Lenovo seems to be “stuck in the middle”? What does it need to be a leader both in China and internationally? After acquiring IBM, Lenovo achieved great benefits and became a well-known private computer brand in the global market, expecially in China. However, this company had to face with “stuck in the middle” when integrating IBM Corporation’s PC division. The differences between two national cultures were the reason why that Lenovo failed in implementing strategies for Chinese market into US market.
While the sales of private computers in greater China region in 2008 increased 12 percent in comparison to 2007, the sales in United States reported a 4-percent-decrease at the same period. This negative result led to doubts about the wisdom of Lenovo’s acquisition. In addition, after market was opened to competition, this third- largest global personal computer manufacturer felt heat from foreign firms and the government started to purchase computers from Dell and other foreign competitors. These changes caused to certain disadvantages for Lenovo.
While small vendors served the low-end market with generic competitors built from components of different brand, big brands such as Dell and HP served the big corporations. All of them are the reason that left Lenovo getting stuck in the middle. In order to escape from this bad situation, Lenovo need to establish a global brand, leading-edge technology and highly efficient operations. Through the acquisition of IBM’s PC division, this need could be met by leveraging the two company’s core competencies.
Lenovo should utilize IBM’s global sales capability and international management to achieve more product differentiation and brand building to make Lenovo of China become Lenovo of the world as the chairman Yang Yan-qing stated. Question 3: On page 4 ; 5 it list potential problems resulting from the different cultures of the companies. Address each one of the problems. Are they solvable? How ? Potential problems resulting from different cultures of the companies are that target customer, management style, Human resource Management and culture and clash. Firstly, target customer has different between Lenovo and IBM.
Lenovo targets in low – end market and medium – size enterprises whereas IMM targets in higher market. I see that IMB focus on large corporate. Therefore target customer between Lenovo and IBM. To solving this problem, company creates two products which are suitable for both of them. It is ThinkPad product in large corporations. Secondly, management style between Lenovo and IBM. As you know, Lenovo manage top- down management style while IBM is flexibility.
The way of management IBM use online compute to show their opinions such as debating, rewarding as well as evaluating. I think that this is a serious problem in different management style of two companies. This problem can solve that it is necessary so that Lenove adapt to IBM to have suitable manage style in order to increase profit and get a foothold in the market. Furthermore, the potential problem of Lenovo is human resource management. The different about human resource management policies lead to management policy. Lenovo manages strictly and tightly, so it is limited by creation. In contract, IBM encourages creative.
It means that it focus on empowerment and self – discipline. It is a problem between Lenovo and IBM when Lenovo uses policies that it’s strike as militaristic. To solve this potential problem, Renovo need to learn IBM which motivate the creation of each individual. I think that IBM’s management is efficient management when they believe that self – discipline will bring many beneficial for company. Therefore Lenovo’s company does not manage strictly in order to the staffs can freedom to create. Finally, the potential problem of the different about culture between Lenovo and IBM will are barrier and face – to – face with some problems.
This problem at here is workforce combination. As you know, Lenovo is domestic company in China. Therefore most people do not speak English and international capacity whereas IBM is a global company and is known by many people. Employees in IBM can communicate by English language. From that, it creates the different in workforce combination and then it has different culture between 2 companies. Therefore, Lenovo should moved from Beijing to purchase improve and understand about culture as well as encourage English language that it becomes main language.
From that company can get a foothold in the market. Question 4: The Global Brand Awareness section it stated that Lenovo had a US branding problem so they tried to brand themselves with various sports entities. What do you think of their efforts? Is sport a good promotional partner for a computer company? What better choices could they have made? Although Lenovo Computer Company is the largest PC manufacturer in China, but they cannot expand their market to international markets. Therefore, the acquisition of IBM’s personal computer division in 2005 is really risky.
The Global Brand Awareness section it stated that Lenovo had a US branding problem so they tried to brand themselves with various sports entities. In my opinion, their efforts brought high effects in the broadcast of brand by media. Lenovo has made significant investment, particularly in advertising and promotion their expansion strategy and internationalization. They became a major sponsor for the 2006 Winter Olympics in Turin and 2008 Summer Olympics in Beijing. The top athletes in the world converged here, they played, exchanged and inspired the world; so, they helped to transmit Lenovo’s products to the billions consumers.
Mr. Deepak Advani, vice president and marketing manager of Lenovo said that: “The Olympics is the ideal way to demonstrate the power of technology, service and innovation of Lenovo. As a big business in China, we are looking for opportunities in the big like Olympics to increase the perception of customers in the rest of the world about our new products. ” They provided modern electronic equipments and machines for the Olympics management, athletes, coaches, referees, and journalists, such as: televisions, screens, serves, computers, laptops and printers, etc.
As a result, various sport entities created opportunities to Lenovo Company can introduce their goods to customers around the world. Besides, they also asserted their position as a global brand, quality and reputation of their products. Sport is really a good promotional partner for a computer company. Moreover, they have other better choices to promote their brand. Because it remained to be seen whether the athletic and sporting-event approach was appropriate for a company that supplied business machines to corporate clients, they opened 20,000 dedicated shops in China’s largest cities to introduce goods.