterion was partially discussed in the case.

Hypothesis

In this case study it will be hypothesized that while the decision was not without its drawbacks, it was the right option to pursue within that time frame and under the circumstances. The criteria identified above present value for assessment because they measure the feasibility of the decision and there is a clear evidence of the alternatives and circumstances. The greatest confidence will be placed in the opportunities created criterion as sufficient data exists to build an argument around it.

Opportunities created standing out as a prominent evaluation criterion as there is an acquisition of a major production company and privileges from the Chinese government, which will yield support in building the argument and proving the hypothesis. It is simultaneously the positive rating, because it boosted the company to occupy a large portion of the market. Because of the evidence provided in the case the evaluation should prove that the Lenovo’s decision was optimal.

Proof and Action

Opportunities Created

By opting for a manufacturing paradigm, Legend was able to make use of its acquisition of Quantum Design International. The strength of this opportunity was based on the fact that it allowed the company to begin producing an item that was in high demand in China. Given the environment of a planned economy and a ban on foreign PC components, this strategic management decision generated an opportunity to occupy a profitable niche in the domestic market. Arguably, the circumstances produced the opportunity and not Legend itself. However, corporate decision-making was essentially the catalyst for the company to continue evolving and taking advantage of the situation for its own benefit.

Another prominent option made available through selecting a focus on manufacturing was the development of a bond with Chinese government and the acquisition of privileges and financing. From the standpoint of market strength, the company exploited an excellent opportunity to become a key supplier of PC components for China; if, in contrast, the company had selected technology as its primary development path, the opportunity might not have been available. Manufacturing was Legend’s strongest and most reliable operation as well as the area where the firm had the most experience. Legend, having anticipated the trend for protectionism exercised by Chinese government, opted for manufacturing and created an opportunity to receive subsidies from the Communist Party.

Opportunities Missed

On the other hand, by opting for manufacturing, Legend missed several potentially profitable opportunities, including the pursuit of technological advancements. As Ni Guangnan suggested, the company might have formed a link with major universities and developed “Chinese integrated circuit chips” that could have attracted wealthy investors (Shu 630). In itself, a partnership with progressive educational institutions might have meant many grants as well because the PC industry was developing rapidly at that time. Such a partnership might have built a strategic advantage in terms of research and development and allowed Legend to compete successfully with IBM and HP.

However, such a scenario, as noted by Liu, the founder, was too risky. For a young company to compete against a technological giant such as IBM, even with collaborative relationships and grants from universities and government, might have led to failure. In addition, the company’s lack of knowledge of business organization also had the potential to undermine Legend’s position in the R&D race.

Another missed opportunity was the export of technology to other countries. Given the existing facilities for the production of motherboards, the company might have sought investments from the state and itself become a technological giant. The risky nature of this endeavor persisted because of a lack of managerial capacity to properly organize R&D. Therefore, missed opportunities had little influence, and their success did not seem to be guaranteed.

Economic Impact

The positive impact of the decision was that the company was able to occupy a sizable niche in the domestic market due to a chain of strategic partnerships and acquisitions. The choice to build strength around manufacturing led to an agreement with Taiwanese manufacturers and eventually allowed the company to optimize its prices and capture a portion of the Chinese and global electronics markets (Shu 631). Arguably, the creation of large volumes of cheap electronics afforded the company the necessary momentum to emerge as a world leader in manufacturing electronic components.

Decision

Due to the rightfully chosen accent on manufacturing that is supported by the fact of the emerging trend for modularity in the PC market, as well as strategic acquisition of the component-making firm which allowed the company to become the top manufacturer in China, the company may adopt the following action plan:

1. Automate production facilities to improve quality and quantity of produce;
2. Explore and research possible foreign markets for selling computers and components;
3. Develop an expansion strategy and establish regional partnership;
4. Expand the range of produced goods to satisfy diverse needs of local consumers.

Alternatives

The hypothesis has one weakness: the promising nature of the rejected option. As mentioned, the key alternative to the decision to become a manufacturing company was a focus on technology and research. A sufficient basis existed for the latter choice in the form of the availability of support from the government and research institutes (Shu 630). The key arguments that the company ownership formulated against this choice essentially revolved around resources and “brain power.”

The first objection could be resolved through seeking state funds, which, given the absence of an influx of new technology developed abroad, had every chance of being sponsored by the Chinese Communist Party. The practice of generous grants being given to state-owned companies and the presence of connections with the government among the Legend executives are evidence of the solid logic behind this claim (Shu 629).

