S.NO CONTENT PAGE.

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1 Abstract 2

2 Introduction 2

3 About Lenovo 3

4 SWOT analysis 4

5 Cultural influence on organisation behaviour 6

6 Globalization strategy 7

7 Ruling China market 10

8 Protect and attack strategy 10

9 Global raise of Lenovo 12

10 Global market strategy 14

11 Marketing strategy 24

12 Result 27

13 Challenges 28

14 From PC’s to PC+ 28

15 conclusion 28

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ABSTRACT

This case discusses Beijing-based multinational technology giant, Lenovo Group Limited’s
(Lenovo), success story in China and its emergence as the global brand from China. In early
2013, Lenovo emerged as the clear leader in the global Personal Computer (PC) market.

Industry experts opined that the company’s success was attributable to several strategies it
had adopted in China – aggressive pricing in its home market China and its acquisition
strategy in mature markets such as Germany and Japan, made it a market leader in the global
PC market.

And also describes the various steps taken by LENOVO, the leading pc manufacturing in
China, in its efforts to go global. The steps include changing its corporate name from legend
to Lenovo, sponsoring the 2008 Olympic games and most importantly, acquiring IBM’s PC
unit. Also the case examines the need for Lenovo to globalization and critical analysis the
efficacy of the above steps in the company’s globalization plans. It als highlights the
challenges faced by Lenovo in its path towards globalization.

INTRODUCTION

Beijing-based multinational technology giant, Lenovo Group Limited (Lenovo), recorded a

market share of 16.7 percent in the global personal computer (PC) market in the first quarter
(Q1) ended June 30, 2013, emerging as the clear leader in the market, according to both
International Data Corporation (IDC) and Gartner Inc. (Gartner). While IDC said that Lenovo
had recorded a growth of 15 percent from the Q1 of 2012, Gartner put the growth from Q1 of
2012 at 14.9 percent. Experts said this was the first time that both IDC and Gartner had given
the top spot to Lenovo.

Founded in 1984 as Legend Holdings Limited, Lenovo sold computer products of branded
PC makers such as Dell Inc. (Dell), Hewlett-Packard (HP), and Compaq Computer
Corporation in its initial years.

Sensing the potential in the lucrative Chinese PC market, the company started selling its own
brand of desktop PCs in 1990 and emerged as the leader in the Chinese PC market in 1996. In
2005, the company acquired the PC division of US-based multinational technology giant,
International Business Machine (IBM). This gave the Lenovo brand global recognition in
addition to making it the third largest PC maker in the world by volume behind HP and Dell.

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For the financial year (FY) ended March 31, 2013, Lenovo recorded sales of US$ 34 billion,
a Year on Year (YoY) increase of 15 percent.

In December 2004, the China-based Lenovo Group (Lenovo) announced that it had acquired
the personal computer (PC) division of the US-based IT major IBM.

Industry analysts termed this as a major milestone for Lenovo in its efforts to globalize its
operations. It was also perceived as an important step towards achieving the company's goal
of becoming a Fortune 500 company by 2010. According to Liu Chuanzhi (Chuanzhi), the
Chairman of the Group, "The purchase will make Lenovo Group the third largest PC maker
worldwide with an annual revenue exceeding 10 billion US dollars.”

Lenovo, formerly known as Legend, is Asia's leading and world's ninth largest PC
manufacturer (Refer Exhibit I for top ten PC companies in the world). By the end of 2003,
Lenovo had captured a 27 percent market share of the PC market in China.

In the fiscal 2003, Lenovo manufactured around 4.5 million PCs including laptops and
desktops. Lenovo has also diversified into other business areas including handheld devices
and IT.

About 51.5% of its revenues came from the corporate segment, 33.5% from the consumer
segment, 8.8% from handheld devices, 3.8% from contract manufacturing and 2.4% from IT
services (Refer Exhibit II for Lenovo's business segments). For the fiscal year ended March
31, 2004, Lenovo reported a turnover of HK$ 23.2 billion and a net profit of HK$ 1.05
billion.

Lenovo started its business as a distributor of computer products for foreign companies
including IBM, AST and HP. In 1990, Lenovo manufactured its first PC and within a decade
it grew to become the leading PC manufacturer in China.

ABOUT LENOVO

The history of Lenovo dates back to 1984 when it was started as New Technology Developer
Inc., the predecessor of the Legend Group Ltd. (Legend) by Founder and Chairman, Liu
Chuanzhi (Chuanzhi) along with ten colleagues at the government-owned Computing
Institute of the Chinese Academy of Sciences (CAS) with US$ 25000 in cash.
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The company was started with the aim of commercializing the research and development
(R&D) activities conducted at CAS.

In 1985, as its first business deal, the company took over the responsibility of receiving,
checking, and maintaining IBM computers imported by CAS and training the staff of the
CAS.

