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    © All Rights Reserved
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    Download as pdf
    46 views15 pages

    Lenovo IBM Merger Case-Study

    Uploaded by

    Harry H Gaiya
    Case-study

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    of 15
    Woman MAT On aL 2 iN un) , \a . vend Oddeu, &H. (eds) oie) (Steed we STatL. G., Meapeatee S.C bent Nosedge R3si-3as i Rew REA 8 AT OAL, ead 6 MBNAG EMENT ESouhLe Kathrin Késter and Giinter K. Stahl LENOVO-IBM: BRIDGING CULTURES, LANGUAGES, AND TIME ZONES SS (A) AN AUDACIOUS DEAL “Cultural Integration Is stil one of the biggest challenges .... We face the combined effect of different corporate cultures and the difference between the cultures of the East and the West.” Orr and Xing, 20072 0 N TUESDAY, DECEMBER 20, 2005, the public learned of the departure of Steve Ward, the CEO of Lenovo, He had lasted just elght months in the position before he was replaced by William Amelio, a former Dell executive? The move came as China’s Lenovo, despite its difficult start, seemed poised to become the world’s leading PC maker, Just 12 months prior, on December 8, 2004, Yang Yuanging, who was then Lenova’s CEO, announced his intention to purchase IBM’s PC division for US$1.75 billion—an unprecedented move for a company based in an emerging market (for a ‘timeline, of the deal, see Appendix A1). The radical deal would transform Lenovo from a company that sold exclusively in China into a major global player. Further= ‘more, IBM’s PC diviston accounted for three times the sales that Lenovo earned, so the announcement seemed less like a merger and more like, David was trying to swallow Goliath, THE LONG MARCH FROM LEGEND TO LENOVO Prior to 2004, Lenovo had been known as Legend, a company established by Llu ‘Chuanzhi, a graduate of the Xi'an Military Communications Englneering Gollege. in 1984, he and a few colleagues spun off Legend from the state-owned Chinese Accemy of Sciences, which provided seed money of US$25,000 that the young entrepreneurs wuts mr ste viny vay 1OrwarO, the Legend brand thus developed an adeLon Trelat allowed Chinese applications to run on English-language operating system, Ciuatled China into the PC age. For this Innovation, Legend receved one ot China's highest honors, a National Science Technology Progress Award, In contrast with ts main competitor, Great Wall, Legend was nat well connected {0 a brotected by government authorites, For example, the company was refused {eense to manufacture in China. But with innovation as its watchword, Legend enma Up with the idea of entering Into a joint venture in Hong Kong, in which eapacity It Would also build motherboards and PCs and thereby outmanewver its better Gonnected Chinese rivals, It was not until 1990 that Liu Chuanzhi could realize his dream to bulld PCs in his home country, though, Jn 1994, Legend went public to ralse capital in Hong Kong and thus be able to Compete with foreign computer manufacturers, whose products had been floding the Chinese markets since the beginning of the 2990s, Before its competitors, Legend Introduced a Pentium PC in Ghina; this fstsmover advantage contributed greatly to its status as the leading PC maker on the Chinese market, Zeieuoh Legend dversifed into afew non-core buslnesses, such as IT service, the PC business remained the contr of ts operates, During the mid-1990s, a young inanager, Yang Yuanaing, stood out for his workin this dvison. An unusually bright Stalnger with a strong desire for clarity aid precision, Yang had been hired straight ut of school and, like many of the company’s high flyers, had been promoted at a ery young age. A forceful personality and firm believer in discipline and centralized decision-making, the young Yang Yuanaing prompted descriptions such ac acutely intelligent, tough, and decisive? as well as aulgcratt In his leadership and abrasive Yet Yang also proved a visionary, with a sharp eye for promising innovations an new business opportunities. In retrospect, observers noted that his arival at the company was a true turning polnt in Legene'’s history Append A2 provides a dee. cription of Yang Yuanging).. With Uy, Yang shared the conviction that to achieve ambitious goals, Legend needed to attract China's best and brightest and then Imbue them with the Kesend spirit, Newcomers had to “ft the mold” and the company went to great lengths to instill the right mindset, values, and work ethic. Legend's vice president Ou Jianhua described the desired corporate culture, as Well as required changes in management practices and individual behavior, using the ™1-2-3-4-5 formula: 7+ Adopt one common culture and vision that all Legend employees and managers share, 2 Require dual altitudes from employees. That ls, Legond employees were expected {o {reat customers with the utmost respect and care, in tine with the motto, “the customer is the emperor," and go the extra mile to meet customers’ need, Legend's definlilon of “customers” included internal customers, suppliers, sales, and distributors, so employees also were waved not to offend or expott LENOVO-IBm 353 these members of the extended Legend family, The second employe characteristic. {fe company prlortized was frugally. Every employee needed to be aware thee Legend was a prof maximizing organization, withthe motto "Saye ‘money, save energy, save time,” Goncentrat on three fundamental leadership tasks: bulld the management team,

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