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
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. 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 – HanCard. 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.
In its initial years in the Chinese PC industry, Lenovo sold and distributed computer products of companies such as Dell, HP, and Compaq. By distributing foreign PC brands, Lenovo accumulated the necessary capital in addition to learning how to organize sales channels and market PCs. Its interactions with customers during this time and its extensive distribution network helped the company gain market insights.
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