The lack of brain power is also a questionable premise. Legend had an ambitious team of computer scientists that had formed the company, along with Ni Guangnan, who had the knowledge to forge the success of the proposed technology. Thus, the risk of failure to create value in this regard was minimal. Thus, it is possible to assume that the safer alternative that Legend ultimately chose was more optimal in the given external and internal environment. Objectivity in assessment was addressed by using factual information from the case. Evaluation might be supported by the fact that the company continues to occupy the largest portion of the global PC market with 22.4% share (Stamford).

Conclusion

Lenovo (or Legend, as it was called in its formative years) presents a fascinating case for an evaluation of managerial decision-making. The goal of the present case study was to assess the decision that formed the foundation for the success of the company. As a result of analysis using criteria or opportunity creation/loss and economic impact, it became evident that while the company’s decision was indeed safe and optimal, the alternative was also viable. Thus, the formulated hypothesis discusses the rightness of the selected option with certain drawbacks in the face of not pursuing the technological option.

Work Cited

Shu, Ei. “Emergent Strategy in an Entrepreneurial Firm: The Case of Lenovo in Its Formative Years.” International Journal of Emerging Markets, vol. 12, no. 3, 2017, pp. 625-36.

Stamford, Conn. “Gartner Says Worldwide PC Shipments Declined 4.3 Percent in 4Q18 and 1.3 Percent for the Year.” Gartner, 2019. Web.

Lenovo dominated the Asia-Pacific markets by crafting distribution agreements. Lenovo acquired the PC division of IBM. This assisted it in market intelligence, management, and technology. The IBM-Lenovo brand was acceded by Lenovo. The latter also obtained the right to operate the Thinkpad trademark.

Businesses that operate in the international business domain can hardly miss facing a liability of foreignness. This implies that both social and economic related expenses are faced by firms that have established their operations in overseas or foreign markets (Qian, Li, & Rugman, 2013). Although firms such as Lenovo and Huawei can overcome the liability of foreignness in regions they are operating in, this type of liability can vary for different firms that operate at the same geographical location.

Liability of emergingness can be defined as social and economic costs that business organizations incur at the infancy stage when they begin to emerge in the mainstream marketing platform. When a multinational like Lenovo expands to foreign markets, additional costs incurred are referred to as liability of emergingness. At this point, it is crucial to mention that Lenovo is a multinational firm that has already experienced or undergone massive expansion into other geographical regions (Chen, Hong, Jiang, & Kubik, 2013).

Assets of emergingness are the social and economic resources accumulated from the operations of firms in emerging or new marketing platforms. In the case of business organizations that operate in foreign locations, both the liabilities of foreignness and emergingness can be transformed into assets of emergingness by lowering the cost of operation and expanding production. Market expansion in the right direction will lead to profit optimization in any foreign market. In other words, firms operating in foreign locations should strive to overcome both of the above liabilities (Khanna & Palepu, 2010). The organizational-related costs, customer-related costs, and government-related costs should be overcome by business organizations to boost the asset base.

First, multinationals such as Lenovo and Huawei should meaningfully embrace technology. Firms that utilize the latest technological platforms are in a better position to compete favorably with other market players. As can be seen in the chart below, Lenovo has been shipping the highest quantity of PCs since 2014 compared to other market competitors (Zheng, Wei, Zhang, & Yang, 2016).

As can be seen in the figure below, IBM was the top three more successful PC sellers across the globe. It is crucial to mention that in 2004 when Lenovo was acquiring IBM, it was not very robust in terms of performance. It was number 9 among the top ten PC sellers across the globe.

Organizations and corporates have a great opportunity to experience growth in markets that emerge alongside what might be referred to as institutional voids. In particular, firms that are keen on seeking exit strategies from poorly performing markets may find institutional voids and emerging markets to be very fruitful.

Khanna came up with the phrase ‘Institutional voids’ to imply a lack of vital trade instruments in a given market (Institutional Voids, 2013). The stakeholders may include credit card systems and market research firms. Such marketing instruments are crucial in creating a viable link between buyers and sellers. In business organizations that attempt to operate in emerging markets like Lenovo, institutional gaps create myriads of daunting obstacles. The key to successful business growth lies in understanding prevailing voids in any given market and how to maneuver business activities in the presence or absence of such voids.

When Lenovo expanded to the Asian markets, it faced several institutional voids due to a lack of supporting institutions. For example, poor market research coupled with a less rigorous online marketing platform were major bottlenecks in the company’s growth and expansion. Shortly after the PC group was sold to Lenovo by IBM, the latter company began edging out of the hardware portfolio. This gave Lenovo better opportunities for expansion and growth. It can be recalled that for the first time, Lenovo expanded to the Chinese market.

