Lenovo Case Study
INTRODUCTION Lenovo bounded on the international scene May 2005 wit the acquisiton of IBM’s personal computer division for $1.75 billion. This was viewed as an experiment to see whether Chinese companies could successfully integrate foreign acquisitions as they continued to expend internationally. With this landmark acquisition, Lenovo’s new strategy was to become a leader in the global PC market. Lenovo Group Limited is one of the most prominent PC manufacturers in the world especially in Asia. It is headquartered in Morrisville, North Carolina with principal operations currently located in Beijing, China, and Singapore. Lenovo recorded revenues of $16.6 billion during the fiscal year ended March 2010, an increase of
…show more content…
Lenovo’s size weakness is reflected in 2009’s global PC statistics. Hewlett Packard shipped 59.9 million units (20.5% market share) in 2009, Dell followed with 38.41million (market share of 13.1%), and Acer sold 37.37 million units (market share of 13.0%). Lenovo followed in fourth, with only 24.9 million units for the year and 8.5% market share. Generally speaking, the international competition between Lenovo and other IT companies is intense. If Lenovo’s domination in the Chinese market is lost, the company would struggle to find profit outside of Asia.
Lenovo believes both smartphones and netbooks in will outsell its laptop and desktop PCs by 2016. The product strategy makes sense in China where 42.7% of a population of 1.3 billion is without a phone. By way of comparison, the U.S. handset penetration rate hovers around 90 percent, while in many European nations are well over 100 percent as some consumers own multiple handsets. The PC demand is forecast to increase over the next few years. In 2011, the global PCs market is expected to have a value of $220.1 billion, an increase of 34.4% since 2006. The global PC shipments are expected to grow from 184 million in 2006 to 260.8 million by 2011. The reasons for this huge demand are expected to be consumers and small and medium enterprises. As a leading manufacturer of PCs, Lenovo is in a good position to benefit from the