Dell and Gateway starts

Since early 1980s, PC

PC Industry Analysis
their build-to-order
industry has been the strategies, resulted to
most dynamic the total supply chain
electronic industry respond swiftly to
sector change
The global PC Emerge of e-commerce
industry reached (online sales) hastened
mature level by mid- PC industrys clock
1990s speed

PC-makers enjoys high Global PC industry

profits 1990, however, they currently affected by two
experiences an extreme major trends;
downfall in early of 2000 commoditization which is
In 2004, in order to about mass-produced and
maintain PC vendors the absence of mid-
market position, vendor market, which separate to
consolidation can develop the customers that
economies of scale in demand cheapest
order to go into a global products and that of
presence exclusive products
 Sales volume worldwide grew rapidly in the late 1990s but declined during the early 2000s
recession
Sales increased again for the rest of the decade though more slowly in the late 2000s
recession
After a substantial growth into 2010, sales volume has remained fairly stable, until a
substantial dip starting in 2013 caused by the switch to pads
 Legend ranked
Renamed to Pioneered in top 10 of
NTD Fastest
10 engineers 1987 Legend 1990 Home and 1996 world's best 2004 growing PC
2012
Computer Small business managed PC
200000 Yuan manufacturer
Company PCs concept venders

First Original Launched its Introduced First Notebook Lenovo sells

Product: own brand PC first laptop with integrated 75 millionth
1984 Legend 1989 1993 with Intels 2000 fingerprint 2010 ThinkPad
Chinese chip reader
Character Card
 Globalization of production and innovation
Major vendors such as IBM,
Compaq, HP, Apple and Gateway
initially had their own production
facilities in each world region
Close to end user demand
because of logistics (too heavy to
ship)
Later outsourced production to
CM (Flextronics, Solectron,
Foxconn ,etc)
Gradual shift in production from
the Americas and EMEA to the
Asia-pacific region
Production initially shifted to
Japanese, Taiwanese and Korean
manufacturers
In 2001, Taiwanese Government
tightened the investment
limitations>> industry moved en
masse to shanghai
By 2005, China was the single largest
producer of PCs and computer
equipment, although most of the
facilities were owned by Taiwanese
firms
Earlier, location of final assembly was
driven by need in the U.S
Demand grew and capability of firms
to exploit lower costs for labour, land China: Well trained mechanical
and facilities, the availability of cost-
effective labour and Government
incentives in china grew
Design of desktops: People with
skills in high level architectural
design, engineering skills,
industrial design and business
management
Development for desktops:
Routine transactional product and
process engineering. Requires
mechanical, electrical, software
engineering skills and technical
project management skills
The U.S: Leading industrial design
firms with strong software and
high level engineering skills
Taiwan: Mechanical and Electrical
engineers with strong practical
experience. Strong process and
manufacturing skills
and electrical engineers but lack
hands-on skills. 8 times less salary
than U.S counterparts
 Global division of labour
In 1990, entire NPD was located in the U.S which handled
system level design and integration
In 2000, only design remained in the U.S, development and
manufacturing of notebooks to Taiwan
In 2006, the U.S position remained unchanged, design centres
were set up in Taiwan to manage NPD
Once production shifts to low cost
location, it pulls higher level activities
Lu and Lui (2004) found that major
location factor is proximity to the
manufacturing site
This gradually pulled the New Product
development to Taiwan and Mainland
China
Globalization of innovation also driven
by a desire to develop an understanding
of the needs of big emerging markets
Summary: Higher value architectural
design and business management, along
with associated dynamic engineering
work done in the U.S. and Japan
Much of the development and
manufacturing of the physical product
along with related product and process
engineering is done in Taiwan and China
 Growth factors for Lenovo

The Ability of The Ability to

The Capability of Giant Step of Establish and
Learning: Proper Competing on Globalization-
R&D activities The Lenovo's Strategy Manage Effective
Price : Lenovo's for Global Expansion : The Acquisition and Efficient
combined with products are only of IBM PCD :
the engineering, IBM has all the things Distribution Network
roughly two-thirds they needed. This deal Lenovo is allowed : Lenovo have
and of those of foreign to use the IBM
manufacturing, brought market share, approximately 50
brands. Lenovo Management know- name for five authorized
instead of purely successfully years. However,
pursuing cutting- how, technology, and distributors in each
maintained a lower international reach the new Lenovo of the seven regions
edge cost structure than will have a strong
technologies Through the in China, and each
multinationals acquisition, Lenovo IBM presence distributor has its
attained the IBM's own reseller network.
global market share, There are over 2, 000
global management resellers in Lenovo's
skills, top PC distribution network
technologies and the
outstanding ability of
R&D, experienced
managers and other
personnel
 Impact of Government Policies

With the development of IT industry, some problems had emerged, such as environmental pollution
and energy consumption. Therefore, the Green IT was encouraged by Chinese government. Green IT
refers to low energy consumption and low noise pollution.

As a leader in Chinese PC market, Lenovo has achieved the task of Green IT in noise pollution. The
noise index of a Lenovo brand-Kai Tian S was lower than 30 dB (Lenovo, 2005).

In addition, the IT industrys export tariff has decreased to 9.1 percent in 2005 since China joined the
WTO. So these policies encouraged Lenovo to expand its global market.
Impact of Government Policies (Contd)
The world economic had a tendency to decline because of the economic crisis in 2008.
The policies were loose monetary policy and positive financial policy. And Chinese government
offered 400 million RMB to motivate economic growth. It was a great opportunity to develop IT
industry. The demand of IT products in China has also increased by the growth of GDP.

Whats more, the economies of some developing countries grow rapidly so that provides more
opportunities for IT industry, while the IT industry in developed countries has become saturated.

Firstly education level and the demand of IT products are increasing in China with the development
of society. Secondly, Chinese people become more international because of the globalization. The
lifestyles of Chinese people changed a lot with the influence of developed countries. So it provides a
better external environment for Lenovos development.
 SWOT ANALYSIS

STRENGHTS WEAKNESSES
One of the leading players in Growing Smartphone
the PC market market
Superior performance across Cloud Computing
product lines Strategic acquisitions
High exposure in China and
other emerging markets
Positive outlook in PC+
markets

OPPORTUNITIES THREATS
Product recalls affect brand Competition can affect
image market share
Slow market share growth Declining PC market
Decline ASPs
Dodger Contender

Extender
Defender
 Lenovos Three Growth Stages
and its Contender Strategies
In 1987, Lenovo successfully
rolled out Lenovo Chinese-
character card and received
the highest National Science-
Technology Progress Award in
the following year.
Subsequently, Hongkong
Legend Computer Group Co.
and Beijing Lenovo Computer
Group Co. were established in
1988 and in 1990,
respectively.
During the period of 1984-
1993, with few foreign PC
companies in the CCGM,
Lenovo was concentrating on
upgrading its own capabilities
and was planning to become a
pioneer in Chinese PC
industry. The reality proved
that Lenovo did achieve a
great success during this
stage.
After acting as the reseller and
distributor for some foreign
brands, Lenovo launched its first
brand PC in 1990, which signalled
that Lenovo has shifted from an
agent for imported computer
products into a producer and a
seller of its own branded
computer products. Finally,
Lenovo has pioneered the home
PC market since 1992.
Thank you