From the above figure, it is evident that Lenovo has been gaining ground ever since its 2004 acquisition. By increasing the production volume, such a firm can boost its sales and optimize profitability and consequently overcome liabilities of emergingness and liabilities of foreignness (Madhok & Keyhani, 2012).

Assets of emergingness can also be attained by outsourcing cheap raw materials and labor, as illustrated below.

In the above diagram, outsourcing plays a central role in the process of production. Outsourcing corresponds to transferring a specific service to another company (Zhou & Guillén, 2015).

Labor outsourcing is the process by which an institution hires another company to provide a particular service. Today, the capitalist system in its financial stage has spread widely throughout the world. In Brazil, 25% of the employed labor is outsourced.

Hence, multinationals should also outsource to remain productive.

The most common examples of outsourcing are related to providing specific services such as cleaning and security. The main reason for increased outsourcing in the developed world is to reduce personnel costs and accumulate assets of emergingness.

References

Chen, J., Hong, H., Jiang, W., & Kubik, J. D. (2013). Outsourcing mutual fund management: firm boundaries, incentives, and performance. The Journal of Finance, 68(2), 523-558.

Institutional Voids. (2013). Web.

Khanna, T. & Palepu, G.K. (2010). Winning in Emerging Markets: A Roadmap for Strategy and Execution. New York: Harvard Business School Press.

Madhok, A. & Keyhani, M. (2012). Acquisitions as Entrepreneurship: Asymmetries, Opportunities, and the Internationalization of Multinationals from Emerging Economies. Global Strategy Journal, 2 (1), 26-40.

Qian, G., Li, L., & Rugman, A. M. (2013). Liability of country foreignness and liability of regional foreignness: Their effects on geographic diversification and firm performance. Journal of International Business Studies, 44(6), 635-647.

Zheng, N., Wei, Y., Zhang, Y., & Yang, J. (2016). In search of strategic assets through cross-border merger and acquisitions: Evidence from Chinese multinational enterprises in developed economies. International Business Review, 25(1), 177- 186.

Zhou, N., & Guillén, M. F. (2015). From home country to home base: A dynamic approach to the liability of foreignness. Strategic management journal, 36(6), 907-917.

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.

The firm for which this paper will map a consumer digital journey is one of the world’s leading technology companies, Lenovo. The reason for selecting this organization is that it is a large international company with an extensive online presence: it has a website and multiple social media accounts in English. The specific product for which the customer’s online journey will be built is Lenovo Legion 5 17ACH6H, a laptop for gaming.

Background

Lenovo emerged in 1984 in Beijing and was initially known under the name Legend. Its founder, Liu Chuanzhi, who was a computer scientist, tried several ways to run a business: he and his small team of engineers imported televisions, did quality checks on computers, and marketed a digital watch. Yet, all these attempts failed because they were “mainly scientists and didn’t understand the market” (Zwanenburg & Farhoomand, 2018, p. 455). The company began to grow after it first succeeded in developing circuit boards that allowed IBM PCs to process Chinese characters (Zwanenburg & Farhoomand, 2018). In 1990, the firm started to manufacture and sell computers, and in 2004, it adopted a new name — Lenovo. In 2005, the company expanded internationally by acquiring IBM’s PC division, which led the company’s turnover to increase fourfold (Zwanenburg & Farhoomand, 2018). Its business grew mainly due to a rise in PC sales and multiple acquisitions of other businesses. Currently, Lenovo sells a wide range of products in countries all over the world and is the world’s leading manufacturer of PCs.

Industry

Lenovo manufactures and markets a wide range of products and, thus, operates in several industries related to technology. The primary industry is personal computers; Lenovo’s acquisition of IBM’s PC division in 2005 was a turning point in this industry since it shifted the balance of powers to Asian countries (Pasalic & Pavic, 2021). Lenovo’s share in the PC market increased from 20.7% in 2016 to 24.9% in 2020, making it the largest PC manufacturer in the world (Pasalic & Pavic, 2021). Yet, as laptops, tablets, and smartphones started to gain popularity with consumers, the PC industry began to decline.

