PART ONE
SWOT Analysis of Lenovo
PART TWO
Generic strategies used by Lenovo in its international expansion plans
The competitive nature of the industry in which Lenovo operates has made the company to rely on both differentiation and low-cost strategies. The rationale for using both strategies is that Lenovo realizes that for it to have a large market share, it has to use competitive pricing while at the same time providing a range of products that are in line with changing consumer needs and expectations. Computer and Information Technology market is highly volatile regarding competition such that reliance on one product line could be destructive for the organization in the long run. To cope with the numerous challenges, it is imperative that Lenovo engages in offering a variety of products including personal computers, smartphones, tablets, televisions and software. Having different product lines sustains the sales and revenues of the firm such that if one line fails to perform to the expectations, it is protected by the other products. However, Lenovo realizes the need to have various ways of differentiating its products, among them; price, image, design and support differentiations. The need to have such differentiation is to ensure that Lenovo still manages to maintain the highest quality in its products while targeting different market segments that have varying purchasing power.
Lenovo uses competitive pricing to meet the low cost needs of its global customers. Such actions make it easier to take advantage of the growing markets in the third world nations whose population and economies continue to grow. In some instances such as with the case of accessories, Lenovo relies on penetrative pricing to influence the majority of consumers in the new markets to embrace its products. However, the major focus for Lenovo is to create a balance in the pricing since very low prices lead to questions of the superiority of the products while higher prices could limit the number of consumers willing purchase. The laptop product line has managed to increase Lenovo’s sales and revenues since their competitive pricing has led to customers preferring them over competitors such as Hewlett-Packard and Dell. The competitive and penetrative pricing of Lenovo’s products is made possible by the fact that the company manufactures a large percentage of its hardware components in the low cost regions of China, Brazil and Argentina. The regions are also known for their low cost labor which enables Lenovo to reduce its costs of operations. The low pricing ambitions can, therefore, see Lenovo emerge as the dominant brand in markets such as India where it has already managed to penetrate using its low cost brand of LePhone Smartphones.
PART THREE
Discussion and recommendations
Lenovo is currently on the right track having managed to make stronger brand recognition in major markets such as the United States and China. The company’s financial performance has so far been good managing to maintain strong financial ratios. The purchase of the IBM personal systems division has also been key to adding on the physical resource capacity of Lenovo. The HR department has played a major role in making Lenovo a global competitor through employees’ motivation programs that have contributed to a good reputation for the firm. Employee motivation is important in building an effective corporate culture based on teamwork and commitment from employees to continue striving to put Lenovo on the global map. The core competency of the organization in terms of taking care of the needs of employees will continue to make Lenovo improve on its product quality for a sustainable period. Its differentiation strategy proves to be important for the company since consumers would always want to associate with firms that are capable of providing a variety of products to select from. Lenovo through sponsoring sports big events such as the Olympics and popular personalities is on the move to establish itself as a key competitor in the industry. WTO trade liberalization policies have proved to be necessary for Lenovo since with the support from the Chinese government, the company has successfully penetrated global markets. Increased literacy levels due to governments investments in digital education is also proving to be important for global brands such as Lenovo since higher education levels mean increased demand for electrical products. Such measures mean that Lenovo has to identify ways to take care of the needs and expectations of billions of young consumers. Legal rules and regulations in the international markets have also ensured that fake and counterfeit products do not find their way into the markets. Such rules have also contributed to Lenovo adhering to the need to manufacture products that are of high quality.
Recommendations
Strategic objectives for Lenovo
Lenovo continues to make a significant entry into new markets with its product range that includes smartphones, personal computers, smart televisions, IT software and tablets. With a creative and innovative workforce, Lenovo needs to continue investing in its research and development programs if it is to expand its market share and dominantly participate in the international markets. Technology is constantly evolving with customers aware of the need to avoid boredom from products that do not keep the pace of technological changes. Entering markets that have large potential such as India requires that Lenovo is able to convince customers with products that are in line with consumer’s preferences and tastes and are unique compared to the competitors. Keeping the pace of innovation is the major way through which consumers could be satisfied and convinced of being loyal to the company’s products. Research and development are also key to establishing strong brand recognition in comparison to the competitors with sight set on manufacturing reliable and durable products. Technological advances have also contributed to increase in substitute products such that it is strategic for Lenovo to identify ways through which it can eliminate the threat of substitutes. Such efforts could only be achieved in case the company undertakes research in understanding consumer behavior and the factors that may lead to them shifting to rivals products. The need for research is also generated by the fact that the younger generation is becoming a major part of markets share such that it is important to identify what drives them to make purchases. Younger consumers are likely to desire unique products since they are technology savvy and realize the importance of buying superior products. Lenovo, therefore, needs to involve its production, marketing and R & D department in identifying specific needs and preferences of the young income earners.
Lenovo has also managed to build on good relationships with foreign nations among them the United States. The implication of such relations is that Lenovo needs to continue shaping its corporate social responsibilities that make it easier to deal with the influence of politics and government regulations. Penetration in the international markets will require that Lenovo is able to create a positive image with initiatives identified to improve the welfare of the community, especially in the developing markets. Having effective corporate social responsibilities is key to improving the visibility of the company where Lenovo will be able to engage its consumers on a deeper level that goes beyond the drive to have higher sales and revenues. The company has to engage in sustainability programs, encourage employees to volunteer in community programs and commit itself to various initiatives that are always monitored by foreign governments.
Conclusion
Lenovo is making huge steps towards establishing a competitive advantage over rivals such as HP and Dell. It differentiation and competitive pricing strategies have so far ensured that Lenovo takes care of the needs and expectations of both local and global consumers. A major strength for Lenovo is the fact that it identifies that consumers would want to be associated with companies that reduce the boredom of outdated products. Such actions by consumers have made Lenovo engage in research and development to understand the behavior of customers and their future preferences. The corporate culture and CSR at Lenovo is also effective and has been key to helping it build on its competent and motivated workforce as well as establish good relations with foreign governments.
References
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