The company invested its profits of US$ 146,583 it received from servicing the IBM
computers into the design, production, and marketing of its first product – the Chinese
character card – Han Card. The Chinese character card that translated English operating
software into Chinese characteristics was based on the original concept developed by the
Institute of Computer Technology (ICT) of CAS. At that time, foreign vendors could not
come out with such an operating system for PCs in China. The successful launch of the
Chinese card boosted Lenovo’s growth in the early 1990s.

SWOT Analysis of Lenovo

In order to propose and justify a forward strategy for Lenovo’s goods, we use the method of
SWOT (strength, weakness, opportunity and treat) to analysis the Lenovo in the follow:

Strengths in the SWOT Analysis of Lenovo :

One of the leading players in the PC market: Lenovo is one of the leading players in the
PC market globally and had a market share of about 20.7 percent in 2015 ahead of companies
like Dell (14.1%), HP (19.4%) etc.

Superior performance across product lines: Lenovo recorded growth in revenue in all

its product lines in the FY 2015. Lenovo improved its market share and revenue in PC,
mobile business group and data centre group. This indicates increased acceptance of the

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company’s products and improved brand image.

High exposure in China and other emerging markets: Lenovo’s high exposure in the

highly growing China market and presence in other emerging markets around the world has
helped the company witness high growth in the recent years. It also guarantees high growth
in the future.

Positive outlook in PC+ markets: PC+ markets are extensions of the PC market which
includes smartphones, Smart TVs etc. Lenovo has a strong presence in the in the PC+ which
is growing worldwide.

Weaknesses in the SWOT Analysis of Lenovo :

Product recalls affect brand image: Lenovo has recalled a number of products in the recent

years. For instance, recalling lithium-ion batteries in April 2015 globally. These batteries are
used to produce ThinkPad computers for Lenovo. Such recalls affect the brand image and
trust on the brand.

Slow market share growth: Due to an entrance of other companies and duplicity of

products, Lenovo hasn’t been able to expand its market share in smartphone and PC category
so much.

Opportunity in the SWOT Analysis of Lenovo :

Growing Smartphone market: Smartphone market is growing globally and is expected to

grow at a rapid pace in the medium term especially in the emerging markets. This gives
an opportunity for Lenovo to expand its revenues.

Cloud Computing: The global cloud computing market has shown great potential and is
expected to grow at a CAGR of 19.4% during 2014-2019 periods. Lenovo has also been
focusing on the growing opportunity in the cloud computing market and is set to be
benefitted by the growth of cloud computing in the future.

Strategic acquisitions: In the recent past, Lenovo has strategically acquired a number of

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companies to broaden its product portfolio and expand its reach. For instance, acquisition of
Motorola Mobility from Google in 2014. Such acquisitions help Lenovo to enhance its
customer base and revenue and Lenovo should look forward to it.

Threats in the SWOT Analysis of Lenovo :

Competition can affect market share: Lenovo faces intense competition from various
global companies such as HP, Dell, Samsung, Apple and Acer etc. in the PC and smartphone
market. Competitive pressure can affect Lenovo’s market share and also challenges Lenovo
to constantly innovate.

Declining PC market: The global PC market is declining with the increase in popularity in

mobile computing with smartphone and tablet devices. This could definitely impact the
company’s bottom-line as 66% of the company’s total revenue is from its PC division.

Decline ASPs: Average selling prices (ASPs) of smartphones are on a declining trend and

will continue to decline with cheaper cost of production and other cost reduction methods.
With declining ASP for the industry, Lenovo also comes under pricing pressures and
thus profitability gets affected.

CULTURE INFLUENCES ON ORGANISATIONAL BEHAVIOUR

ORGANIZATION

CULTURE

 ETHICS ORGANIZATIONAL
SOCIETAL CULTURE
 ATTITUDE
BEHAVIOUR
 CUSTOMS  ASSUMPTION
 LANGUAGE  EXPECTATION

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LENOVO’S ORGANIZATION STRUCTURE

 The 5 p’s
o “we plan before we pledge”
o “we perform as we promise”
o “we prioritize the company first”
o “We practice improving everyday”
o “We pioneer new ideas”

CULTURE OF LENOVO

Our culture defines us … it's our DNA. We call it the Lenovo Way and it's the values we
share and the business practices we deploy. It's how we address our day-to-day commitments.
The Lenovo Way is embodied in the statement: We do what we say and we own what we do.

This culture of Lenovo helped them to achieve their international goal by

 Creating an understanding for other culture

 Build trust with those culture
 Gain the knowledge and assets necessary
 Which helped them expand into foreign markets and move towards their goals.

GLOBALIZATION STRATEGIES

Lenovo believed that in order to become a global brand, it was not enough to just be
identified as a global firm. Establishing a presence in more developed and highly globalized
areas such as the US and Europe was essential for Lenovo’s overall strategy. During this
time, in 2002, the Chinese government announced its ‘go global’ policy. This policy
encouraged Chinese companies that had the capability and expertise to expand abroad.
Lenovo was quick to respond to this government initiative. However, the company soon
realized challenges to its global expansion: it did not have a brand name that was
recognizable worldwide, a strong presence in the world market, or the human talent to run
and manage a global company.