The change in customer preferences urged Lenovo to innovate rapidly and search for new sources of growth. In 2009, Lenovo entered the smartphone market, and in 2016, its share was 4.6% of global sales (Zwanenburg & Farhoomand, 2018). Since 2014, Lenovo has invested in smartphone innovation to increase its market share, but it was difficult to compete with the well-established businesses of Samsung, Huawei, and Apple (Zwanenburg & Farhoomand, 2018). One of the key Lenovo’s innovations in this industry is Phab smartphones, which allow consumers to use augmented reality. Furthermore, the company’s experience in manufacturing both PCs and smartphones enabled it to invest in creating a cross-product ecosystem, similar to that existing in Apple’s products, and in developing cloud services.

Targeted Customers

Lenovo serves a wide range of customers with diverse needs. The key target market is individuals with an upper middle income who use electronic devices more often than other population groups. Apart from individual consumers, Lenovo sells its products to corporate customers. As for the product selected for mapping the digital journey, its target audience is gamers. These customers are distinguished by high brand loyalty, meaning that it can be difficult for Lenovo to win over consumers who are already loyal to different brands (Brand&Deliver, 2019). In addition, Lenovo’s Legion brand targets individuals for whom games are an essential part of their identity and who consider themselves “elite enough to be involved with the brand” (Brand&Deliver, 2019, para. 8). Thus, although Lenovo’s target audience is large, it devises specific products to meet the needs of particular customer groups.

Purchase Process

Problem Recognition

The first stage of the consumer journey is problem recognition. Customers may acknowledge the existence of a problem either because they have an unmet internal need or in response to external stimuli, such as advertising. Before purchasing the Lenovo Legion 5 laptop, I saw a trailer for Elden Ring on one of the gaming YouTube channels to which I was subscribed. As a devotee of the Souls series, I could not miss this game. However, upon checking the recommended system requirements, I found that my current laptop’s characteristics were not sufficient for getting the best gaming experience. As a result, I recognized a problem — a need for a more powerful laptop.

Information Search

After identifying a problem, consumers start gathering information, relying on external (media content, word of mouth) and internal (previous experiences with the brand) sources. At this stage of the customer journey, I conducted a thorough information search on the internet since a laptop is a complex and expensive product. I looked through lists of best gaming laptops, read customer reviews, and watched product review videos.

Alternatives Evaluation

At the end of the previous step, I came up with a list of criteria that the desired product had to meet. The key criteria were as follows: RAM of 16 GB, graphics — Nvidia GeForce GTX 3060, and a full HD display with a screen size of 17 inches. Upon comparing suitable gaming laptops of such brands as Lenovo, Razer, Asus, and Acer, my choice fell on the Lenovo Legion 5 17ACH6H laptop. This product was preferred over competitors’ offerings because of an optimal price-quality ratio and a convenient keyboard. In addition, I had a positive experience with Lenovo’s brand before, which also contributed to the decision.

Purchase Decision

At this stage, I visited Lenovo’s website to complete a purchase online. The website guided me throughout the process: first, I had to add the laptop with the necessary technical characteristics to the basket. Then, Lenovo allowed me to choose additional services: warranty, accidental damage protection, and smart privacy. Further, I chose software from the available options (PDF, Adobe, security, graphics, web design, multimedia, cloud storage, and backup software). Finally, the website offered me to purchase accessories for the laptop (monitors, keyboards, mice, audio, webcams, and storage and optical devices). In the end, I was redirected to the page where I could check all the order details and proceed to checkout. The payment process was easy, and delivery terms were clearly explained.

Post-Purchase Behavior

Lenovo places great emphasis on customer care and ensures that consumers are satisfied with its products and support services. After ordering a laptop from Lenovo’s website, I received an order confirmation email with a link to the order details page. Part of the company’s customer care is the return policy. According to it, customers can contact Lenovo’s support within seven days after delivery and return the product for free if it is defective and for a fee of 15-20% of the purchase price if customers change their minds. The company also provides online technical support to its clients.

Mapping the Digital Journey

Figure 1 shows the customer’s digital journey when buying the Lenovo Legion 5 17ACH6H laptop. The diagram covers all the touch points at which the customer interacted with the brand — from problem recognition to post-purchase service. In the given case, Lenovo’s website was not the initial touch point; rather, the customer’s encounter with the brand occurred in the digital media not owned by the company.

Critical Analysis of the Customer Experience

Online Presence

Lenovo has an extensive online presence: its website is available in multiple countries around the world. The website automatically determines the user’s geographic location and adjusts the content and product offerings accordingly. Furthermore, Lenovo has accounts on such social media as Facebook, Twitter, LinkedIn, YouTube, and Flickr. The company’s social media accounts also differ depending on the user’s location. For example, it has separate Facebook accounts for customers in UK and Ireland, Australia and New Zealand, and the United States. Links to the firm’s social media are provided on the home page and landing pages, which makes it convenient for consumers to engage with the company. On the customer journey, no issues with Lenovo’s online presence were found: the information about the company and its products was readily available, and the order could be placed easily.

