Company Profile of Lenovo Group - Case Study Example

Company Profile of Lenovo Group Introduction Profiling a company requires an examination of all the business, management, organisation and cultural aspects that the company in question is associated with or identified by. This brief essay seeks to Profile the Personal Computer multinational, Lenovo Group, the third largest PC manufacturer and vendor in the globe1. The company as shall be detailed hereunder, begun as a small Chinese investment with marginal capital and has today grown into a PC supplier with a global footprint2. It is without a doubt among the most influential, successful, trendsetting and futuristic companies in business today, the reason why it has been handpicked for this evaluative essay. The essay first details the impressive history of the company before detailing Lenovo’s company structure and organisation, its main products, manufacturing process and subsidiary products. The essay will also evaluate Lenovo’s are of operation and its main trading links as well as its financial structure. To conclude, the essay will evaluate the training provisions in Lenovo’s organisation policies and the company’s future prospects. History of the Company The walk to the global market has been long, ambitious and impressively successful for Lenovo Group. Its track record spells many firsts for a Chinese company and since recently, for a PC company in the world3. Lenovo was established in China in 1984 by a group of 11 scientists under the name, New Technology Developer Inc4. The initial capital outlay was given by the Chinese Academy of Sciences amounting to a mere US$ 25,000 and the company started operations under the founding chair Liu Chuanzhi. By 1987, they had rolled out a successful Chinese-character card, which received the highest Chinese National Science-Technology Progress Award a year later5. That same year (1988), the company launched its regional offices in Hong Kong changing its name to legend6. In 1990, the company launched its first ever PC changing its role from a certified importing agents of computer products to a PC manufacturer and retailer. Their branded computers and computer products were immediately ratified by the China Torch Program marking the beginning of PC market dominance. Two years later, they launched another innovative home PC concept (Legend 1 + 1) into the Chinese marketplace followed by the first Pentium era PC in China. By 1994, the company was already listed on Hong Kong Stock Exchange for stock trading. Product success and increasing innovation saw the company launch its first branded Legend server helping Legend attain the Chinese market share leader position in 1996 for the first among many times to come. A year later, they signed an Intellectual Property deal with Microsoft, being the single most valuable deal that had ever been made in the Oriental land. This was followed closely by the launch of their first multi-function laser-type printer. 1998 saw Legend sell its millionth Legend branded PC during which celebrations the launched the first Legend retail Shop. It only took a year for the retailing business to catch on, making Legend the ranking PC vendor in all of the Asia-Pacific region and first among Top 100 Chinese national Electronic Enterprises. This success helped they launch their pioneering Internet PC, touted for its "one-touch-to-the-net" capability by millions of Chinese internet users. At the close of the century, Legend was already ranked by Forbes as among the top 10, world's best managed PC manufacturers and venders. By 2001, Legend was able to spins off the subsidiary, Digital China Co. as a separately listed Hong Kong Stock Exchange enterprise7. A new era was beckoning and Legend thus rebranded to Lenovo as part of its preparations to expand into the world market scene8. They begun their global entry with a successful Olympic worldwide partnership in 2004, the first ever Chinese company and the first ever computer technology equipment enterprise to attain IOC partnership. As the ultimate ace card to enter the global market in 2005, Lenovo acquired the American computer giant, IBM PC’s division for US $1.2 Billion thus becoming the third-largest global PC leader and the best in desktop and notebook computers, a position hitherto occupied by IBM’s ThinkPad brand. Since then Lenovo has successfully launched its laptop and notebook brand, IdeaPad to sell alongside ThinkPad products and has continued to concur the world market niche by niche. Company Structure and Organization The new Lenovo Group has adopted a matrix structure of management. It has two operational divisions Lenovo International and Lenovo China. Lenovo International has eight active departments, each run by a senior vice president. The company has an employee base of over 19, 000 employees globally. In Structure, the company is headed by a chairman of the board and a board of directors under whom the President and Chief Executive Officer works. Under the President, the company has the Senior Vice President and Chief Operating Officer. There are eight more Senior Vice Presidents, each heading the eight distinct departments of the Lenovo Group. These are General Counsel (Strategic Planning), Global Services, Human Resources, Mature Markets, Idea Product Group, Think Product Group, Corporate Information (PR), Emerging Markets, Global Supply Chains, Financial