This assignment will assess learning outcomes
1. Demonstrate a systematic understanding and critical evaluation of the key aspects of the strategic management process;
2. Demonstrate the ability to compare different theories and perspectives of strategic management and use and appraise them appropriately;
3. Critically evaluate theories and concepts of strategic management. Analyse and apply appropriate problem solving techniques plus knowledge learned to solving complex business problems;
4. Demonstrate the ability to communicate complex issues.
The Case Study - The Competitive Strategies of Lenovo in the Corporate Market By: Mingshir Lin Kyriakos, et., al.
Executive Summary
In recent years, the personal computer manufacturing company Lenovo has utilized unique competitive strategies to achieve a rapidly increasing share of the computer and notebook market. After acquiring the IBM brand name and laptop division, Lenovo soon became a major player in the corporate market, inheriting along with IBM's notebook division technology and executive staff a reputation and branding that allow Lenovo a 19% market share in the international corporate notebook computer market. However, Lenovo is continuing to optimize their strategies for competing in a market dominated by major players Hewlett-Packard and Dell who account for 21% and 54% of the international corporate market, respectively. In the next year, Lenovo will be losing the rights to use of the IBM branding on their Thinkpad notebook series. This poses an interesting strategic problem: how can Lenovo continue to improve their share of the corporate notebook computer market once it has lost the IBM brand name? This case situation attempts to address issues and analyse Lenovo's outlook critically,
Background
Lenovo Group is a Chinese person computer manufacturer that has grown to be the third largest personal computing company in the world. Since its acquisition of the IBM Personal Computing Division in 2005, Lenovo has been a player on the international stage, expanding operations rapidly and seeking to develop an international reputation for the Lenovo brand name. By 2006, Lenovo had acquired and set up significant investments and centers in the United States, and had begun marketing Lenovo branded products outside China for the first time. An internal analysis of markets for both notebook and desktop sales shows that Lenovo continues to manufacture and sell about an equal number of laptops and desktops each year. Roughly half the sales of Lenovo products (including IBM branded products) continue to be sold in Asia, while the rest are relatively evenly split between sales in the Americas and in Europe.
In recent years, it has been the stated goal of Lenovo Group Chairman to "challenge perceptions of Chinese companies as mainly producers of cheap, low-end products." Lenovo has begun marketing high-end models of notebooks under the IBM brand, like the ultra-thin ThinkPad X300. As a result, Lenovo has not rolled out a range of low-end products outside of China. However, Lenovo has plans to release a wide range of products, at both low and high-end levels.
International PC Market Viability
Despite the slowly growing PC market in the US, the corporate market continues to demonstrate a healthy growth rate. The total corporate market size in the US grew from $664 billion in 2004 to $778 billion in 2007. Dell, HP, and Lenovo have dominated the corporate desktop and laptop market with 87% of enterprises purchased their desktops and 84% of enterprises purchasing their laptops from these three manufacturers in 2006, and the trend is expected to be the same in the next two years.
Customers
Customers in the corporate PC span the range from small and medium-sized businesses to large enterprises. Desktops have dominated the enterprise computing arena for decades because they are cheaper, more powerful and easily upgraded and repaired. However, increased needs for mobility and rapid increase in laptop performance-to-price ratios have resulted in a recent upswing in the share laptops have in the corporate market. Even as performance and price remain priority, additional factors like energy-efficiency, size, weight, and noise have become increasingly important. The ratio of desktops to laptops evolved from 75/25 in 2004 to 70/30 in 2006 and desktop managers reported in 2006 that their laptop usage plans over the next two years were 1.5 times greater than their desktop usage plans.
Brief Competitor Profiles
Dell is currently the top enterprise desktop and laptop supplier in the world. Dell supplies both desktops and laptops to more than half of North American and European enterprises, doubling its closest competitor in both notebook and desktop PC sales. In North America, Dell is winning 60% of the desktop and 58% of the laptop market. Dell's strengths lie in its low prices and product support. However, low R&D budget prevents Dell from producing new innovative products.
HP maintained its solid No. 2 desktop supplier status and recently overtook Lenovo for laptops, supplying desktops to 27% and laptops to 21% of North American and European enterprises. HP has also improved significantly year-over-year, especially across laptops. It gained 6% in the North American enterprise laptop market and 5% in the European enterprise laptop market in the last year. These gains will continue, since HP recently refreshed its entire lineup of Intel-based laptops in 2007 with Intel's Santa Rosa release. However, HP is behind in product quality and product support, according to surveys of customer satisfaction.
The Problem
Lenovo faces major obstacles to dominance both in the strength of its current competitors as well as in its impending loss of the IBM brand name for ThinkPad products. Lenovo to optimize the utilization of current borrowed brand image and to offer plans for the business future to achieve an improved share of the corporate market for notebook computers over the next several years.
Assignment Tasks
In this case study you need to do the following tasks:
1: Critically analyse the current state of international corporate PC market to get a better sense for the environment to address the problem of Lenovo. Use the concept of Porter's Six Forces.
2. Write a critical SWOT analysis on Lenovo's outlook in order to get a better sense of the corporate market and the impending loss of the IBM branding.
3. Explain the implications of competitive strengths gained by Lenovo applying the appropriate theory of strategic choices. Focus on the
organisation's perspectives in expanding product differentiation strategies.
4. Design a strategic plan that can structure Lenovo's challenges for market sustainability in the Sultanate of Oman.