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Lenovo’s Globalization of Production Processes
Lenovo’s operational process has grown from mere global sourcing to the establishment of
manufacturing and distribution channels in various parts of the world through continued
research and development (Yang & Stoltenberg, 2014). The enactment of equitable
international trade policies and free trade fairs underpins the globalization of production
processes. Advancing communication and transportation innovations have made an
investment in foreign countries significantly efficient. Favored by these conditions, Lenovo
has established various facilities in overseas countries that serve as global production lines.
Yang and Stoltenberg (2014) reveal that the company has heavily invested in sending IT
manufacturing and business processes to countries where production costs are going down.
Currently, the cost of manufacturing in China is rising. The costs of hiring IT professionals
and funding operational processes have also increased gradually. As a result, the company
has established various production facilities in the United States where such costs are
plummeting.

Despite its centered marketing operations in India and manufacturing in China, the firm has
now plotted key areas that it plans to establish production facilities to ensure further
diversification of products. The running of networked global operations is usually
challenging, especially in the IT segment where rivalry is eminent. However, Lenovo’s broad
understanding of diverse cultures and economies has boosted its production and distribution
efficiency in numerous countries across the globe. According to Yang and Stoltenberg
(2014), diversity inclusion has played a primary role in the establishment of the firm’s
facilities overseas. Currently, it has a total of twelve executives who come from seven
different countries and a hundred senior executives from diverse parts of the globe. This
attitude has led to the assimilation of a blend of talents into its production activities. As a
result, Lenovo has fully transformed from being a copycat to a pacesetter whose hi-tech
products compete in the international market.

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Globalization of Market
The globalization of markets is one of the most identifiable aspects of business in the
21st century. Lenovo is among a few Chinese information technology firms that have broken
the barriers of trade to join the international market. Wang, Zhang, Wang, and Sheng (2016)
reveal that the company’s market position is driven by a blend of both high-end and middle
strategies. The rise of the company to the global position has been achieved through a number
of ways. At the outset, the company uses acquisition strategies to get into various
international markets (Wang et al., 2016). For instance, in 2005, Lenovo acquired the PC
segment of IBM. This acquisition enabled the company to gain access to new technology.
According to the company’s executives, the firm’s intention was not getting access to IBM’s
PC technology but seeking its international marketing tactics (Li, 2014). Lenovo’s CEO
believed that purchasing IBM’s PC and laptop division would pave way for gaining various
business skills that were vital for improving its global presence. In 2012, the firm also
purchased a top Brazilian manufacturer of PCs and mobile devices known as
DigibrasIndustria. In addition, Lenovo acquired Motorola, a US company that manufactures
smartphones (Li, 2014). This move was aimed at positioning the firm’s devices in affordable
market segments in tier-2 and tier-3 cities. The latest acquisition was the purchase of IBM’s
low-end server segment in China. Acquirement of the business divisions of other companies
has played an important role in the strengthening of Lenovo’s market in the global arena.

Besides acquisition, Lenovo adopts a dual-brand strategy that places its brand at the entry-to-
mid-level position in the market. Lenovo is geared towards achieving a quicker growth than
the market itself to maintain its position in the international IT business sphere. The company
aims at becoming one of the top-five IT companies that are spearheading the production of
PCs and smartphones (Wang et al., 2016). In the last decade, Lenovo focused on online
marketing tactics that improved its sales significantly. Indeed, approximately 60% of its
products are available for sale through its websites. However, the company plans to expand
its offline market by doubling its retail stores and service centers (Wang et al., 2016).
Currently, Lenovo has about 2000 ground-level stores and 100 service points. The company
has already maximized its importance in the Indian and Chinese markets in terms of sales
volume and revenue. Nonetheless, there is a plan to double its production to a whopping 10
million units by the end of 2017. The plan to increase production will underpin its sales
volume in overseas countries since it will export more PCs and smartphones (Wang et al.,
2016). Lastly, Lenovo adopts a franchise model that helps it to sell other products such as

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notebooks, tablets, laptops, and phones. This strategy has increased its global presence in the
international market.

Globalization of Institutions
The rise of Lenovo to the global arena is underpinned by various institutional frameworks
that govern its business operations overseas. The bilateral relationship between China and the
US has increased the chances of survival of Chinese operations in the American market.
Lenovo has allocated a considerable number of resources to invest in overseas countries
through foreign direct investment plans (Fagan, 2010). At the outset, the political
environment in the United States has favored the establishment of production facilities and
service centers in the country. This situation is witnessed in Lenovo’s acquisition of IBM
personal computer division, which received relatively mild political reactions (Fagan, 2010;
Wang et al., 2016). The US political environment for Chinese firms is anticipated to remain
vibrant in the near future. However, this state will be determined by the overall status of the
US economy (Wang et al., 2016). Based on this view, Lenovo has taken an advantage to enter
the US market fully owing to the state of the friendly business regulations that are prevailing.

