Case Study on Lenovo In late 2004, IBM announced that it was getting out of the personal computer business and would sell its entire PC operations to Lenovo, the fast-growing Chinese manufacturer of personal computers, for $1.75 billion. The acquisition turned Lenovo into the world's third-largest PC firm. It also raised many questions about how a Chinese enterprise with little global exposure would manage the assets of an American firm that had 2,400 employees in the United States, 4,000 in foreign manufacturing facilities, and 3,600 sales and distribution centres in over 60 countries around the world. Lenovo moved quickly to reassure employees that it was committed to building a truly global enterprise with a global workforce. Less than 24 hours after the two companies announced the acquisition, the human resources department at IBM's PC division released a 59-point question and answer memo to all employees informing them that they would become employees of Lenovo, that their compensation and benefits would remain identical or fully comparable to their IBM package, and that they would not be asked to relocate. The memo also made it clear that employees could accept employment at Lenovo or leave, with no separation pay. IBM would not consider them for a transfer within IBM or recruit or hire the new Lenovo employees for two years. What really surprised many observers, however, was the composition of the top management team at the new Lenovo and the location of its global headquarters. Top executives at Lenovo were smart enough to realize that the acquisition would have little value if IBM's managers, engineers, and salespeople left the company, so they moved Lenovo's global headquarters to New York! Moreover, the former head of IBM's PC division, Stephen Ward, was appointed CEO of Lenovo, while Yang Yuanqing, the former CEO of Lenovo, became chairman, and Lenovo's Mary Ma became CFO. The 30 member top management team was split down the middle-half Chinese, half American-and boasted more women than men. English was declared the company's new business language. The goal, according to Yang, is to transform Lenovo into a truly global corporation with a global workforce that is capable of going head-to-head with Dell in the battle for dominance in the global PC business. The choice of Ward for CEO, for example, was based on the presumption that none of the Chinese executives had the experience and capabilities required to manage a truly global enterprise. For Lenovo, when deciding who should hold management positions, the national origin of candidate is not an issue. Rather, the decision focuses upon whether the person has the skills and capabilities required for working in a global enterprise. Lenovo is committed to hiring the very best people, wherever they might come from. Commenting on the acquisition, Bill Matson, a former IBM executive who became senior vice president of human resources at Lenovo, noted that the company would use the same set of principles to guide workforce management in all locations. He noted that ‘'You have to establish the broad principles of how you want to manage your business, but then you have to be very astute about how those principles are applied in every local market so that you remain responsive to the needs of people in different environments (Hill,2011) Answer all following questions:
1. Critically analyse the suitability of an acquisition strategy used by Lenovo to acquire IBM Personal Computer Division. (1000 words)
2. Critically analyse the strategic appropriateness of the staffing approach applied by Lenovo on acquiring IBM Personal Computer Division. (1400 words)
3. Using appropriate theories, critically analyse the importance of a cross-cultural understanding for international businesses success. Support your answer by quoting relevant examples from the case study. ??????