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PESTEL/PESTLEAnalysisofLenovo|FreePESTELAnalysis

PESTEL/PESTLE Analysis of Lenovo

by adamkasi | Dec 30, 2015 | Companies | 0 comments

PESTEL Analysis is a strategic tool which has been utilized by the strategists and
marketers to determine and analyze the external or Macro-environmental factors that
could have positive and negative impact on Organization. This article will discuss the
Search
PESTEL or PEST analysis of Lenovo to perform analysis of external factors ( Political,
Economic, Social, Technological, Environmental and Legal ) that have impact on the
Organization.

Introduction
Lenovo is a Fortune 500 company with high tech products in almost all elds; it has
laptops and LCDs with the same name where as smart phone with the brand name
Motorola. It is the biggest Chinese computer making company and it is third world
wide; ranking after HP and Dell. It has its headquarters in Beijing, it is the brand of this
century, and whatever it has achieved up till now it did so in a very short span of time.
The founder Lui Chuanzhi was a government scientist and started the company by
taking a government loan worth $24000 during Cultural Revolution era and now
Lenovo stands as a $46 billion company. It took over ACER, a Taiwanese company in
order to increase its market share and brand equity. It was one of the rst companies
to oer sponsorship in 2008 Olympics. They also signed a deal with IBM and took
charge of their x86 server business. Think Pad, the famous iconic tablet that James
Bond used in his 1995 sequel, belongs to Lenovo. (LENOVO, 2012)

Political Factors
Lenovo is not only operating in China but all over the world, therefore it has to keep its
business strategy in line with global and local politics. The Communist Party of China
has made it their manifesto that they want scientic growth for their country hence it
becomes very easy for Lenovo to think of expansion. WTO has liberalized trade for
international companies to take advantage of markets dispersed around the world;
Chinese government talked with WTO in order to ensure that mutual agreement exists
between the two institutions and in case of any dispute or friction there is established
set of laws which are agreed upon beforehand. In order for Chinese companies to
become international, China also had to open its borders and soften its laws for
imports and arrival of foreign brands. China is a hugely populous country and the
entire world has its eyes upon this market. (Dozier)

Economic Factors
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Lenovo was stagnating in China, with no remarkable increase in sales and revenue, it
thought that it should become global and expanded its brand in international
markets. Luckily for them, international markets accepted the brand due to its
takeover strategies of some of the biggest names of this industry. But when economic
crisis hit the world economy, Lenovo was also hit badly and hence it decided to go
back to its roots and gain from the Chinese market, now China was more acceptable
of this brand since it has association with some foreign reputable brands. In order to
take advantage of economies of scale, it has set its manufacturing units in low labor
cost countries like China, Argentina and Brazil, which helps it in staying competitive
and avoid price uctuations in case of any economic shock.

Social Factors
The literacy rate of China prior to this government was as low as 20%, now the level is
satisfactory which has resulted in increase in household income and therefore
increase in purchasing power parity. This has done favor to Lenovo as it is in the high
tech business which is directly proportional to literacy rate. The more people become
literate the more they will need connectivity and high tech products. Another
challenge for Lenovo is to increase its market share in countries where the demand
for high tech products has already saturated. In countries like U.S. and U.K. this brand
is associated with low price and low quality; it does not have that much of a bright
future there as it has in developing nations who are not familiar with great brands and
look for cheaper alternatives.

Technological Factors
This is the era of modern technological breakthrough; companies are inventing new
products and updating older ones every other day. Those who could not keep up die,
like Blackberry and Nokia; once market leader are now either liquidated or left behind
in the race. Lenovo also has to take care of this feat; it does not only have to innovate
but also look for strategic partners in order to build reputation in product quality and
distribution, so that people consider it synonymous with innovation and quality. It is
important to evolve but it is more important to develop capabilities that are hard to
imitate this gives competitive advantage to companies.

Environmental Factors
Lenovo is one of the most environmental friendly companies where all the
operations from the product to packaging are recyclable. It uses PCC in all its
products including laptop, Smart phones, TV and tablets etc. the newly developed
products even cross the threshold for using PCC materials. By using PCC materials
Lenovo is saving considerable amount of natural resources which could have been
used again had the recycled material not used by them. Apart from this it is
committed to produce low Halogen content in its products in order to be more
environments friendly. PVC has been eliminated from most of its products. Lenovo
also uses water and energy in the most ecient way in order to conserve these
rapidly depleting resources which are most scarce. (ENVIRONMENTALLY
RESPONSIBLE SOLUTIONS)

Law/Legal Factors

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Law/Legal Factors
In China there are laws to protect the rights of consumers for example the right
against any illegal actions or fraudulent actions that a rm might conduct in order to
engage consumers and make sales. There is also a law which prohibits the rms
from selling any inferior quality product to consumers and these laws make an
environment of healthy competition where rms succeed on the basis of their great
product ideas and marketing techniques and not by mere luck or cheat. Although
laws have got it covered but still companies are in constant struggle to protect their
intellectual rights, Apple and Samsung are in series of suits and counter suits in
dierent countries in order to claim their right to certain software or feature.

Bibliography
Dozier, B. (n.d.). Lenovo: Chinese multinational Computer Technology Company.
Retrieved December 27, 2015, from wordpress:
https://barbradozier.wordpress.com/2014/12/21/lenovo-chinese-multinationalcomputer-technology-company/
ENVIRONMENTALLY RESPONSIBLE SOLUTIONS. (n.d.). Retrieved December 27, 2015,
from Lenovo: http://www.lenovo.com/social_responsibility/us/en/materials/
LENOVO. (2012, April). Retrieved December 27, 2015, from Facts and Details:
http://factsanddetails.com/china/cat9/sub61/item1890.html
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