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    Valeria Mihaliov
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    Lenovo acquired IBM's personal computer business in 2005 for $1.75 billion. This allowed IBM to focus on more profitable consulting services and middleware solutions, while shedding an unprofitable operation with many competitors. It also helped Lenovo increase its market share, especially in Asia. Prior to the acquisition, Lenovo found success in China by introducing products that translated operating systems into Chinese and distributed PCs, gaining a large share of the profit. This boosted Lenovo's PC distribution business and allowed it to launch its own personal computer brand in China.

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    Lenovo acquired IBM's personal computer business in 2005 for $1.75 billion. This allowed IBM to focus on more profitable consulting services and middleware solutions, while shedding an unprofitable operation with many competitors. It also helped Lenovo increase its market share, especially in Asia. Prior to the acquisition, Lenovo found success in China by introducing products that translated operating systems into Chinese and distributed PCs, gaining a large share of the profit. This boosted Lenovo's PC distribution business and allowed it to launch its own personal computer brand in China.

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    48 views1 page

    Lenovo Case Study

    Uploaded by

    Valeria Mihaliov
    Lenovo acquired IBM's personal computer business in 2005 for $1.75 billion. This allowed IBM to focus on more profitable consulting services and middleware solutions, while shedding an unprofitable operation with many competitors. It also helped Lenovo increase its market share, especially in Asia. Prior to the acquisition, Lenovo found success in China by introducing products that translated operating systems into Chinese and distributed PCs, gaining a large share of the profit. This boosted Lenovo's PC distribution business and allowed it to launch its own personal computer brand in China.

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    International Marketing

    Case: Lenovo

    1. Why did IBM want to sell its PC business? Why did IBM sell to Lenovo?
    One of the reasons why IBM wanted to sell its PC business was the fact that the deal was
    an opportunity to shed an unprofitable operation (seeing the number of competitors in the
    market) and concentrate on consulting services and middleware solutions. Selling its business
    to Lenovo would help them increase market share, especially in Asia. IBM concentrated now
    on services and consulting groups. In addition, they would continue to provide global support
    for the computers for five years.

    2. What explain Lenovo’s success prior to the acquisition?


    In 1987, Lenovo introduced its first original product, the Legend Chinese-character card,
    which translated English language operating systems into Chinese. It included a popular
    ‘association’ feature that allowed users to form common Chinese phrases by typing in just a
    few Chinese characters. Legend card with the imported PCs it distributed gained 46% of
    profit. Its popularity gave a boost to the PC distribution business and the firm won several
    new contracts. Legend launched its own-brand PC into the Chinese market in 1990. By 1995,
    Legend was the world’s fifth largest manufacturer of motherboards.

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