Category: Lenovo

Introduction

Lenovo is one of the most renowned multinational companies that deal with computer technology, design, and the IT software. It operates within major regions of the world and sells its products in more than 160 countries (Lenovo Group 2013). According to the Lenovo Group (2013), most of Lenovo’s production deals are done to consumers and businesses in a number of ways.

For instance, the company sells its commodities through retail stores, channels of business account sales, and directly to consumers through internet sales. At the onset, Lenovo faces the challenge of delivering its products to customers in an economic sense and/or according to the appropriate delivery dates.

Lenovo has been challenged in terms of efficient fulfilment of customer delivery across the various channels. The primary cause of this challenge lies in the company’s supply network management sustainability issues (Hanifan, Sharma, & Mehta 2014). Sustainability issues affect the logistics network of Lenovo in terms of dangers, rate of waste, and its ecological setting.

Sustainability in the supply has been identified as an essential aspect that triggers organisations’ long-term profitability. Lenovo has implemented tools for maximising customer value. One of the most appropriate tools for Lenovo is the Lean Six Sigma.

By definition, Lean Six Sigma is a business approach towards profit improvement. The tool has helped Lenovo in terms of reducing waste in areas such as manufacturing, design, or service processes (Shukla, Garg, & Agarwal 2011). Lean Six Sigma has been the foundation of management systems in Lenovo.

As a multinational business company, Lenovo has adopted measures that give the company an opportunity to operate sustainably within its supply network. The purpose of this essay is to provide a critical assessment of the extent to which the adoption of Lean Six Sigma will be sufficient to ensure sustainability of Lenovo’s logistics system. In addition, the essay will identify parts of Lenovo’s operations that may be vulnerable whilst explaining why this susceptibility is expected.

Supply Chain Management

Lenovo is a major manufacturer and supplier of peripheral computer-related products such as software, Smartphones, tablets, servers, and high-quality laptops. Lenovo main supply chain has adopted the direct shipment method. The company’s supply network has been transformed in three parts.

First, the direct shipment programme allows the company to integrate new partners and/or meet new demands in a quick manner. The second part is the sell-on-water service, which allows Lenovo to locate its products that are being taken to customers in case the ship is in transit (Lenovo Group 2013). Moreover, Lenovo’s supply network has a chain strategy that uses a balanced mix of house-production and outsourcing partners.

The company’s direct shipment strategies include the original design manufacturers (ODMs) and the electronic manufacturing services (EMS). The approach results in the company’s optimal supply chain, cost-effectiveness, and agility. Moreover, the approach helps in mitigating risks that are associated with market volatility (Qiao & Conyers 2014).

In its supply organisation, Lenovo has vowed to be a responsible and an active corporate citizen. The main goal of the company through the supply chain is to embrace customer satisfaction. In addition, the company seeks to integrate core values of operational excellence and innovation in every aspect of global supply chain.

Lenovo has become a member of Electronic Industry Citizenship Coalition (EICC), which is a code of conduct that boosts supply practices. This code of conduct provides effective conformity to ethics, health and safety, labour, management system, and the environment (Lenovo Group 2013).

Lenovo sells its products to customers through a channel of distribution that requires different logistics networks. Therefore, Lenovo must have a sustainable supply system that necessitates the achievement of its global operations. Logistics network has a number of components (Lenovo Group 2013).

The supply complex for Lenovo has components that relate to sourcing, manufacturing, packaging, and distribution centres. In addition, the logistics system has issues of waste management and emission control (Wolf 2014). Lenovo’s production must entail the identified components for the logistics chain to evade the aforementioned challenges and limitations.

Consequently, Lenovo’s vulnerable operations have led to an insufficient sustainability in its supply complex. In addition, Lenovo’s logistics network has been recognised to be improving. In 2013, Gartner, a leading advisory and information research firm, ranked the company’s supply chain among the top 25. This ranking is a global recognition to the improvements of Lenovo’s operations, which have outperformed other companies in the industry.

Need for Sustainability and the Involved Factors

Lenovo has a growing sustainability concern. The company has recognised the relationship between the natural environment and the manufacturing operations. The company’s supply chain has become one of the most important factors in its decision-making processes.

For instance, Lenovo has been involved in undertaking technological developments, environmental stewardship, and corporate responsibility. Lenovo’s supply chain needs sustainability of the involved factors to manage its production processes. According to Salmona, Selam, and Vayvar (2010), businesses endeavour to manage their production processes and supplies appropriately while considering all factors that are involved in ensuring sustainability.

They provide a service through an environment that considers improvement and impacts on the social and economic gain based on the benefits that both parties enjoy. Businesses have been tasked with the responsibility of ensuring that customers have to buy products and services confidently in their source.

Lenovo has a supply system that promotes customer approval. In the new era, the company regards corporate sustainability, risk management, and compliance as critical plans for ensuring the company’s access to the market as well as market success.

However, Lenovo has witnessed challenges in maintaining a large proportion of its manufacturing section after adopting this unique approach of treating its customers. Businesses that encounter issues in their supply systems have higher chances of falling in terms of their operations. The manufacturer must ensure that all products benefit the client.