In addition, Lenovo complies with the regulatory requirements of other countries. The
company has focused on improving its reputation of being a foreign investor by adhering to
various anti-bribery policies that prevail in countries such as the United States. Lenovo
understands the potential risks linked to overseas investments. As such, it has established a
long-term strategy to develop its market position in countries that are not politically sensitive
(Li, 2014). The company has also conducted a critical economic analysis in its foreign
markets to ensure its survival amidst rivals who offer similar products such as HP and Dell
brands.

RULING THE CHINA MARKET

In the 1990s, Lenovo was the first company to introduce the home computer concept in China
and grew into a national company cornering a market share of 27 percent in the domestic
market. Lenovo’s competency stood in its deep understanding of the domestic market and
quick response to local demands of the consumers.

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PROTECT AND ATTACK STRATEGY

Despite ruling the Chinese PC market, Lenovo suffered a setback due to the global economic
slowdown in mid-2008 which led to Lenovo posting a loss of US$ 226 million. During this
time, the company’s CEO William Amelio stepped down in favor of Yuanqing, who took
over as CEO, while Chuanzhi returned assuming the role of Chairman.

PROTECT:LENOVO’S COMPETITIVE “MOAT” IN CHINA

As Warren Buffett famously remarked, the most enduringly successful businesses are those
that possess economic “moats” protecting their profits from encroachment by competitors.
On face value at least, Lenovo has many such moats in China.

Perhaps the most impressive advantage enjoyed by Lenovo in China is its immense network
of distribution channels. Lenovo has access to thousands of sales points in its
Chinese distribution network, the majority of which are exclusive distributors of Lenovo
products.

The advantages of this network extend beyond mere scale. Lenovo’s local expertise as a
company born in China lends it an advantage over non-Chinese competitors. A case in point
—Lenovo’s “wedding computer,” a low-cost product adorned in red (a color connoting luck
in China) and emblazoned with the Chinese character for “happiness.” The local insight
embodied in this product, which proved wildly popular among rural Chinese consumers,
suggests that foreign competitors may face difficulty in unseating Lenovo in the hearts and
minds of Chinese consumers.

Lenovo’s executives have made it clear that protecting these competitive advantages in China
is a top strategic priority. But they have also made clear that their ambitions do not end there.

ATTACK:EMERGING MARKETS AND THE WORLD STAGE

For most companies, becoming a market leader in China would be amply ambitious. For
Lenovo, however, it is only the start of their dreams. Having established themselves as the
leaders of China’s PC market, they have since undertaken to expand their presence in
emerging markets such as India, Russia, and Brazil.6

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This strategy is not without sacrifices. Initially, these expansions generally cause operating
losses as a company invests in establishing its sales presence in the target market. However,
this unprofitable period is endured with a clear goal in mind: once a double-digit
market share is attained, Lenovo’s policy is to switch their priority toward a balance of
continued growth and profitability.

In theory, Lenovo’s long-term goal is to recreate the dominant position it enjoys in China in
each of its expansion markets. In practice, however, this is far easier said than done.
Lenovo’s executives are well aware that the diverse markets in which they operate—which
include the Americas, Europe, Africa, the Middle East, and Asia—are each home to unique
consumer preferences, competitive landscapes, and regulatory regimes.

 EFFICIENCY:

 Focuses manufacturing at sites in China, Argentina, India, Mexico, and Poland

 Produce in low cost countries to gain efficiency in cutting cost and saving
money and cheap labour.

 Efficiency created by employees by being best fit for job and globally
competitive
 FLEXIBILITY:

 R&D research to keep products up to date and innovated.

 Senior Management focuses on keeping costs of manufacturing low.

 Diversity in partners and international environment helps Lenovo acquire new

knowledge.

THE GLOBAL RISE OF LENOVO

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Once upon a time, Lenovo was an obscure Chinese PC manufacturer, barely making any
money. Today, it is the world’s largest PC maker with close to $40 billion in sales, leaping
ahead of its closest competitors, HP and Dell.

How did they do it

Lenovo used six ways achieve this progress they are as follows,

1. First came a string of aggressive acquisitions, which helped the company acquire new
technology, assembling a scale and scope advantage in the process. In 2005, for
instance, Lenovo acquired the PC division of IBM for $1.75 billion. In 2012, the
company purchased of DigibrasIndustria, a leading Brazlian PC and gadget maker.
Many more acquisitions followed, some taking place as frequently as every 2-3
weeks. Most recently, Lenovo acquired IBM’s low-end server division in China for
$2.3 billion -- and the handset division of Google for close to $3 billion.
2. Second came the gradual elimination of the shi, shi, shi, (yes, yes, yes) business
culture – a ‘yes man’ environment unattractive to the high-tech industry. This helped
Lenovo improve its ability to recruit and retain talent in overseas markets -- where
technology companies typically favor more of a heretic culture.
3. Third came innovation. Recruitment and retention of foreign talent has helped Lenovo
make the transition from being an imitator, competing on costs, to being an
innovator -- competing on state-of-the art products like the ThinkPad laptop and Yoga
four-position ultrabook.
4. Fourth is the strengthening of the company brand. Innovation and global expansion
have helped Lenovo’s product gain recognition in overseas markets. Lenovo ’s
Window Yoga Tablet with AnyPen Technology, for instance, was included in PC
Magazine’s “The Best of CES 2015 list,” as was the company’s Vibe Band and
LaVie H750 convertible and HZ550 clamshell laptop.
5. Fifth came the listing in the HK exchange, which added transparency to Lenovo’s
corporate image, something other large Chinese companies are missing.
6. Six is a dual headquarters—Beijing and North Carolina. This highly decentralized
corporate structure has facilitated the company’s efforts to recruit and retain global
technology and marketing talent, while getting closer to the end customer.