Digital Marketing Tools

Lenovo uses a range of digital marketing tools to promote its products. One tool is personalization: the company’s website changes based on the customer’s location, and it provides consumers with the opportunity to create an account to track orders and engage with the brand in other ways. Another digital tool is influencer marketing; for example, the company used this instrument to promote its YOGA line of products. Its #Goodweird campaign engaged influencers from YouTube in creating video content, and it was a success, especially in countries with high daily use of social media (Backaler, 2018). The UX and design is another digital tool successfully used by Lenovo, and the company’s website is a good example of it. According to Indiani and Fahik (2020), a website should be convenient, easy to use, and secure to convert leads into customers. Lenovo’s website complies with these characteristics: its interface is intuitive, and the necessary information can be easily found. In addition, Lenovo recognizes the importance of users’ privacy and takes the necessary measures to ensure secure transactions.

Critical Analysis of the Company’s Online Organic Presence

Lenovo’s website contributes to a positive consumer experience through user-friendly design, structured and comprehensive information about products, and links to the company social media allowing customers to engage with the brand. Further, an SEO audit of Lenovo’s landing page will be performed to identify its strengths and weaknesses and suggest improvements. The SEO audit was conducted using SEO Site Checkup, and Lenovo’s landing page for the Legion 5 17ACH6H laptop scored 62 (see figure 2). In comparison, a landing page of Lenovo’s competitor, Razer, scored 72, suggesting that Lenovo’s SEO performance is lower than that of other industry players.

The key SEO issues identified during the audit are as follows:

• the webpage contains not SEO-friendly URLs;
• the CLS score is 0.302, while the target score is 0.1 or less;
• the website is not using a custom 404 error page;
• the webpage is using render-blocking resources;
• the webpage is not using images in a modern format;
• the loading time is about 7.7 seconds, while the average speed is 5 seconds;
• the page size is 113.88 Kb, while the average size is 33 Kb.

The first issue related to the webpage’s URL seems to be unjustified. According to Roumeliotis, K. I., & Tselikas (2021), SEO-friendly URLs consist of relevant words, hyphens, and slashes, while non-SEO-friendly URLs contain numbers and question marks. Although Lenovo’s webpage contains numbers, they are not random but describe the model of the laptop. Apart from this issue, Lenovo’s URLs are relevant to the content of the webpage and contain hyphens and slashes.

The next two issues are related to online customer experience. CLS stands for Cumulative Layout Shift and measures the score of all unexpected layout shifts that occur throughout the webpage lifecycle (Sumedrea et al., 2022). A score over 0.25 is considered poor, meaning that Lenovo needs substantial improvements in this area. On my customer journey, I once noticed that the top menu buttons overlapped the buttons “Service,” “Software,” “Accessories,” and “Proceed to checkout,” which made the purchase experience somewhat unpleasant. Another issue — the absence of the custom 404 page — may cause Lenovo to lose its website traffic because customers may think that the entire website is broken. All the remaining problems — the use of render-blocking resources, improper image formats, and increased loading time and page size — cause Lenovo’s webpages to load at a lower speed than customers expect. This issue can lead to a loss of some potential buyers who will close the page before it loads completely.

Despite these problems, Lenovo performs well in different areas of SEO. For example, its website design is responsive, making its use comfortable for both desktop and mobile users. The website has a sitemap file, employs Google Analytics, is connected with social media, and utilizes a caching mechanism for decreasing loading time. In addition, it applies secure communication protocols and is viewed by browsers as safe.

Recommendations for Better Online Organic Presence

The issues identified during the SEO audit suggest areas of improvement. First, Lenovo should reduce the CLS score on its website. This improvement can be made by reserving the necessary space for images and videos, including size attributes in these elements, avoiding entering new content above the existing content without user interaction, and using transformation animations (Sumedrea et al., 2022). These modifications will ensure that no changes in the page content or layout will occur unexpectedly for customers. Another recommendation is to customize the website’s 404 error page. Customization implies adding pointers to the home page, other website pages, or even references to other websites with relevant content (Ziakis et al., 2019). This improvement will keep the users on the website and enhance their online experience.

The SEO audit also demonstrated that Lenovo’s website has a set of issues decreasing its loading speed. Loading time is usually increased by excessive use of graphic elements and files of other types, leading to incomplete indexing of pages and lower ranking of the website in search results (Ziakis et al., 2019). In order to reduce the loading time, Lenovo should consider such methods as HTML compression, external style sheets, moving JavaScript to external files, and using modern image formats such as JPEG 2000, JPEG XR, and WebP. In addition, the company should avoid using render-blocking resources because they increase the loading time.

