Lenovo Group Ltd. Prepared by: Pu Zhao Mei Wu Taryn Hauso Marty Bearce Lenovo Group Ltd. • • • • • • • Introduction History Globalization Analysis Competitor Analysis SWOT Analysis Future Outlook Recommendations Introduction to Lenovo Group Ltd.   Established in 1984, by 11 employees, with total capital of 25,000 U.S. dollars Changed name from Legend to Lenovo for globalization purposes ---"For overseas markets, Lenovo will be used alone," said the firm    Owner of IBM PC brand The third-largest computer maker on the world scale The dominant Chinese computer marketer for over 10 years. Important Records of Lenovo        1984—With an initial capital outlay of only RMB200,000, (US$25,000) Lenovo’s founding chairman Liu Chuanzhi, together with 10 like-minded colleagues, launches the New Technology Developer Inc. (the predecessor of the Legend Group) funded by the Chinese Academy of Sciences. 1988—Legend’s Chinese-character card receives the highest National ScienceTechnology Progress Award in China. Legend Hong Kong is established. 1996—Legend becomes the market share leader in China for the first time. 1999—Legend becomes the top PC vendor in the Asia-Pacific region and heads the Chinese National Top 100 Electronic Enterprises ranking. 2004—Lenovo becomes an Olympic worldwide partner. It is the first Chinese company to become a computer technology equipment partner of the TOP. 2005—Lenovo completes the acquisition of IBM's Personal Computing Division, making it a new international IT competitor and the third-largest personal computer company in the world. 2006—Lenovo introduces the first dual-core ThinkPad notebook PCs, improving productivity and extending battery life for up to 11 hours. Globalization Strategies    Cooperation Merger and Acquirement Promote Brand Awareness through involving important sports events Cooperation  Main Reason: Shortage of Oversea Sale channels and Public Relations.  Standards for choosing partners: 1. With Complementary strengths 2. Proper size Merger and Acquirement    The most important measure for most ambitious companies is to expand its market shares. To form its new strengths as soon as possible. A good sample in globalization is obtaining IBM PC Division through M&A. The Strategies to Promote Brand Awareness  TOP (The Olympic Partner )partners photo Source: http://www.lenovo.com/torino/us/partnership.shtml   NBA partners AT&T partners Challenges in Globalization  Ability of Culture adaptation In April 2005, a manager (Sales) of Dell Int. tried to use unusual tactics to persuade IBM’s customers to purchase Dell products in his mail, “every dollar they spent on these IBM systems is directly funding the Chinese government.”  Brand Awareness Competitors (main)  Acer Inc. (Taiwan, China )  Dell Inc. (United States)  Hewlett-Packard (United States) Acer     Leading manufacturer of notebook, tablet, handheld, desktop computers The gap is narrowing. Acer's global market up to 6.8 percent in the fourth quarter While Lenovo shrunk to 7.1 percent, according to the market research company Gartner. In third quarter of 2005, Acer had 4.7 percent and Lenovo had 7.3 percent  Acer's success derives from its effective use of the "channel" marketing model, which pairs it with local distributors to help its products gain traction Key Financials         Company Type Public (Taiwan: ACER) Fiscal Year-End December 2005 Sales (mil.) $9,654.0 1-Year Sales Growth 37.2% 2005 Net Income (mil.) $257.3 1-Year Net Income Growth 17.3% 2005 Employees 6,554 1-Year Employee Growth (0.1%) Dell Inc.    World's #1 direct-sale computer vendor Provides a broad range of computer and entertainment products for the consumer and enterprise markets Markets third-party software and peripherals Key Financials         Company Type Public (NASDAQ (GS): DELL) Fiscal Year-End January 2006 Sales (mil.) $55,908.0 1-Year Sales Growth 13.6% 2006 Net Income (mil.) $3,572.0 1-Year Net Income Growth 17.4% 2006 Employees 66,100 1-Year Employee Growth 18.0% Hewlett-Packard    Provides enterprise and consumer customers a full range of high-tech equipment Known for product innovation, the company's corporate development is a tale of reinvention Boasts an IT service organization that is among the world's largest Key Financials         Company Type Public (NYSE: HPQ) Fiscal Year-End October 2006 Sales (mil.) $91,658.0 1-Year Sales Growth 5.7% 2006 Net Income (mil.) $6,198.0 1-Year Net Income Growth 158.5% 2005 Employees 150,000 1-Year Employee Growth (0.7%) Key Financials     Revenues $86,696.0 Profits 2,398.0 Assets 77,317.0 Stockholders' Equity 37,176.0 8.5% -31.4 --- SWOT Analysis  1. 2. 3. Strengths The brand chrematistic a. honest b. innovative c. good service d. easy to use Price advance Environmental factors SWOT Analysis  1. 2. 3. Weakness Lack of international managing experience Brand influence Ability of getting profit SWOT Analysis  1. 2. Opportunities In charge of IBM PC Division Important sporting events a. TOP (The Olympic Partner) b. NBA partner c. AT&T Williams partner SWOT analysis  1. 2. Threats Software pirate Powerful competitors Future Outlook    From East to West High brand awareness One of most competitive companies in the world. Recommendations Short-term ways:   Distribution Model should be innovated to be efficient. Existence Model: Lenovo—Wholesaler—Retailer—Consumer Alternatives: 1. Lenovo—Discount Retailer (Wal-Mart)—Consumer. 2. Lenovo—Consumer (through Ecommerce and Agent) . Continue to rely on its financial advantages for R&D, struggle for talented employees .     Through establishing and implementing of more rational strategies of localization and spreading its corporation culture to avoid cultural difference and reduce the possibility of conflicts. Reduce the possibility of duplication of investment, and strive for cooperation, instead of competition, and to transfer rivals between the cooperators. Good use merger and acquirement strategy, principle of which is that use abundant capital to transfer its disadvantage to become advantages in a short period. Promotion Brand Awareness through increasing advertising investment. Recommendations Long- term ways 1. Devote itself to its leading area, distinguish what are the disadvantage parts and cut them. 2. Promote its ability to predict marketing needs, for example, cooperate with government agencies to analyze markets. The End Questions? Answers?