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
Lenovo - The World Leader
Beijing-based multinational technology giant, Lenovo Group Limited (Lenovo), recorded a market share of 16.7 percent in the global personal computer (PC) market in the first quarter (Q1) ended June 30, 2013, emerging as the clear leader in the market, according to both International Data Corporation (IDC) and Gartner Inc. (Gartner). While IDC said that Lenovo had recorded a growth of 15 percent from the Q1 of 2012, Gartner put the growth from Q1 of 2012 at 14.9 percent. Experts said this was the first time that both IDC and Gartner had given the top spot to Lenovo.
Founded in 1984 as Legend Holdings Limited, Lenovo sold computer products of branded PC makers such as Dell Inc. (Dell), Hewlett-Packard (HP), and Compaq Computer Corporation in its initial years. Sensing the potential in the lucrative Chinese PC market, the company started selling its own brand of desktop PCs in 1990 and emerged as the leader in the Chinese PC market in 1996. In 2005, the company acquired the PC division of US-based multinational technology giant, International Business Machine (IBM). This gave the Lenovo brand global recognition in addition to making it the third largest PC maker in the world by volume behind HP and Dell. For the financial year (FY) ended March 31, 2013, Lenovo recorded sales of US$ 34
billion, a Year on Year (YoY) increase of 15 percent.
According to industry experts, Lenovo's success story was attributable to the various strategies it had adopted in China as well as in other markets. Some experts pointed out that Lenovo's aggressive pricing strategy in its home market – China – and its acquisition strategy in mature markets such as Germany and Japan, had made it a market leader in the global PC market. Some analysts stated 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 as the PC market was deteriorating due to sluggish demand...
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