Recommendations for Overall Rewarding Customer Experience

The first recommendation is to expand the use of online PR and link building. This advice stems from the described customer journey because this journey began not with Lenovo’s resources, such as the website, a newsletter, or social media, but with the content on third-party websites. Online PR uses a combination of content marketing and social media to engage with customers and other stakeholders (Peter & Dalla Vecchia, 2021). For example, to promote its Legion product line, Lenovo can collaborate with gaming news sites to increase its brand awareness and make it easier for customers to learn about its products.

Furthermore, Lenovo can use mobile marketing to drive sales and provide a positive customer experience. So far, it seems that the company has mobile applications only for providing technical support. Meanwhile, mobile marketing can go beyond this: it can be utilized not only for service provision but also for the customer’s interaction with the market (Peter & Dalla Vecchia, 2021). Mobile marketing can benefit Lenovo in two ways: first, it will improve customer online experience by increasing the number of possibilities to interact with the brand. Second, it will allow for greater personalization of services and product offerings, which will also enhance customer experience.

Another important digital tool that Lenovo should use is influencer marketing. The company has already had success with utilizing this instrument: its #Goodweird campaign became viral around the world. The firm should further capitalize on its experience and brand image and collaborate with technology influencers on YouTube and other social networks to raise brand awareness and boost customer loyalty. In addition, campaigns such as #Goodweird motivate customers to engage in the creation of user-generated content, thus making their online experience with the brand more rewarding.

References

Backaler, J. (2018). Digital influence: Unleash the power of influencer marketing to accelerate your global business. Palgrave Macmillan.

Brand&Deliver. (2019). Legion: Consumer engagement and brand awareness. Web.

Indiani, N. L. P., & Fahik, G. A. (2020). Conversion of online purchase intention into actual purchase: The moderating role of transaction security and convenience. Business: Theory and Practice, 21(1), 18–29.

Pasalic, I. N., & Pavic, I. (2021). Market concentration in the personal computer industry. International Journal of Economic Sciences, 10(1), 84–99.

Peter, M. K., & Dalla Vecchia, M. (2021). The digital marketing toolkit: A literature review for the identification of digital marketing channels and platforms. In R. Dornberger (Ed.), New trends in business information systems and technology (pp. 251–265). Springer.

Roumeliotis, K. I., & Tselikas, N. D. (2021). Search engine optimization techniques: The story of an old-fashioned website. In D. P. Sakas, D. K. Nasiopoulos, & Y. Taratuhina, (Eds.), Business intelligence and modelling: Unified approach with simulation and strategic modelling in entrepreneurship (pp. 47-55). Springer.

SEO Site Checkup. (2022a). Lenovo SEO general checkup score. SEO Site Checkup. Web.

SEO Site Checkup. (2022b). Razer SEO general checkup score. SEO Site Checkup. Web.

Sumedrea, S., Maican, C. I., Chițu, I. B., Nichifor, E., Tecău, A. S., Lixăndroiu, R. C., & Brătucu, G. (2022). Sustainable digital communication in higher education—A checklist for page loading speed optimisation. Sustainability, 14(16), 1–15.

Ziakis, C., Vlachopoulou, M., Kyrkoudis, T., & Karagkiozidou, M. (2019). Important factors for improving Google search rank. Future Internet, 11(2), 1–12.

Zwanenburg, S. P., & Farhoomand, A. (2018). Lenovo: Being on top in a declining industry. Communications of the Association for Information Systems, 42(1), 455–480.

Executive Summary

Lenovo Group Limited is a Chinese second-largest vendor of computer hardware and electronic products, headquartered in Beijing and Hong Kong, China, and Morrisville, North Carolina, United States. The company trades in PCs, notebooks and other PC+ products. The company enjoys a larger market share in China (31.7% as at 1Q11).

On the global arena, in the fiscal year-end 2011, the company got whooping US$ 29.57 million in revenues, having elevated it to its current position. To this end, both its brand name and research team are the reason behind its successes.

The company enjoys better marketing strategies that give it an edge on other players in the industry, and together with a sophisticated products’ portfolio, Lenovo remains competitive. This makes it a sought-after company that any country would not hesitate to give a green-light to invest in to harness the benefits that include employment opportunities, infrastructure growth, tax revenues, among others.