Officer and technological Officer. The eight Senior Vice Presidents are served by a network of managers who serve specific areas of the department. In Global Supplies Chain Department, the Senior Vice President is served by five regional Vice Presidents in charge of India, EMEA (Europe, Middle East and Africa), North Americas and Asian Pacific (Korea, Australia, Japan, Hong Kong, Taiwan, Southeast Asia and New Zealand) markets. Main Products Lenovo is a product oriented company who manufacture their own PC products, retails them and services them for themselves. Their product range is in branded desk top PC’s, notebooks and laptops. Most of the desktops are sold in China under the Lenovo brand while its global supplies mainly comprise of ThinkPad series and the IdeaPad series, both notebook and laptop PC’s. Some of the products are designed for internet use and others prepackaged with Microsoft Window Operating System with enhanced features. Product Manufacturing Process Prior to the 2005 merger with IBM, all products sold under Lenovo name were manufactured and assembled in Beijing, China where their main manufacturing plants are. Lenovo does not contract parts suppliers like many PC vending companies. Most of their products are made in their productions lines. After the merger however, Lenovo has acquired some manufacturing plants in the US and Asian Pacific regions that were formerly owned by IBM9. Currently, the products are designed in Lenovo’s research centers located in Japan (Yamato), China (Beijing) and The US (Raleigh, North Carolina). Areas of Operation and Main Trading Links As elaborated in the company structure section, Lenovo’s operations are mainly structured along the areas of operations. The company has two divisions, Lenovo International and Lenovo China. Lenovo International based in North Carolina is in charge of global sales and strategic management also serving as Lenovo Headquarters. Lenovo China based in Beijing is in charge of operations within China for Lenovo and all its local subsidiaries and is under a vice president. For Lenovo International, they have five customer sales and service regions all under the global Sales Senior Vice President. This includes India, EMEA (Europe, Middle East and Africa), North Americas and Asian Pacific (Korea, Australia, Japan, Hong Kong, Taiwan, Southeast Asia and New Zealand). Financial Structure Lenovo made a net profit of US $120 Million in 2005 but a loss of US $90 Million immediately after the 2005 IBM merger10. Since then however, the company has turned around its fortunes and increased its turnover11. It registered a growth of the Notebook sales (18%) and desktop sales (15%) in 2008 leading to turnover of US $ 17, 842 million up from US $ 6, 309 million registered in 200712. In 2008, there was a US $ 179 million divided offer, with shareholders earning 12.76 HK cents per share as compared to 4.37 HK cents in 200713. Training Provision Lenovo prides itself as an equal opportunity employer intent on attracting high quality employees. The company policy mandates a two month in-house training for all professionals hired into the company with an option of seeking interpersonal development training in any of the 37 available programs. All in-house training opportunities are available freely and with allowances for study leave besides the normal pay rate. The maximal amount of study leave offered is a year, but an employee can apply for extensions in special cases. There are also some compulsory training programs for technical staff, sales and marketing staff and for those in the management positions, which must be attended by all members of the designated sectors when joining and from time to time as arranged by the company. Future of the Company Lenovo’s strategic plans are biased towards establishing a global presence especially in the area of laptops and notepads products. The company is intent on attaining a global brand that is not seen as a mere Chinese brand (sometimes judged as inferior)14. This will entail confirming to former IBM customers that they are capable of maintaining and even improving the market leading, innovative and progressive brands that IBM had built. More so, as the third leading PC vendor in the world, Lenovo bears the challenge of establishing global supply and customer service centers in all the regions their operations are targeted. In the next five years, Lenovo will be compounded by the challenge to build its distribution infrastructure, maintain high standards of product quality and amplify its repute as an innovative PC provider for the globe. Bibliography Lenovo, 2010, Company History, Accessed on 27 April 2010, From . Lenovo, 2006, Lenovo Group Limited 2005/06 3Q Results. Accessed on 27 April 2010, From Kynge, J 2007, China Shakes the World: A Titan's Rise and Troubled Future -- and the Challenge for America, Mariner Books, Beijing, pp. 43 – 52. Liu, Chuan Zhi, 2007, Lenovo: an example of globalization of Chinese enterprises, Journal of International Business Studies, Vol. 38, pp. 573–577. Rifkin, G and Smith, J 2006, Lenovo makes break with the IBM brand, New York Times, April 10, Accessed on 27 April 2010. From < http://www.nytimes.com/2006/04/10/technology/10iht-lenovo.html?_r=1>. Zhijun, Ling 2006, The Lenovo Affair: The Growth of China's Computer Giant and Its Takeover of IBM-PC, Wiley & Sons, New York, pp. 112 – 115 Read More