Still, Lenovo’s globalization strategy has its own limitations. And the first is cost.

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Building a competitive advantage with acquisitions eventually turns out being an expensive
proposition. Especially when companies try to acquire breakthrough technology, which isn’t
a commodity that can be purchased in the market. Instead, it is an organizational capability
that must be nurtured inside corporate boundaries.

Another limitation is the clashing of cultures. This is especially an issue for Asian

companies that maintain a dual headquarter structure.

That’s been the case with Sony Corporation, which has maintained headquarters both in
Japan and the US.

GLOBAL MARKET STRATEGY

Target Marketing Choice of Lenovo

At present, Lenovo considers the following factors when choosing target market:

1) Strong brand awareness, city customers who have advanced concepts. In the personal
computer market, the impact of Lenovo brand is comparative advantage, so choosing such
target customers can cater to the needs of such customers.

2) Cities customers who have the high level of education, higher on admission, and are aged
below 45. Lenovo called this crowd high-end crowd, the crowd is conducive to high-end
products sales.

3) Developed rural market, those customers have strong brand awareness. This crowd has
formed part of purchasing power, Moreover, Lenovo early did the act of the "free movies for
countryside" to develop the rural market, the activities have brought the brand impact, so
choosing this part of the crowd as the target customer group, apparently can quickly enter the
rural market.

Market Position of Lenovo

Lenovo’s marketing position mainly considers the following three factors: Take mainly to
the high-end, middle and high-end combination of market positioning methods. Middle and
high-end positioning can not only guarantee the consistency of Lenovo position in the

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market, also continue the image and status in consumer's mind, while the computer industry‟
present status such as the profits decline also decides the only choice for high-end
positioning, will it be possible to maintain the long-term favorable market competitive
position (Gan, 2002). Generally speaking, the high-end products‟ unit profits are 2 -3 times
more than low-end products, in the pressure of the rising cost situation, low-end products
have no guarantee of profits, the profits of enterprises is the key to taking the high-end route.
Low energy is not only the main consumer demand of IT industries, but also an image of the
representatives of high-tech enterprise, therefore,

choosing low energy consumption and market leading-edge technology positioning will
enhance brand image. At present, the service content of Lenovo brand is mainly limited to the
after-sales service in a timely manner, etc. such narrow positioning can no longer meet the
needs of the competitive market situation. Management master Michael Porter (2003) said, in
the 21st century the multinational companies are unlikely to be manufacturing companies, but
the service industry. The new economy is the services economy; the service is the
competitive edge. Therefore, the service content of Lenovo should learn from the experience
of DELL, it should provide more information on purchasing home computers, and after-sale
service. Customers‟ focus has changed from product quality and price gradually to control
energy consumption, frequency and quiet technology (Jack, Telaote, Lise, 2006). So
Lenovo's market position should be made promptly converted to meet consumer demand. It is
the origin of Lenovo to create the famous Chinese brand, and this existing connotation can
continue exist and support Lenovo‟s strategy choice.

The Product Strategy of Lenovo

Lenovo’s product strategy is the same as target market and positioning, mainly embodied as
follows: Middle and High End Market Positioning Take Lenovo‟s personal computer as
example, the market survey shows that its refrigerators mainly focus on middle and high end,
Lenovo owns 70% market share in high end products, while the middle end count for 40-50%
market share, the market share of low end product is lower than 10%. Different Competition
of Product Development Through segmenting the market, tapping users‟ unmet demand,
thereby pre-empt competitors to develop completely different products from the market,
exclusive share the cake of segment market. Seen from the introduction of Lenovo‟s products
in the past three years, we can see this development idea. In light of this situation, in 2001
Lenovo introduced the "ThinkPad" machines, which reaches not only to meet the needs of the

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users but also share the piece of cake alone. According to the Channels and the Difference of
Segment Markets, Develop and Design Targeted Products As for the supermarket channel,
Lenovo has designed relatively low prices of mid-level products, while high-end products on
the electrical chain and retail sales channels. For the rural market, Lenovo designs and
develops products that have relatively simple functions, relatively low prices to meet the
needs of the students market.