Company Description

Lenovo Group Limited, the world’s second-largest vendor of computer hardware and electronic products, traces its roots back in Beijing, China. Headquartered in Beijing and Hong Kong, China, as well as Morrisville, North Carolina, United States, the company significantly came into the limelight thanks to the acquisition of IBM PC operations.

This propelled its market share six years down the line in the year 2011, to topple Dell behind Hewlett-Packard (HP) as the second leading PC merchant in the world. In terms of revenue collection, as per the fiscal year-end March 31, 2011, Lenovo Group Limited gained whooping US$ 29.57 million with nearly half of it having been generated locally.

With respect to percentage unit sales as at the fiscal year-end 2011, Lenovo Group Ltd. had 13% of market share vis-à-vis 12.1% to Dell’s market share, consequently relegating it as the third-largest behind the former universally. To enhance its operations, Lenovo is supported by a workforce of 27,000 people around the world. To keep abreast with the ever-evolving world, behind this workforce, there exists a research team based in China; Japan; France, Paris; Singapore and the US.

Its merchandise includes “tablet computers, personal computers, mobile phones, electronic storage devices, servers, workstations, smart televisions and IT management software.”

The future prospect of Lenovo is to rapidly grow marketwise and profitably above other players in the industry. To have an edge on its competitors, Lenovo provides its clients with the state-of-the-art PCs coupled with an unrivaled ownership experience. To this end, Lenovo has realized a steady growth in revenue as attested by the graph in appendix I. By June 2012, the revenues reached a new height of US$ 37.6 million.

Its growth in revenue for the past 3 years relative to its peers has been amazing, 27.2% versus 6.6% respectively. The future seems brilliant for Lenovo as the market envisions a higher “long-term growth prospect giving it a better than peer median PE ratio of 18.6.” As such, its growth projections are considered superior than its peers’. To save its competitive advantage over its rivals, its strategies are built around its strengths as well as the market opportunities open for grabs.

Company’s International Strategy

Lenovo Group Limited generates its revenues from the sales of PCs and electronic appliances all over the world. A big chunk of its revenue (nearly 95%) is skewed towards notebooks and desktop computers with the former having sold significantly higher after the acquisition of IBM in the fiscal year 2006/7.

Its main strategic focus is to ensure that all the integral parts of the organization work in tandem to achieve a common goal. To this end, Lenovo aligns itself along four core strategic initiatives vital in the implementation of the key aspects of its strategy.

To this front, Lenovo strategizes on the successful worldwide expansion in transaction business model to market it further as a global player in PC industry with respect to SMB (small and medium business). Moreover, cost-effective supply chains and efficient delivery are other strategies that Lenovo prides itself on since this has greatly improved its serviceability.

Lenovo products are sold all over the world with China’s market accounting for a lion’s share (31.7% of Chinese PCs units during the 1Q11). According to Gartner’s research, Lenovo momentarily ousted HP at the helm of global PC shipments in the 3Q12 (the third quarter of 2012). This could be attributed to the aggressive marketing campaigns aimed at boosting its brand name recognition.

To keep it competitive in the market, Lenovo constantly develops novel and user-efficient PCs, suitable for various purposes due to efforts and developments of its research team based in China, Japan, France, Singapore and the US. The rationale of the decision to choose these regions as its center of research is partly because of resource availability, and partly because of the ease with which a new technology penetrates the promising market.

Besides its technological innovative approach in a quest to maintain its market share and further expand it; Lenovo faces competition from its rivals like HP, Dell Inc. and Acer Incorporated. However, after several attempts in the year 2011, Lenovo managed to topple Dell Inc. (approximately 43 million units) to become the second-largest vendor worldwide, selling approximately 47.6 million units (refer to appendix II).

With respect to the company’s strength, Lenovo prides itself upon a strong brand name coupled with an enormous market share. Ranked the second after HP with an upward inclining trend (Appendix III) in the recent past, Lenovo shows a tremendous capability for advancement owing to its superior reputation on “high quality, high end products inherited from IBM.”

Moreover, the workforce maintained from IBM notebook faction injects the necessary experience giving it an edge on new players in the industry (especially, in US market). Concerted efforts aimed at reducing its marginal costs have seen Lenovo introduce an in-house manufacturing. As such, Lenovo braces itself up for price wars better than its competitors do.

One of Lenovo weaknesses is attributed to the fact that it is a relatively new company in the global arena. Consequently, it faces an uphill task in its quest in trying to penetrate foreign markets. Additionally, the existence of fake products limits its growth in market share. Moreover, its initial marketing strategy biased within China’s market was not beneficial since it would have found it difficult to retain sustained growth rate in acquired market segments.

