Lenovo: Challenger to Leader
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Case Code: BSTR449 Case Length: 33 Pages Period: 1984 - 2013 Pub Date: 2014 Teaching Note: Available |
Price: Rs.500 Organization: Lenovo Industry: Information Technology Countries: China Themes: Globalization, Localization, Competitive Advantage, International Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
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. Some analysts opined that much of the company's success was due to its 'Protect and Attack' strategy started in 2009 which gave it an edge over its competitors. Using this strategy, the company protected its China PC business and the global enterprise business while attacking emerging markets with its PC products as well as targeting new product areas such as tablets, smartphones, and smart televisions (TVs). The new product areas, also known as mobile Internet devices, were part of its PC Plus strategy wherein the company innovated with the PC to develop new products. Experts said that the company's decision to focus on these new product areas was a bid to maintain its global sales momentum as the PC market was deteriorating due to sluggish demand.
Going forward, the company planned to challenge Samsung's leadership position in the Chinese smartphone market and become a leader by including gaming software to its smartphones. In August 2013, Lenovo rolled out several retail outlets – Lenovo Solution Center which was similar to Apple stores with wide counters and tables where customers could sit and try out Lenovo's tablets and phones. The retail strategy was an attempt by Lenovo to surpass Samsung in sales in the Chinese smartphone market. The company also had ambitious plans to launch its smartphones in the US by 2014. Some analysts felt that the move was positive considering the decline in the global PC industry. Others felt that Lenovo would face some challenges while trying to make its presence felt in the US smartphone market as it lacked the brand recognition that established players such as Apple Inc. (Apple) and Samsung Electronics Ltd. (Samsung) enjoyed in the country. Some experts pointed out that Lenovo could also face challenge in making its presence felt in the US smartphone market since it was largely dominated by Apple and Samsung.
Issues
The case is structured to achieve the following teaching objectives:
- Critically analyze the strategies to be adopted by Lenovo to maintain its market leadership position in the lucrative Chinese PC market
- Understand the issues and challenges faced by a Chinese PC company in growing its business
- Study how Lenovo achieved a balance in catering to global customers while customizing its practices to suit the needs of its Chinese consumers
- Understand the strategies to be adopted by Lenovo to defend its market share in the global PC market considering the demand in the global PC industry was decreasing
- Analyze Lenovo's Protect and Attack strategy
- Examine whether Lenovo could increase its dominance in the Chinese smartphone market and become a leading player in the Chinese smartphone market
- Examine the strategies Lenovo should adopt to enter and make a mark in the US smartphone industry
- Examine the challenges faced by Lenovo in gaining a presence in the intensely competitive US smartphone market
Contents
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Lenovo - The World Leader
About Lenovo
Globalization Strategies
Ruling the China Market
Protect and Attack Strategy
The Results
The Challenges
Looking Ahead
Exhibits
Keywords
Lenovo, IBM, Global PC market, Chinese smartphone market, Pricing strategy, Acquisition strategy, Protect and Attack strategy, PC Plus strategy, Retail strategy, Globalization, Localization, Competitive advantage, Sales channels, Global brand, Brand recognition, Distribution, Brand channel, Tablets, Smartphones, Enterprise PC business, Samsung, Legend, Chinese Academy of Sciences, Smart connected devices, Apple, HP, Dell, iPhone
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