Some of the benefits that Lenovo’s clients have enjoyed include employee and customer satisfaction, enhanced reputation, reduced cost, retaining and improvement of the business, and increased competitive advantage (Miemczyk 2014). Lenovo has a process that combines the collection of techniques as a way of reducing the needed time to provide its services.

Exclusive to any company, the business understands its improvements and benefits through a structured programme that checks the manufacturing and distribution channels (Render 2008). The manufacturer should have an affordable process that leads to improvement of the products, their quality, and substantially. This process translates into customer contentment.

Chakraborty and Tan (2012) regard customer satisfaction as the core pillar of any business. Through an effective supply set-up, Lenovo has placed itself in a position of benefiting itself and its stakeholders. It has differentiated itself, demonstrated its commitment, promoted best practices in its production, and increased its marketability.

However, Lenovo has implemented a programme that combines the synergies of the initiative to provide the organisation with fewer processes, limited variations, greater speed, and increased impact. Moreover, effective businesses should have a structured problem-solving tool, be customer-focused, track performance of the business, and/or have the means to produce the largest gain in terms of customer satisfaction.

Lean Six Sigma Tools, Techniques, and their appropriateness at Lenovo’s Case

Lenovo’s logistics set-up has features that have placed the company ahead of others. The company has a shipment process that emphasise Lenovo’s gain. DMAIC, DMADV, and the SIPOC are some of the Lean Six Sigma tools and techniques that are appropriate at Lenovo.

Lean Six Sigma as a concept has many features that emphasise customer satisfaction, continuous improvement, comprehensive stakeholder involvement, and search for the cause of certain developments within the business (De Mast & Lokkerbol 2012). The techniques and tools for service delivery are DMAIC (Define, Measure, Analyse, Improve, and Control) or the DMADV (Define, Measure, Analyse, Design, and Verify) (Rever, n.d).

Lenovo’s operations primarily involve a process improvement, optimisation, and service delivery. One of the Lenovo’s operations is the logistics set-up that has been using these tools and techniques, which assist in the development of a sustainable supply chain. Lenovo’s processes and optimisation procedures for service delivery have been appropriate application of an approach that involves definition of the supply chain leading to customer satisfaction.

DMAIC and DMADV techniques are widely used in Lenovo’s manufacturing processes. DMAIC has helped the company in structuring and guiding the improvement of its processes and productivity (Pyzdek & Keller 2010). After manufacturing, the steps that are involved in the DMAIC technique involve several tools such as the SIPOC device, which consists of Lenovo’s suppliers, inputs, process, output, and customers.

The SIPOC tool’s definition comes from the DMAIC process (Chen & Roth 2005). These tools have been appropriate in terms of helping Lenovo to manage its supplies and processes. Regarding the logistics management, the DMAIC, as well as the DMAIV techniques have been appropriate for Lenovo to establish proper measures to achieve affordable supply effectively.

On the other hand, DMAIV is a methodology that has offered an opportunity Lenovo to champion its processes (Kinsey 2011). This technique is mostly used when the product has not been in existence at the company. The company must demonstrate a need to develop the strategy (Cronemyr 2007). In addition, the method is used when the existing products or processes have been optimised but failed to meet customer satisfaction and specifications.

As a result, the application of the two techniques is effective in the manufacturing process. There is a need to appreciate that Lenovo is a company that is involved in manufacturing processes. DMAIC and DMAIV techniques have been key in sustaining these processes.

For example, the tools are used to fix defects in the shipment process in the supply chain. The tools have been used to minimise the amount of time between the target and the specification unit. In addition, through the DMAIC phases, the Lean Six Sigma has been applied to solve the problem of shipping the products to the user.

The five phases are also used during waste management. Lenovo’s products have wastes. The Lean Six Sigma strengthens and minimises probable and identified weaknesses. Upon the application of the tools in Lenovo’s supply set-up, the company has witnessed an increase in the process velocity and/or reduced the process variation. Moreover, Lean Six Sigma is a methodology that has initiated product quality within Lenovo’s supply chain (van der Vorst, Tromp, & Zee 2009).

A supply management for a manufacturing business such as Lenovo necessitates a strategy that is capable of measuring, controlling, defining, and completing its logistics network for sustainability (Ford 2005). The Lean Six Sigma, DMADV and DMAIC methodologies essentially have helped in the definition of the company’s supply management system.

They have been appropriate for Lenovo’s product energy, packaging, transportation, product end life, waste management, conflict materials, and environmental performance. Moreover, Lean Six Sigma application in Lenovo has been identified in engineering the momentum for the PCs, mobile internet devices, and computer software among other operations as a way of building the company’s competitive strengths of the existing brands and new products (Radhakrishnan 2011).

Promoting Lenovo’s sustainability, Recommendations, and Limitations

Lenovo has taken appropriate initiatives to promote a sustainable supply sequence. The areas the company has focused on to promote sustainability in its logistics network include transparency, climate change, compliance and risk management, building a sustainable culture, and product leadership (Lenovo Group 2013).

