Can Lenovo Regain Glory with New Strategy?
Case Code: BSTR540
Case Length: 21 Pages
Period: 1984 - 2018
Pub Date: 2018
Teaching Note: Available
Organization: Lenovo Group Limited
Industry: Computers, Smartphones
Countries: China, Global
Themes: Growth Strategy, Business Model Innovation, Blue Ocean Strategy
Abstract Case Intro 1 Case Intro 2 Excerpts
This case discusses how Beijing-based multinational technology giant, Lenovo Group Limited (Lenovo), emerged as a global brand from China. After becoming a market leader in the Chinese PC market, several international acquisitions helped the company establish a presence in global markets. The company’s 2005 acquisition of the PC division of US-based multinational technology giant International Business Machine (IBM) gave the Lenovo brand global recognition. Lenovo’s 2011 acquisition of German electronics manufacturer, Medion, in 2011 and a joint PC venture with Japanese multinational technology company NEC Corporation helped the company transform from a small Chinese electronics company into the world’s largest PC maker by shipping over 53 million units in 2013.
After some initial success with its ‘Protect and Attack’ strategy, Lenovo started to face reverses. In 2017, it lost its PC crown i.e. market leadership in the global personal computers (PCs) market, to its arch rival Hewlett-Packard (HP). Lenovo also found the going tough in the smartphone business that it entered in 2010 as part of its ‘PC Plus strategy’. Lenovo’s gamble of acquiring Motorola Mobility from Google failed to pay off, according to some analysts. By the end of 2015, Lenovo’s fortunes in the mobile market had dipped dramatically. It slipped to eighth position in China’s smartphone market as new and nimbler Chinese competitors such as Huawei, Xiaomi, Oppo, and Vivo continued to grow rapidly. Critics stated that Lenovo lacked innovation at a time when its rivals were upping their game in both the PC and smartphone markets. The challenge before Yang Yuanqing (Yang), CEO of Lenovo, was how to orchestrate a turnaround in the fortunes of the company and restore it to its past glory.
The case is structured to achieve the following teaching objectives:
- Analyze the internationalization strategies adopted by Lenovo that contributed to its success in the global PC market
- Identify the challenges faced by Lenovo in the intensely competitive Chinese as well as global smartphone market and explore strategies that the company could adopt to sustain itself in these markets
- Examine the strategies that could help Lenovo regain its lost momentum in the global PC and smartphone markets
Becoming the PC Market Leader in China
Lenovo's Internationalization Strategies
Protect and Attack Strategy
Other International Acquisitions
The Road Ahead
Localization; Competition; Globalization; Why Chinese companies go global; Building globally recognized brands; Cross-border mergers and acquisitions; Post-merger integration challenges; Market leader strategy; Protect and Attack strategy; PC Plus strategy; China
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