Price strategy of Lenovo

In recent years, the production capacity of IT enterprises seriously exceeds, and this causes to
expand market share and the price war has become worse. As a large computer manufacturer,
of course, Lenovo is subject to the impact of the price war. However, Lenovo was
demonstrated most vividly in this price war, Lenovo did not reduce price, while the corporate
image enhanced, sales grew and market share expanded, the effective price strategy has
enabled Lenovo to exceed in the economy of excessive capacity. Based on different levels of
consumers, Lenovo developed different prices, by creating differentiated products to meet
different consumer groups, formulating differential price discrimination. Lenovo domestic
market sales operator, Yang (2006) said, Lenovo's production line is continuity, so prices of
their products are also of continuity, from more than 10,000 Yuan to more than 2000 Yuan.
Almost every 500 Yuan there are two products to serve the different needs and purchasing
power of consumers. Lenovo now has 19 species, 200 various models of products; Lenovo's
exports and diversified product enable it to avoid involvement in domestic plague of the price
war impact of its competitors. We can see that Lenovo's price strategy can according to
products in accordance with the best performance of the physical value, brand value, the
value of service and other form of value make Lenovo establish an independent cognitive
value in the eyes of consumers, which can be the base of the price of Lenovo products and
achieve the relatively independent cognitive value system. This awareness of the value
system is not set up like the prices can be as simple imitation. Such an independent value and
the price of Lenovo model are built on years of accumulated brand and the concept of
service. This created a core competitiveness of Lenovo brand and Lenovo is still invincible in
the fierce competition.

Differentiation Strategy

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A differentiation strategy is based upon persuading customers that a product is superior to
that offered by competitors. The major benefits to Lenovo of a successful differentiation
strategy are:

(1) Its products will command a premium price.

(2) Demand or its product will be less price elastic than that for competitors‟ products.

(3) Above average profits can be earned.

(4) It creates an additional barrier to entry new business wishing to enter the industry.
Lenovo is seeking to differentiate itself which will organize its value chain activities to help
create differentiated products and to create a perception among customers that these offering
are worth a higher price.

Focus Strategy

A focus strategy is aimed at a segment of the market for a product rather than at the whole
market or many markets. The major benefits of Lenovo‟ focus strategies are: (1). It requires a
lower investment in resources compared to a strategy aimed at an entire market or many
markets. (2). It allows specialization and greater knowledge of the segment being served. (3).
It makes enter to a new market less costly and much simpler. Since Lenovo‟s is regarded to
adopt cost leadership as its development strategy which share some features of differentiation
in the current by the author, the Lenovo‟s competent advantage is developed from
differentiation and cost saving through value chain. Its core competence is illustrated:

· Improved supply chain;

· A cheaper price through lower transaction costs;

· Convenience and twenty-four-hour access;

· Good reputation among customers;

· Quick and efficient search capability;

· The personality of the service;

· Wide selection and one-stop shopping;

· First mover in the market stronger than average and well-known.

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 Lenovo famous brand names makes Lenovo stay well in the fierce market competition,
Lenovo‟s lot of advertising budgets provided a strong guarantee for the material in order to
maintain the competitiveness of Lenovo brand. Over the years, Lenovo brand and Lenovo
advertising leave a deep impression in people’s minds, enhancement of brand recognition, is
actually the acceptance of Lenovo cultural diffusion.

How Lenovo built global brand awareness

Lenovo shares began trading on the Hong Kong stock exchange back in 1994, but the main
target market for Legend at that time remained countries in Asia. The company refrained
from entering the more dynamic and profitable markets of Western Europe and the United
States, where at that time the Taiwanese companies Acer, Asus were already quite successful.
The main reason for this state of affairs was that the company had “state roots” and its main
reference point was the domestic market. In addition, the company did not have enough
available production capacity to enter foreign markets. However, despite this, after only 6
years, in 2000, Lenovo became one of TOP-10 of the largest computer manufacturers.

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From Legend to Lenovo: A new name for a global market strategy

In the early 2000s, the company decided to change its attitude towards foreign markets.
Lenovo has taken many steps towards this, the first of which was the name change
from Legend to Lenovo in 2003. The full name of the company is Lenovo Group Limited.
The main reason for the renaming was the fact that at that moment there were already quite a
few companies in the American and European markets with the word “Legend” in their
registered trademarks.

The name Lenovo is a derivative of the Le- prefix, which remained from the original Legend
name, and the Latin word novo. The prefix Le- also translates from Chinese as “happiness”,
and “novo” means novelty, on which the company puts a strong emphasis. Preparing for
global expansion, the company did its best to make the new brand recognizable.

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Lenovo’s cooperation with the Olympic Committee

One of the most important steps in increasing Lenovo’s brand awareness was the 2004
partnership agreement with the International Olympic Committee as a technology supplier.
At this time, China was actively preparing for the 2008 Olympic Games, so the agreement
was just on time. It is worth noting that Lenovo became the first Chinese company included
in the list of partners of the International Olympic Committee, and received the right to use
Olympic symbols.

Lenovo’s cooperation with IBM

Perhaps the most important in the development of Lenovo was the conclusion in 2004 of an
agreement with IBM, thanks to which Lenovo acquired the IBM notebook and personal
computer division. In addition, the Chinese company received the right until 2010 to use
trademarks owned by IBM, including the popular IBM ThinkPad brand in the business
environment.