Actions that have been taken for sustainability from these areas include providing regular updates, minimising the impact of carbon emission, and ensuring effective tools for managing the company’s operations and the expansion of management procedures. However, the company needs to focus on core areas to provide suitable sustainability (Lenovo Group 2013).

Lenovo promotes a sustainable logistics system through a number of ways. The company has a sustainability policy in its supply chain management. Promoting sustainability calls for the implementation of corporate sustainability policies. Lenovo is a corporate that has been promoting sustainability in its activities.

As a major partner in international business through manufacturing and distribution, the company has been committed to interacting with its stakeholders responsibly. In the supply realm, Lenovo plays an integral part in sustainability. In specific, the company has a strategy, namely Protect and Attack, as a tool for steering a steady relationship in all regions.

The company has built a scale in the transactional business for the consumer market. It has also driven its shares in the emerging markets. In addition, it has expanded Smartphones and tablets in the emerging markets as a way of attaching peripheral services to become a global player.

Through these steps, the company has promoted sustainability (Assarlind & Aaboen 2014). These steps have been effective in areas that Lenovo has focused on relating to sustainable policies, goals, and progress. A continuous focus on the management areas and the performance of the product are a factor that leads to effective performance (Lowenthal 2002).

Lenovo has identified sufficient sustainable logistics system management strategies. However, susceptibility has been witnessed in some areas. Insufficiencies in the supply set-up have resulted from vulnerable areas within the company. The most vulnerable area is the supply management that incorporates the key company’s operations components.

These areas include physical distribution, global customer reach, external linkages, and environmental risk management governance on supplier relations, the procurement department, and the safety department. Management involves major areas within the operations of any business (Cohen 2013). Logistics system management is the most important area in Lenovo, although it is prone to challenges since supplies are made to various regions that have different perceptions and needs.

In addition, the emerging competitors pose a threat to the company’s products. Lenovo needs to adopt a strategy that can minimise vulnerability in its supply network. An effective strategy would be supply chain traceability. Lenovo must ensure that it has traceability schemes. Traceability is a technique for assuring and verifying sustainability claims that are related to the company’s products as a way of ensuring respect and good practices in the environment where diverse people are involved in the supply chain (Czinkota et al. 2014).

Lenovo engages in the manufacturing of products that need to be supplied in major regions of the world. As a result, supply management, the distribution chain, and its components form the basis of understanding its supply chain. Lenovo has succeeded in avoiding the use of materials that can later bring side effects or other conflicts.

The company has demonstrated maximum concern with its supply chain. Traceability ensures clients’ reliability of the company in the areas of human rights, environment, as well as, health and safety. Any business that does not focus on its supply network may fail (Breyfogle 2002). The supply management reveals how best the business can achieve.

Lenovo considers an evolving procurement strategy in its management to achieve sustainability in its supply network. Procurement sustainability has guaranteed the company a sustainable sourcing (Moosa & Sajid 2010). In addition, Lenovo has moved from conformity to a method that has performance enhancement. Over the last years, Lenovo has been involved in the invention of new products.

The products have been an effort to comply with the set standards. Standard products are one of the major factors that attract customers and/or build the reputation of a business (Czinkota, Kaufmann & Basile 2014). Lenovo has been in this trend for many years. The company has moved beyond this approach and exercise risk management.

Lenovo has combined this approach with new initiatives while at the same time using its capital to become a supplier to the emerging markets. Engaging new markets is a crucial development that helps in the provision of new services and new bulk of raw materials (Harry 1992). The best practice for a manufacturing company is the guaranteeing of a reliable source of raw materials and innovation that significantly improve the lives of the new market as well as the operations of the company (Antony et al. 2012).

Lenovo sustainability is an indication of competitive advantage and performance. The company has developed a collaborative and functional logistics management system (Pyzdek 1999). For instance, it has explored effective decision-making and communication plans to maintain an excellent supply sequence.

A sustainable approach with a competitive advantage should converge in a decision or an approach that measures the intensity of its operations. Lenovo collaborates with its customers for mutual benefit. The mutual benefit from a sustainable supply network is an indication that the business has the concern of its product and its impacts on users (Qiao & Conyers 2014).

Lenovo’s strategy of taking the initiative of collaborative and functional chain management has given it a competitive advantage. However, the company should make decisive conclusions to develop a sustainable logistics plan across its areas of operations.

Conclusion

Lenovo has understood customer value improvement and satisfaction. The company has been committed and focused on ensuring that it makes the necessary approaches that can transform it into a successful entity. A disciplined process such as Lean Six Sigma has benefited Lenovo in enhancing communication, participation, and satisfaction.

The business should appreciate that the environment where it operates in is crucial in developing a sustainable supply set-up. Lenovo has addressed major factors such as packaging, end-product-life and distribution channels. In addition, the company has used effective tools and techniques such as DMAIC and DMADV, which have been integrated within the Lean Six Sigma method to help in achieving sustainability.

Lenovo understands that these tools help to upgrade the existing products while at the same time elevating new inventions. The company uses such tools to ensure competitive advantage. Moreover, sustainability in the logistics system has pushed Lenovo to incorporate sustainable tools and techniques that promote sustainability. The process of sustainability for Lenovo, however, has its limitations that arise from vulnerabilities in some areas.

