LENOVO

INNOVATION THAT MATTERS

THE LENOVO AFFAIR

The growth of China’s Computer Giant and its takeover of

IBM-PC

 Sathya  Sathish  Siva prakash  Shiwapradha  Sheeba  Andrea

December 8, 2004 | © 2004 IBM Corporation

© 2004 IBM Corporation
December 8, 2004
 Really what is in this Book??????
• Cautionary tale?
• Raise of hackles and alarm in China.

• How lenovo succeeded in becoming third

largest company in the world?
• About the hero’s and legends of lenovo.
• “Snake eats Elephant story”
2 © 2004 IBM Corporation
December 8, 2004
 Legend who wrote this book???? Ling Zhijun
• Born in Shanghai in 1953.
• Dual Role - Farmer and Soldier
• Discontinued his studies at 15, and
continued at 30.
• Awarded as a Masters in Jurislegislation.
• Famous books - China’s healing and
entry, History will no longer equivocate, A
record of china from 1990-2002
3 © 2004 IBM Corporation
December 8, 2004
 About Lian Xiang

Why we are here?????

• Road to Success: (1984-

1989) The Rebels
• Some people string the
pearls.

4 © 2004 IBM Corporation

December 8, 2004
  Road to Success: (1984-1989) The Rebels:
• Lianxiang alias lenovo born in 1984, by 11 employees
particularly Liu Chaunzhi, with total capital of
25,000 U.S. dollars
• Company started in a small building with two rooms.
• No business plan
• Like minded People.
• No Business, people with talents perceive as Scientist.

5 © 2004 IBM Corporation

December 8, 2004
 About Lian Xiang Company

 1984 - Chinese Academy of Science founded

the New Technology Developer, Inc (NTD)
 1987 - Legend character card which translated
English language operating systems into Chinese

 1989 - NTD renamed Legend Computer

Company

 2004 – Legend renamed Lenovo (Le + novo)

6 © 2004 IBM Corporation

December 8, 2004
 Objective

To be the Chinese market leader surpassing bench marked

competitors

Steps taken to achieve the Goal:

 Three year plan wherein
 To increase the production capacity of the plant.
 Reducing the Cost of Production.

7 © 2004 IBM Corporation

December 8, 2004
 Goals Achieved

Result:

 The production increased from 300 to 1000 Computers a

Day.
 The company got Intel Processors at cheaper price.
 220% increase of Sales.
 Achieved net profit of RMB(Chinese Yuan) 5 millions.
 Competed with the Compaq, IBM, HP,AST.
 Emerged as Market leader next to IBM.

8 © 2004 IBM Corporation

December 8, 2004
 CRITICS

 There has been Gossip among the people, those goods

produced by Chinese companies is of inferior Quality

Solution:
 Overcome with ISO 9001 Certification

9 © 2004 IBM Corporation

December 8, 2004
 Lian Xiang Research and Development

 The Company setup a Computer

Development Department with Lin jun as
manager.
 Lin jun Designed a new Computer and gave
a trendy exterior look and named as
Scorpio.
 Remarkable sales in the market.

10 © 2004 IBM Corporation

December 8, 2004
 Research & Development
 Lin Jun’ s Statement -
“In the early days we did what I call Backwards
Engineering: First we designed something and sold it to
the customer. Then we started to do what I call Forward
Engineering: We found what the customer needed and
then we designed to those specifications”.

11 © 2004 IBM Corporation

December 8, 2004
 PROMOTIONAL STRATEGIES

ATL:
 All forms of media Oriented Promotions focusing on mass
people.
 E.g. Television, Radio advertisements

 Advertisement quote: One

Family, “one 1+1” dad
figures out Problems, One family “one 1+1”
MOM helps to manage households, “one 1+1”
helps me study “Lian xiang personal computers”

12 © 2004 IBM Corporation

December 8, 2004
 PROMOTION STRATEGIES
BTL:
 Cost effective promotion focusing on specific target group.

 Offering sales commission, Sponsorships, Merchandising

13 © 2004 IBM Corporation

December 8, 2004