Key features of Lenovo’s localization to the west

Contrary to most Chinese companies, the official language of Lenovo is English. The CEO
Yang Yanging is still not very good at English, but is constantly improving his language
skills and trying to embrace American culture. To do this, he even moved with his family to
Morrisville, North Carolina.

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Lenovo has managed to build a clear product line, effectively dividing it into different areas:
one intended for the general consumer, and another focused on the corporate market. A prime
example of this approach is the emergence of the IdeaPad family of notebooks that combine
the reliability of a ThinkPad with the excellent multimedia experience customers demand.

What else is interesting is that Lenovo’s corporate culture is quite different from most large
companies in China. Despite the fact that the state Chinese Academy of Sciences financed
Lenovo, today the company operates as a private enterprise, without government interference.

Geographically, Lenovo’s revenue is fairly evenly balanced, with the Americas accounted for
31% in fiscal third quarter 2018/19, followed by China (26%), Europe, Middle East, Africa
(25%), and Asia. Pacific (18%).

Financing innovations leading to Lenovo’s global success

The company invests heavily in artificial intelligence (AI) and machine learning (ML).
Much of this research is funded through Lenovo Capital and Incubator Group (LCIG),
which launched in May 2016. LCIG funds and develops not only AI, but also the Internet of
Things, Big Data and VR/AR in sectors such as manufacturing, healthcare and
transportation.

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Lenovo was ranked 127th on Strategy &’s 2018 Innovation 1000 Rankings, which  is a study
of the world’s largest corporate R&D investors. The company ranked 39th out of 309 IT
companies and 5th out of 46 companies based in China or Hong Kong.

Top Lenovo products worldwide

Lenovo’s current strategic mantra is to “lead and drive intelligent transformation”, which it
strives to achieve with products and services focused on Intelligent IoT, Intelligent
Infrastructure and Intelligent Vertical Solutions. Lenovo also intends to use GFF LCD touch
panels in its laptop systems, which, while slightly thicker than OGS panels, are cheaper. This
will help the company set more attractive prices than competitors.

Lenovo’s Q3 FY 2018/19 quarterly results saw the PC & Smart Device business group
accounted for more than three-quarters (77%) of the company’s $ 14 billion in revenue. This
is 11.6 percent more compared to the same period last year.

The company’s flagship PC lineup is the ThinkPad line of premium business notebooks,
which Lenovo acquired along with the rest of the PC makers IBM in 2005 for $1.25 billion.
The first IBM ThinkPad was the 700C, released in 1992. It featured the now classic black

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casing designed by Richard Sapper and red accents including the distinctive TrackPoint. As
of 2018, more than 100 million ThinkPads have been sold. Lenovo is now releasing the 6th
generation ThinkPad X1 Carbon.

Smartphones the next step of Lenovo’s global success

Lenovo Mobile Business Group (MBG) is focusing on the Motorola brand, which Lenovo
acquired from Google in 2014 for $2.91 billion. MBG’s improvement strategy has enabled
the company to achieve profitability levels in 2018 and become profitable worldwide for the
first time since the Motorola acquisition. The company achieved it by cutting costs,
streamlining the smartphone portfolio and focusing on core markets, Lenovo said.

The Moto Z is the flagship lineup, with the latest Moto Z3 offering a Moto Mod 5G that will
run on the Verizon network (launched in Chicago and Minneapolis in April, with “over 30
markets” coming in 2019). The Motorola One, released in October 2018, aims to showcase
new technologies and appeal to the youth market in particular. Two more Motorola One
products will appear in the near future.

The Moto G line has proven itself well in the “affordable” smartphone sector, with the latest
G7 models became popular among consumers. Lenovo-branded phones are lining up to boost
sales in emerging markets. The 6.9-inch Lenovo Tab V7 was recently launched in Europe,
the Middle East and Africa. The Moto E line caters to the budget segment of the smartphone
market.

Another Lenovo phone unveiled at MWC 2019 is the Z6 Pro. It is a 5G phone with a 100-
megapixel camera capable of Hyper Video and Super Macro modes.

The future of Lenovo smartphones: Foldable smartphones and 5G

After the Samsung Galaxy Fold and Huawei Mate X was unveiled at the Mobile World
Congress (MWC) in February, there was a lot talks about foldable smartphones. Although
Lenovo has yet to announce a foldable phone, the company has a lot of research into this
area. She showed such devices back in 2016 and received a patent for a clamshell phone in
September 2018.

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The advent of 5G networks and foldable phone innovations in 2019 could take the
smartphone industry to the next level. In a China Paradigm interview, Aurelien Rigart, the
co-founder and Vice President of IT Consultis shared, “5G is a birth word and clearly
something that is going to revolutionize step by step the user experience”.  However, IDC
research manager Anthony Scarsella recently warned that “consumers continue to hold on to
their phones longer than before as newer higher priced models offer little incentive to shell
out top dollar to upgrade. Moreover, the pending arrival of 5G handsets could have
consumers waiting until both the networks and devices are ready for prime time in 2020″

LENOVO MARKETING STRATEGY

Marketing strategy of Lenovo is one of the major factor for achieving in global market. Some
of the factors of Lenovo’s marketing strategies are as follows:

1. Strong Brand Awareness

Lenovo has a brand presence as it provides a variety of products and markets the brand in
innovative ways to grab customer’s attention.
Advertising is the main way to promote your brand, from the above image as you see it has
created several different ads to create awareness. Lenovo has created strong brand

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recognition in the PC market and steadily they are creating awareness of their mobile phone
segment also.