Nevertheless, there is a need for Lenovo to identify sustainability approaches in its supply network as the core factor for its progress. The organisation should also understand that sustainable logistics complex has to incorporate other measures. It should abandon the traditional approaches and adopt new ones to foster a competitive advantage. Lenovo’s sustainability is based on a competitive plan that adopts tools and techniques of Lean Six Sigma.

Sourcing, manufacturing, packaging, distribution management, and waste management processes can help Lenovo to achieve success if effective measures such as Lean Six Sigma and its components are effectively applied. A collaborative approach through the Lean Six Sigma ensures sustainability in the logistics network. Furthermore, any vulnerability in Lenovo’s operations can be addressed through a traceability supply chain management.

References

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Assarlind, M. & Aaboen, L. 2014, ‘Forces affecting one Lean Six Sigma adoption process’, International Journal of Lean Six Sigma, vol. 5 no. 3, pp. 324-340.

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Cohen, S. 2013, Strategic supply chain management, McGraw-Hill, New York, NY.

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Introduction

Lenovo is a large, global company that, over the long history of its existence, has gradually diversified its activities within the framework of IT technologies. Starting as a PC manufacturer in the most promising time, the organization has grown to the development of mobile communications, software solutions, servers. Assessing the risks and outlining the development vector, the 3S program was defined, offering development in three directions, including smart Internet of things, infrastructure and industry verticals. In fact, Lenovo with this program is aimed at cutting-edge developments in the field of artificial intelligence, data analytics and the corresponding specificity of integration and transformation of solutions for specific structures and sectors. At the same time, against the background of these innovations, the company had to maintain the pace of revenue growth in its core business of creating PCs, mobile communications, servers and software solutions for various customers.

In the context of the coronavirus, a fairly large number of important processes have become more complicated. These include disruptions in the supply chain, the need to comply with new strict sanitary measures, adapting to legislation, which in some cases could go as far as a complete lockdown (Han et al., 2020). The process of globalization, which the company began to master almost before anyone else during the merger of the Chinese Legend with IBM, when there was a conflict of cultures, views and languages, both facilitates adaptation to new conditions and differentiates risks. With a worldwide geographic footprint, Lenovo has mitigated production shutdowns in the epicenter of the outbreak, China, by dispersing them across other continents. Many other challenges have been created by the pandemic, not just for the organization, but for the industry as a whole, yet driving sales in certain categories (Morrison & Black, 2020). As a consequence, in this situation, the company should answer the question of how to support the development of autonomous business sectors under the new 3S program. This work provides an analysis of the big picture in order to give recommendations to management for the most advantageous way out of the current problems.

Autonomous Business Sectors

The Smart Devices Group and the Data Center Group form the entire revenue of the company. Despite falling global demand by 2019, Lenovo’s PC and smartphone sales have only grown (Morrison & Black, 2020). Even though the organization has invested in the server and mobile industries, thereby depriving the corresponding investments in the PC sector, through years of experience and the right course, management manages to maintain revenue. However, according to Lenovo’s financials, the company’s net revenue was negative in 2016 and 2018, and showed growth only after the pandemic (Macrotrends, 2022). It is very likely that this fact is connected with a lot of operating expenses for development, because 3S was proposed just at that time. At the same time, the cost of goods sold form approximately the same gross profit ratio for several years, therefore, the costs came from other items (Macrotrends, 2022). Negative net income affected metrics such as EPS, ROA, ROE and ROI, thereby reflecting a possible reason for the low market cap relative to other competitors.

However, Lenovo maintains an assets-to-liability ratio in the long run, with the company’s current ratio well below one relative to its short-term liabilities. This fact is partly offset by increased post-pandemic revenue due to accounts receivables that were heavily deferred but paid out (Macrotrends, 2022). In general, the company’s financial indicators have leveled off and show promising growth. Lenovo’s PE ratio is understated, which indicates the organization’s potential for growth in share prices. However, it takes time and a significant amount of resources to reach the values ​​of the computer, smartphone and software industries, as the indicators differ by more than 10 points (Petrillo et al., 2018). In fact, being the market leader in sales of computers, the decision of management to diversify the company’s activities in the direction of 3S is the only correct one, since there is potential in the industry, but in a specific sector it has already been fully realized.

To support the profits of computer technology, appropriate integration and diversification of software products is needed. This need was raised a few years ago by a CEO emphasizing the need for customer comfort (Morrison & Black, 2020). Lenovo Capital & Incubator Group will be required to perform R&D functions, which will almost always guarantee any technological and timely implementation of hardware in personal computers. The software environment is developing much more rapidly and comprehensively, and here Lenovo must adapt and create a unique offer in certain market niches. Smart Verticals offer a solution perspective for industry, commerce and education. R&D should also consider those business industries in which the presence of information technology does not yet solve the full range of tasks required, or changes are brewing and fresh ideas are required. These areas include telemedicine, security, finance and bioinformatics. Developments in telemedicine and bioinformatics always need additional productive capacities not only for scientific theoretical purposes, but also for quite practical ones (Asadzadeh et al., 2020). Participation in and development of such projects with the help of Lenovo will primarily contribute to the company’s reputation and compliance with social and environmental responsibility.

