Question

CASE 12 LENOVO After purchasing IBM's personal computer business in 2005 the relatively small computer maker, Lenovo, seemed like an unlikely candidate to challenge the bigger companies in the industry like H-P and Dell. By 2013 the previously unknown Chinese computer company became the largest PC manufacturer in the world and the company feels as if it is only getting started. Lenovo may become China's first truly global brand The Lenovo Group was founded in Beijing in 1984 by eleven Chinese scientists in a small one-story building. The name Lenovo comes from its previous name Legend (Le), and the Latin word for new (novo). By 1994 the company was trading on the Hong Kong Stock Exchange, and by 1998 it had sold it:s one-millionth personal computer. At the time of the purchase of IBM's PC unit Lenovo already employed over 19,000 workers and was China's largest PC manufacturer. Lenovo also produced servers, handheld computers, mobile headsets, and imaging equipment. The company sought to be a leader in what it call:s the "3C Era meaning computers, communications, and consumer electronics. While a company of size, the Lenovo brand was essentially unheard of outside of China. From the start Lenovo sought to be an innovator in personal computers. While Legend had not been strong in research and development, the new Lenovo wanted to become a leader in new product development. The company at the time described its values by the following pronouncement: We reject the status quo We reject mediocrity We choose not to follow We choose to INNOVATE

1. How do you explain the success of Lenovo? What lessons can be learned?
2. How can a Chinese company create an image of quality when many Chinese products are perceived as lacking quality?
3. In your opinion can Lenovo beat Apple through lower margins and prices and still maintain a broad product line? What would be necessary to make this happen?

Answer 1

The Answer to Q 1. The success of Lenovo and lessons:

The success of Lenovo has explained in the value system it possesses. It challenges the status quo, mediocrity, and chooses not to follow, but innovate. Innovative and entrepreneurial spirit are the roots for success. Lenovo focused on the dynamics of different countries, broad product line with innovation, low margin and targeting the market share.

Lessons that can be learned:

To capture the market such as electronics, innovation is the key. The products must be innovative and offered at affordable prices. The dynamics of different countries must be understood and design the strategies accordingly, such as less developed IT infrastructure in less developed countries. Last but not least, follow the value system thoroughly.

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The Answer to Q 2. How a Chinese company can create an image of quality

A Chinese company can create an image of quality by consistently investing in research and development for consistent quality product production. Lenovo has maintained the quality standards by continuous research and development through hiring the scientists at the Beijing facility.

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The Answer to Q 3. Beating Apple

As per my opinion, Lenovo cannot beat Apple through lower margin and prices because the target market of Apple and Lenovo are totally different. Apple users do not look at the affordable product. Moreover, Apple users are image conscious, who generally buy the products to maintain their social status. Lenovo can beat other companies by introducing innovative products. To beat Apple, Lenovo should start producing a different product range with premium prices and attractive products.