2. Social Media Strategies

This campaign heavily relies on social media. It has a strong social media presence which
helps their customers to know more and stay updated about various new products in the
market. Here is the social media handle of Lenovo:

Instagram Profile

Facebook Profile

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From the above images as you see they have a huge presence on all social media platforms
which helps them to achieve a certain target market.

3. Differentiation Strategy
It is based upon how the product is superior enough that is offered to the competitors.
Here are some of the major benefits of the distribution strategy by Lenovo:
 Its products will command a premium price
 The demand for the product is less price elastic as compared to the competitor’s
products
 Above-average profits can be earned
 It creates an additional barrier to entry for new businesses wishing to enter the
industry
Lenovo is seeking to differentiate itself which will organize its value chain activities to help
create differentiated products and to create a perception among customers that these offerings
are worth a higher price.
Thus, Lenovo offers great deals on laptops, mobile, and smartphones, they have a lot of
promotional codes available on their website which eventually helps the company stand out
in the market.

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4. Use of GoogleAds 
Google Ad words, as we all know, is the largest platform for advertising for the company.
The drill is very simple, you search for something and various ads pop up that are display ads
in the same way Lenovo has advertised the brand as a display advertising following is the
image for the same:

Thus, this helps Lenovo to reach a wide range of audiences through Google Ad words.

5. Influencers Marketing
Lenovo promoted its brand by influencer marketing from various people around the globe.
Youtube advertisements of Lenovo are will be promoted in such a way that it connecting
people of different countries, cultures.
This Ad campaign and influencer marketing video was something unique that eventually
attracted customers towards the brand from all over the world. We must add that Lenovo’s
marketing mix is quite extensive and diverse which definitely help in drawing customers
towards the brand.

THE RESULT

The company’s Protect and Attack strategy started reaping benefits in 2010. The company
said that for the FY ended March 2011, its profits had risen to US$ 273 million from US$
129.4 million in 2010. The company’s global sales also increased by 30 percent to US$ 21.6
billion during the same period. While China contributed to 46.4 percent of its sales, or US$
10 billion, other emerging markets contributed 17.9 percent, or US$ 3.9 billion.

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CHALLENGES

According to a survey in 2009 by Shaun Rein, head of China Market Research Group, on
Chinese consumers’ brand perceptions, “Five years ago, consumer satisfaction rates of
Lenovo were extremely high–consumers felt proud that China had a global brand in
consumer electronics that they felt was better than Dell and HP and closer to the Chinese
consumer.” But as Lenovo neglected the Chinese market to focus on other markets from
2006-2009, domestic consumer satisfaction rates began to decline.

From PCs to PC+

Although Lenovo’s rise has rested mainly on the PC market, in recent years it has moved
toward more diverse revenue streams. Underlying this movement is CEO Yang Yuanqing’s
belief that PCs are developing toward what he calls the “PC+ Era,” in which PCs exist as the
central hubs linking a network of interconnected devices such as tablets, smartphones, and
smart TVs. Implicit in this vision is a desire to steer Lenovo from a world leader in traditional
PCs to a world leader across the range of “PC+” devices.

While the company focuses on diversification, it has a long way to go to achieve the huge
market share enjoyed by its top competitors in both the smartphone and tablet markets.

As of the second quarter of 2020, Lenovo came in seventh place in global smartphone market
share, capturing only 3% of total sales. Huawei and Samsung ranked first with 20% market
share, followed by Apple, which had 14%.9 In the fourth quarter of 2020, Lenovo came in
third place in tablet sales with a 10.7% share of the market, well behind Apple, which earned
a commanding 36.5% share of the tablet market.

Conclusion
The report has provided insight into the ways in which Lenovo uses the globalization of
production, markets, and institutions to boost its viability in the global arena. Its global
presence has been promoted by the acquisition of various segments of other companies such
as IBM and Motorola. This move has not only increased its technological prowess but also
has paved the way for entry into international markets in countries such as the United States.
Lenovo products are designed with quality and customer taste in mind. As a result, the

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company’s brand recognition has remained exceptional both in China and the international
market. Diversification of products and maintenance of its brand has helped the company to
penetrate global markets. Besides, the company has invested heavily in establishing a good
public relationship that underpins its goal to become the leading PC and smartphone seller in
the international arena. However, the company’s products and services are only offered by
monopolized outlets. Lenovo should encourage franchise strategies that will allow other
technology firms to market their products. It should also ensure further product
diversification to allow customers to choose their favorite designs and capture a wider
market.

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