The integration of the tasks of these areas into the main vectors of 3S development can create unique specific solutions for entering a new market that is not yet occupied by competitors. However, additional diversification comes with increased risks. Information security and finance also offer a fairly high demand for expert systems and other IT developments that need a lot of server, hardware and software support (Ahnert et al., 2021). Smart vertical optimization may consider integration as one of the possible tools to improve revenue in a market with potential high margins due to low competition. The transition to a stable growth rate of gross, operating and net margin financial indicators may contribute to the development of the company’s investor attractiveness. A broader diversification of promising technologies, differentiated by specific industries, can give a complete picture of the demand for specific tasks. Lenovo should consider this option as a potential branch into more niche products after appropriate market intelligence.

The smartphone market is filled with competitive solutions every year more often than the PC market. Flagship positions Apple and Samsung are globally recognized leaders in the premium product segment. While Samsung also offers lower-end options, Lenovo has entered the market for relatively cheap products in developing countries (Morrison & Black, 2020). As a consequence, Lenovo should consider horizontal expansion in a geographical sense. In other words, the company should continue to follow the previously outlined strategy to capture the budget markets of developing countries, offering the most convenient product. At the same time, software solutions integrated with the products of this sector also represent a promising direction. Whereas in the case of PC software, Lenovo can focus on the more in-depth, specialized tasks of large enterprise customers, in the case of smartphones, the reach should be aimed at a wide audience. Appropriate surveys, budget proposals and thoughtful, culture-integrated, socially and environmentally responsible marketing campaigns that are unique to each deployment region can contribute to this. Given the impact of the coronavirus and the need for social distancing and remote work, smartphones may be accompanied by free versions of the most popular and necessary programs for remote interaction, which will make the offer on the market relevant and comfortable, as required by Lenovo management.

3S Complexity

When revenues decline due to a pandemic, and spending only rises and requires enforcement, development becomes more problematic. On the other hand, each crisis presents new opportunities in a dynamic world, and the first one to respond to them properly will be able to occupy a certain niche in the changed reality. The Internet of Things has become more relevant due to the fact that people are forced to spend more time at home, and the home environment is full of various things that can be adapted in this direction (Kumar et al., 2019). Given the corona virus agenda, collaborating with healthcare organizations can provide Lenovo with invaluable experience in developing relevant equipment. For example, people can get special health monitoring devices that integrate with smartphones and PCs to recognize signs of illness and alert the owner about it (He et al., 2020). In addition, cloud storage and analytics tools can be provided to medical companies in order to process data faster and better to solve the fleeting problems of a pandemic.

Smart infrastructure projects can also be outsourced to big data companies. While Lenovo can provide and develop products for medical purposes with government funding or reputational support, scientific labs, industry, and retailers can turn to Lenovo for data analysis without resorting to costly outsourced solution development services. Such services have a fairly large margin, have a high gross profit ratio, and can be carried out even under the most severe restrictions during a pandemic (He et al., 2020). It is worth noting that the company is unlikely to be able to make any fundamentally new developments in the relatively near future due to increased costs and disruptions in the supply chain. Infrastructure and the Internet of things at this stage represent a field of opportunity, which, however, cannot provide instant short-term earnings, but, on the contrary, requires financial injections. Accordingly, in order for the plan not to be idle, and for Lenovo to be able to gradually increase its customer base and diversify earnings into these groups, a number of recommendations should be taken into account.

Recommendations

Firstly, the most promising group of the new 3S direction is connected with verticals, namely, the search for potential niches for solutions in various business industries. In addition to the obviously highlighted commerce, industry, and education, Lenovo should look to banking and telemedicine. The medical and pharmaceutical industry will be central and most funded by both investors and governments during the pandemic. Collaboration with such companies can provide not only experience, but also potentially progressive solutions at the intersection of information technology and the fundamentals of health care, bringing control over human health to a new level. This step contributes to the processes of globalization, however, it is associated with certain financial risks, while completely eliminating reputational risks.

Secondly, new software solutions are needed to preserve autonomous markets that have been successfully operating in sales for a long time. Lenovo smartphones should continue to be sold in the budget segment of emerging markets, as the flagship Apple and Samsung in the premium segment have captured the audience and set a high bar for quality, which requires impressive funding. Software integration can include in the operating systems of finished products the most useful free solutions during the pandemic, which are paid from other manufacturers. The personal computer market should be developed into an area of ​​broad and specific programs that will accompany already successful hardware products.

Conclusion

The combination of globalization, the 3S approach, and the pandemic crisis is another challenge for Lenovo, which in the long run should bring more benefits than potential short-term problems. It is almost certain that a company will suffer some losses once development teams introduce and test the first IoT products or niche solutions for a business industry, but diversification always comes with high risks in every area where the company is present. However, as a leader in PC sales, finding itself in a highly competitive smartphone market, Lenovo simply needed to find new branches of development, since even with further globalization, the organization would risk falling into a state of stagnation. An important criterion for success at this stage will be constant quality control and analytics of each step, which will predict the feasibility of following the 3S model and appropriate diversification in the markets.

