Lenovo's Globalization Strategies
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Case Details:
Case Code : BSTR156
Case Length : 15 Pages
Period : 1998 - 2005
Organization :
Lenovo
Pub Date : 2005
Teaching Note :Not Available
Countries : China
Themes : Globalization |
International Business | Marketing
Industry : Information Technology and Related Services
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"As Lenovo's founder, I am excited by this breakthrough in
Lenovo's journey towards becoming an international company. Over the past 20
years, I've watched Lenovo develop into the leading IT Company both in China and
throughout Asia. Since the beginning, however, our unwavering goal has been to
create a truly international enterprise. From 2003 when we changed our
international brand name to 2004 when we announced our partnership with the
International Olympic Committee, to today's strategic alliance with IBM, I have
been delighted to watch Lenovo become a truly world-class company."1
- Liu Chuanzhi, Chairman, Lenovo Group.
Introduction
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.
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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."2
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.
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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.
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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, AST3 and HP. In 1990, Lenovo
manufactured its first PC and within a decade it grew to become the
leading PC manufacturer in China. |
Lenovo's Globalization Strategies
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