Lenovo - Case Study Example

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In the year 2011, Lenovo has overtaken industry leaders such as Dell by becoming the world’s second largest personal computer manufacturer and by October of this year, it has effectively toppled Hewlett-Packard as the number one PC vendor (Gupta and Yee 2012). …
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Download file to see previous pages Lenovo has declared its might in its website, detailing the expanse of its operations. To quote: Lenovo is a US$21 billion personal technology company... We have more than 26,000 employees in more than 60 countries serving customers in more than 160 countries… We are defining a new way of doing things as a next generation global company (Lenovo 2012). It is interesting, hence, to know that Lenovo has had humble beginnings and, more importantly, it is a technology company that emerged from China, a developing economy and outside of the Silicon Valley. The company started modestly as a spinoff of China’s Institute of Computing Technology, a research institute of the Chinese Academy of Sciences (Tsui, Bian and Cheng, 2006, p.303). From there on, it began supplying parts and building computers for technology companies such as IBM. Lenovo, which operated under the name of Legend Holdings during its early years, gradually became a dominant PC maker in China. By 2003, it began its internationalization ambition. According to its CEO, Chuanzi Liu, “With a 30 percent share of the Chinese PC market, Lenovo realized that its opportunity for further domestic expansion was limited,” and that “Since the global PC market was estimated at around $200 billion, it could pose huge potential for us (p.574).” ...
In order to tackle market globalization, there are many barriers involved and the type of operations management required is radically different from its own. The organization has effectively identified these problems themselves: 1) the organization did not have a brand name that could invoke worldwide recognition; 2) Lenovo did not have a strong presence in the world market; and, 3) there is a lack of human resources to effectively run and manage a truly global company (Liu, p.574). In internationalization and, much more, in the case of being a multinational company, the operations such as those involving organizational culture and human resources are very international in scope and must adhere with international standards and norms while ensuring a high degree of integration and responsiveness at the same time. Lenovo was able to address the problem and its complexities in a bold and ambitious move. In 2005, it acquired IBM’s PC business. This strategy addressed several critical challenges that it had identified previously. It boosted the organization’s global brand by “piggybacking” on IBM’s reputation and the company’s products such as the ThinkPad brand (see Lenovo’s performance during this period in Fig. 1). This enabled the company to penetrate lucrative markets such as the United States, as well as additional market segments that IBM and its acquisitions were particularly known for such as large enterprise, midmarket and, most particularly, laptop computers (Gupta, Wakayama and Rangan, 2012, p. 195). The OM involved is aligned with the “springboarding” approach that involves the acquisition of critical resources at home and abroad in order to penetrate markets, compete with rivals and ...Download file to see next pagesRead More
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