References

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Asadzadeh, A., Pakkhoo, S., Saeidabad, M. M., Khezri, H., & Ferdousi, R. (2020). Information technology in emergency management of COVID-19 outbreak.Informatics in Medicine Unlocked, 21, 100475.

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Petrillo, A., De Felice, F., Cioffi, R., & Zomparelli, F. (2018). Fourth industrial revolution: Current practices, challenges, and opportunities. Digital Transformation in Smart Manufacturing, 1-20.

Introduction

Businesses often encounter issues that require changes in their strategic planning that would enhance daily operations. It is necessary to understand that these choices shape the company and its future by providing a vision of prospective tasks and mission for the direction of work. In the case of Lenovo, the company had to reshape its strategy that emerged as a consequence of being formed as an enterprise with limited resources provided by a non-profit institute. This paper aims to present a hypothetical case study of Lenovo that would illustrate the strategic decision-making process and evaluate possible options.

Situation

In this case, the company’s executives encounter difficulties when launching a new company to the market with a challenging external environment. In addition, the country in which the venture operates is a developing economy, which results in a lack of necessary resources. Shu states that firms with a cohesive strategy are usually more successful when compared to those that lack a clear vision (625). However, with new products or ventures and in the circumstances similar to the described it can be difficult to predict the outcomes such as the reaction of clients and demand in the market. Regardless, Lenovo had to reach operational start-up and ensure adequate revenue by creating a plan that would leverage its competitive advantage.

The product of the company is technical solutions that are now available for sale globally. Thus, this organisation had to create a strategy that would enable obtaining necessary financial resources and human capital. Additionally, this computer product should have a marketing and positioning approach as well as customer support and additional features. This strategy requires a well-planned approach to manufacturing and distributing products through adequate management of cash flow and other resources.

In addition to the problems mentioned above, it should be noted that the original company – Legend did not have a cohesive strategic vision. Upon establishment, the organisation operated without a monetary incentive because the primary investor was a nonprofit institute (Shu 630). Thus, it is evident that to achieve commercial success and obtain revenue Lenovo’s executives would have to review all the operations and create new processes. This objective had to be performed with limited financial resources, which restricted the options available to managers.

Additional issues included a lack of support from the government that the competitors were able to obtain. Thus, rival companies that operated in the same industry of computer technology had the opportunity to receive additional finances and control metrics such as margins better, while Lenovo was unable to do so. As becomes evident from the case described by Shu, governmental support has a crucial meaning in China (633).

The author argues that Great Wall, the primary competitor for Lenovo was able to receive resources, both financial and physical, such as manufacturing facilities as well as access to international corporations and their contracts by using connections of governmental officials. The meaning of political support remains to be a crucial component of operating a business in China even today. Hsu argues that contemporary organisations have to deal with this approach of the officials as well. Thus, this component had a critical impact on shaping Lenovo’s strategy for future development.

Questions

Case studies differ from offer types of learning material because they provide an extensive description of business operations and decision-making processes that occur in a particular company. Ellet argues that when examining a case study, such as the one by Shu, an individual should focus on thinking about the implications of the information (20). In addition, the author suggests having several questions prepared before reading the content, which will help locate necessary information.

With Lenovo, the primary issue is the strategic planning of the company. Thus, the questions that require answers are what affected the need to look for alternative decisions, which components of the company’s operational activity had to be subjected to the most significant changes and what were the options and rationale for each solution, which will be discussed in this paper.

Therefore, in the case of Lenovo, the primary issue is the strategic development of the company that would enable growth and financial success. The principal subjects of the problem are management and the economic and political environment of the country. It can be argued that despite the difficulties described above, the case study in question accounts for the success of Lenovo’s planning decisions. The problem described in this paper is significant because it traces the process of transformations that a company established in difficult external and internal circumstances went through to become a manufacturer known worldwide.

Hypothesis

The previous paragraphs focused on the particular elements that made Lenovo’s executives look for alternative plans for their business. According to Ellet, an essential component of a case study analysis is a hypothesis (27). Thus, this paragraph will discuss the changes in the internal structure of operations and its impact on the emerging strategy of Lenovo. Based on this information, a hypothesis regarding the company’s strategic vision can be made.

Firstly, as was previously mentioned, Shu describes Lenovo’s approach to business as chaotic due to lack of experience in the for-profit market and other constraints (628). However, although this component was considered as an issue at first, the approach of China’s government to businesses and foreign establishment affected Lenovo’s growth significantly. Shu states that throughout the 1980s until 1990s the governmental officials forbid foreign trending organisations from operating in their state (630).

This gave Lenovo an opportunity to fill out the gaps in its financials and experience-related fields. According to Shu Lenovo offered “consulting, business integration and support services” to out of state ventures (630). Next, Lenovo developed several other products that helped them obtain 50% of the domestic market.