A glimpse of the short-term strategies brings to the fore the need to improve global supply chain to further reduce its costs to enable the company to realize a greater profit margin. This is achievable through bringing industry experts on board to further curtail the losses through driving manufacturing optimization.

A focus on the long-term strategies brings to the fore the company’s projections of further investing in building “its core competencies, product innovation, branding and new PC+ segments, including mobile internet and digital home (MIDH), balancing expenses and revenues to drive long-term sustainable profit growth.” This will be achieved through its ‘Protect and Attack’ strategy which focuses on exploring new markets, while protecting the ‘mature markets.’

Company’s Marketing Approach

Lenovo products are sold worldwide, with China, its domestic market, accounting for a greater market share (31.7% as at 1Q11). On the foreign front, the US leads other market segments including Europe, the Middle East and Africa, among others. Significantly, it is worthy noting that Lenovo momentarily has advantage over HP in total PC shipment in the 3Q12. This is attributed to the customers’ changing preference ditching traditional PCs in favor of the more sophisticated Lenovo tablet devices developed due to its powerful research team.

With its research team strategically headquartered in potentially promising market segments, Lenovo ensures quicker penetration of technological innovations. Additionally, the decentralization of headquarters around the world enhances its ability to reach out to the multitude.

To enhance its brand name internationally, the company uses global events, such as Olympics, Space contests, e.g., NASA and National Football Leagues (NFL) for market campaigns. To distribute products worldwide, the company uses middlemen including wholesalers, agents and retailers.

Company’s Logistics Approach

With the main facilities in Beijing; Morrisville, North Carolina, and Singapore, and with research centers in Japan, China and the US, the main goal is to reach out to the regions’ enormous population quickly and efficiently.

These regions are good market segments for its middle and high-end products because people can afford them. Furthermore, these countries have stronger currencies and are economically stable and technologically advanced to support company’s growth. In terms of resources, these regions have the necessary human as well as economic resources to enhance its development.

Company’s Human Resource Management (HMR) Approach

Lenovo recognizes the essence of attracting as well as retaining excellent employees. In line with this philosophy, the company boasts of its formal, clear and performance-aided remuneration package covering its top brass management personalities. These incentives come as performance bonuses, retirement benefits and allowances.

The company focuses on its shareholders’ interests, giving a 21-days notice, prior to an annual general meeting, and taking the members’ contributions’ into consideration. The company enhances sustainable business practices along four fronts including environment, employee health and welfare, global supply chain and corporate social investments.

Analysis

On allowing the company to set up its operations, the host country gains a couple of benefits that include employment opportunities to the local residents. The locals are highly motivated owing to the company’s remuneration policy which helps improve on the living standards of the citizens as a result. The host country should not shun company’s intentions to invest in the same, appealing to environmental hazards, because the company is environmental cautious.

Furthermore, the member country will experience all the first-hand technological innovations as soon as they are released to the market. With the high revenues ranging to billions, the host nation stands to gain either directly through tax revenues or indirectly through the other sectors of economy, e.g., infrastructure. Also, the host nation benefits from relatively cheap products thanks to a shorter supply chain.

However, with a better remuneration package, the hosting nation can risk widening the gap between the rich and the poor. Lenovo-employed members will assume a higher social class increasing the living standards and hence causing class conflict and segregation.

Recommendation and Conclusion

On weighing the options studied in the analysis above, the benefits outweigh the risks. As such, I would allow the company to invest in the country since the locals will enjoy employment opportunities, among other benefits. Vitally, with the company’s enormous revenues, the host nation will get an opportunity to directly gain astronomically through tax revenues.

Bibliography

Chao, Loretta. “As Rivals Outsource, Lenovo Keeps Production In-House.” The Wall Street Journal 4, no. 21 (2012): 34-40.

Kobie, Nicole. “Lenovo targets European market with ex-CEO of Acer.” Thomson-Reuters Magazine, January 2012.

Little, Lyneka. “CEO of Lenovo Gives $3 Million in Bonuses to Employees.” ABC Magazine, February 2011.

Owen, Fletcher. “Lenovo passes Dell to become world’s No 2 PC maker.” MarketWatch Magazine, April 2012.

Zhijun, Ling. The Lenovo Affair. Singapore: John Wiley & Sons, 2006, 15.

Appendices

Appendix I: Lenovo revenue trends from 2008-2012.

Appendix II: Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2011

Table 1

Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2011 (Units)

Appendix III: Lenovo market share trends vs. its competitors