These opportunities allowed Lenovo to have resources for investing in other products and developing as a company by manufacturing motherboards. The success of manufacturing in the domestic market was crucial for the company because it provided resources for future growth. Due to these significant changes in operations and scope of activities, Lenovo had to reposition itself as a market-oriented enterprise (Shu 630). Thus, it can be concluded that the hypothesis that guided its executives was that market demands require manufacturers to develop low-cost personal computers.

Proof and Action

The company focused its production on developing simple hardware and software solutions for consumers. The decision that Lenovo’s executives were to focus on manufacturing a “bundled transportable computer” (Shu 631). In addition, Lenovo partnered with Taiwanese companies as part of its strategy to lower the costs of supplies. This rationale for these choices was guided by an understanding of components that are required to ensure a product’s success in a market.

For instance, Shu states that the chief executive officer of Lenovo understood that having a high-quality product is not the only component that enables its success (629). Additionally, they would have to invest in marketing and other operational activities. Instead, the chosen course of action focused on leveraging the domestic market’s opportunities, experience and partnerships that allowed reducing costs of production significantly. Thus, Lenovo decided to manufacture personal computers that would suit the needs of the mass market due to their low price.

This case involves several options that relate to Lenovo’s strategic direction. Ellet argues that decision-type cases focus on specific issues and possible solutions that affect a company’s future (20). In such instances, it is necessary to identify the scope, available information and consequences of actions. The range of the decision-making process for Lenovo is the transformation of the entire business model towards one that would be profitable.

The information the company had at that time is their knowledge of the domestic market and their technological developments (Shu 626). The consequence, in this case, is a model that enables Lenovo to obtain revenue and have a fully functioning manufacturing.

It is evident that each decision of an executive should be based on factual information and all option should be weighted considering the outcomes and possible downsides. For instance, Laczkowski et al. state that the following elements should be examined before making a decision – “financial performance, markets, competitive advantage, and operating model” (par. 1). The authors argue that some establishments can prioritise growth in their core segment without adequate evaluation, which leads to failure. In addition, Shu explains that strategy formulation should be regarded as a learning process with continuous input from stakeholders (626). Using the previous experience and evaluation of the components described above, Lenovo was able to achieve success in its strategic planning.

Alternatives

Alternatives in this strategic planning of Lenovo included the suggestion of their chief engineer to manufacture high-quality PC boards. Innovation is crucial for this alternative because this market segment required new solutions. Although research and development suggested that new products may be revolutionary for the market, Lenovo chose a different approach (Shu 630). Arguably, the deciding was guided by the high risk connected to innovation and an understanding of the manufacturing and distribution approaches in both the domestic and foreign market. The alternative’s rationale included an assumption that a high-quality product that offers a novel solution to consumers would allow Lenovo to have a competitive advantage over its rivals.

Unarguably, in this scenario, the alternatives to the strategic decision of Lenovo were limited. The company had experience in manufacturing circuit boards and other components, as well as in trading and distribution. This allowed it to focus on developing products under its brand and selling them using previous knowledge. Thus, the primary question was what product should Lenovo focus on in its strategic planning. The choice to avoid the high-risk alternative described in this paragraph proves to be successful over the years.

Conclusion

Overall, the described case depicts Lenovo and the strategic challenges that the organisation faced upon its establishment and development. The issues that Lenovo encountered during its strategy formation are operations in the emerging economy, lack of experience in the for-profit market and the importance of governmental support in China. The company could either choose to develop high-end computer products or focus on market-oriented solutions by reducing costs. The strategic decision to select the second option helped Lenovo gain commercial success worldwide.

Works Cited

Ellet, William. The Case Study Handbook: How to Read, Discuss, and Write Persuasively about Cases. Harvard Business School Press, 2007.

Hsu, Sarah. “Why ‘Strong Government’ Is Expected to Be Key to China’s Economy in 2018.” Forbes. 2018. Web.

Laczkowski, Kevin, et al. “Seeing Your Way to Better Strategy.” McKinsey. Web.

Shu, Ei. “Emergent Strategy in an Entrepreneurial Firm: The Case of Lenovo in Its Formative Years.” International Journal of Emerging Markets, vol. 12, no. 5, pp. 625-636.

Intel has already dominated the market for chips. Notebooks are replacing larger laptops except where a large screen is crucial, and replacing desktops even more swiftly, as noted in Table 1, below. Lenovo’s new Thinkpad’s X1 Carbon has cool texture, durable cutting edge materials, and comfortable corner design, as well as fine performance. It is very pricey, however, in an industry headed for a kind of maturity, where computing power is evolving towards becoming a commodity, and this presents a challenge and an oppo1rtunity in marketing it. (Hazarika)

Marketing Plan Objectives

The marketing plan objectives for this product are difficult to quantify because market data is not fully available to the public. The data that is available often mixes different product lines, as is visible in Table 2, below. Lenovo has, according to Bloomberg, garnered 19.4% of the 2014 personal computer market, representing just under a 1% increase from the prior year. However, data on ThinkPads, specifically, is harder to acquire (Lococo). Mr. Yuanqing Yang, the Lenovo CEO, was quoted as saying that 100 million units of the ThinkPad were shipped in 2014 (Robinson), without specifying models.

However, the Gartner firm reported that PC sales grew 1% in 2014 (Gartner), supporting a 1% growth goal for any individual Lenovo product line. Another way to look at sales goals for this pricey and luxurious product is that it will appeal to what has been termed the “one percent”¹. This marketing plan thus seeks a one percent annual growth in sales. This would translate into 1% of the ThinkPads that Lenovo sells, or at least.01 x 100 million, which equals one million units.

Table 1: Sales of Different Types of Personal Computing Equipment.

Table 2: Worldwide Device Shipments by Segment (Thousands of Units).

To achieve this objective, even taking a skim approach rather than a big bang penetration approach, will require substantial investment. Marketing investments of anywhere up to 15% of the sales value of the one million units could be appropriate (Mckee). The value of this level of sales, at approximately 1000$/unit, would be one billion dollars and equate to a marketing budget of 150,000,000 dollars. This would be spent on product placement, enhanced tech support, and specialized salesforce training, as noted below.

Target Market

The ideal target market is the business customer, whether corporate or small business owner. Other targets are people with substantial resources and the need for the ultimate in mobility. This underserved need for mobility may arise because of travel, or being ‘in the field.’ Competitors are as strong/stronger in battery life, although Lenovo is innovating in materials. While this is a new product, ultrathins are a known product, so the stage of the lifecycle is perhaps more like a mature product.

Product

This product meets key under-served needs of intensive users on the road, in the field, or in the air, requiring extreme portability, including lightweight, thin profile, comfortable corner design, decent battery life, quick charging, and built-in Wi-Fi access (Hazarika). A variety of brands are trying to compete intensely on all these same characteristics. These customers demand/expect more in reliability and service. To differentiate this product from competitors, who are shaving their costs brutally on most models, Lenovo must provide superlatively swift and responsive support. Phone support staff with superior language skills and intense customer orientation and on-site “nerd squad” office visits for a modest fee would fit with Intel’s previous pattern of some vertical integration. The package could also include a backup battery to ensure continued operation under extreme circumstances.

Price

Computing power is, in general, becoming practically a commodity, and increasingly affordable, with other brands competing intensely on price. The original price of over 1000 USD placed it well beyond the reach of most students, and casual users, but within reach of employer-funded purchasers (Hazarika). At this price, attractively priced owners’ insurance should be offered with a purchase package to enhance perceived product value.

Promotion

Despite its distinctive appearance, the Lenovo X1 Carbon Thinkpad faces a plethora of similar close items competing intensely on looks and performance. Promotion by other brands is also intense. The X1’s promotion must distinguish it, and justify its high price. It also must reach high-end customers who can afford it.

The ideal promotion is product placement in entertainment vehicles featuring corporate, creative, or political successes². Additionally, sample units could be distributed to highly visible, successful people (doctors, celebrities), with a follow-up taping of their (hopefully positive) impressions for website posting.³. The company can also link the product to success by providing sample units to salespeople for upscale products like luxury cars, jewelry, and yachts, and high-end real estate.

Distribution

The best distribution channels for high-end items are places attracting high-end customers. Additionally, this computer’s selling points – weight, hand feel, and speed – must be experienced personally, implying real rather than virtual distribution channels. Specialty outlets like MicroCenter are ideal, but Staples is widespread, and their store and inside sales staff can be prepped with information before roll-out.

Conclusion

Lenovo has a product priced for high-end customers. Their marketing strategy must differentiate the model and position it as a premium item worth the extra cost for what has almost become a commodity. Premium support is one stratagem, as is insurance and extra batteries. They must market it to the people who need the premium features and can afford to pay for them. They can do this by making the model visible as an accessory of the successful or those who service the highly successful

Works Cited

Gartner. “Gartner Says Worldwide PC Shipments Grew 1 Percent in Fourth Quarter of 2014.” Gartner. Web.

Hazarika, Pallab Jyotee. “Pallab Jyotee Hazarika.” 2012. Notebook. Web.

Lococo, Edmond. “Lenovo Surges After Profit Beats Estimates on Smartphones.” 2015. Bloomberg Business News. Web.

Lundgren, Ingrid. “Gartner: Device Shipments Break 2.4B Units In 2014, Tablets To Overtake PC Sales In 2015.” 2014. TechCrunch. Web.

Mckee, Steve. “What Should You Spend on Advertising?” 2009. BusinessWeek.com. Web.

Robinson, Daniel. “CES 2015: Lenovo unveils ThinkPad X1 Carbon with Intel 5th-generation Core chips.” 2015. V3.co.uk. Web.

Trefis Team. “What’s Impacting Intel’s Notebook Processor Market Share?” 2013. Forbes. Web.

Footnotes

1. This is a reference, used by social justice activists over the last several years, to describe the more financially successful among the population.
2. The dream placement would be as James Bond’s personal computer – not the villain – but the hero.
3. Any video of beloved celebrities migrates to YouTube immediately, constituting free advertising.