Lenovo Report

In: Business and Management

Submitted By greatgates
Words 80647
Pages 323
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...FDI strategy vs. gaining competitive advantage in foreign markets- the case of Lenovo FDI in theory FDI is one of the options companies have while considering doing business abroad. The other possibilities are exporting and licensing. Licensing allows the company to use the property of the licensor in a foreign market. It’s intangible kind of intellectual property e.g., trademarks, patents, and production techniques. The owner of the license is charged a fee in order to receive rights to use the intangible property with possible technical assistance. Many time licensing allows companies yield high returns. The main threat for the investors using this mode is loss of potential returns from marketing activities and manufacturing Exporting stands for the marketing and direct sale of domestically produced goods abroad. It’s one of the most traditional ways of reaching foreign countries. This mode does not require production of goods in the foreign market, so no cost of foreign production facilities is needed. Most of the investments demanded in the exporting procedure have the form of marketing and logistic expenses, these cost are most of the time higher than those in the domestic market, since the exporter has to get foreign sales data and also know-how of marketing customs in target market Doing business in a foreign country calls for additional activities which incur additional monetary and human costs. Additional tasks are among logistics of co-ordinating operations......

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...Lenovo Problem: Lenovo worked on the strategy to build a master brand while leveraging the ThinkPad product brand name, thereby implying an immediate challenge of maintaining the loyalty of existing customers, specifically the ThinkPad, while sustaining innovation at the same time.  Moreover, the much thought out first innovation in the form of the X41 Tablet series from Lenovo after the acquisition, led to IBM being given all the credit owing to the less popularity of Lenovo. The association of Lenovo with China and the Chinese Government  was a potential downside for it to compete in price competitive products with the fear of being recognized as the company from China providing cheap products. This not only had the potential to devalue the Lenovo master brand, but could also damage the premium ThinkPad brand. While a relatively low budget on worldwide marketing as compared to its competitors also proved to be a reason for its market share to that of the PC market leader being as low as 1:3. Competition: Dell was Lenovo’s greatest competitor, being the market share leader with a strong global footprint. The direct sales approach rather than the retail store distribution model led to its rapid growth in China. Similar to Dell, HP, another competitor of Lenovo, also focused on providing standardized products while maintaining a low cost and supply chain. Moreover, Apple and Sony concentrated their energies on innovation and providing premium products. Other competitors......

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...portfolio company have a number of methods by which our financing can be repaid and our equity investment sold or redeemed. These methods would typically include the sale or refinancing of the business or the ability to generate sufficient cash flow to repurchase our equity securities and repay our loans. • Structured Products Criteria. We receive extensive information from the issuer regarding the mortgage loans, commercial loans and other securities that are the underlying collateral for a CMBS, CLO or CDO pool. We underwrite the collateral securing our investment as appropriate. 2) How would you describe Lenovo’s strategy and business model relative to its key competitors? How is Lenovo’s strategy reflected in its financial statements? • Lenovo is still heavily weighted in PC sales (90% of sales) however they are looking to diversity their product mix • They are looking to launch new products such as smartphones and TV’s and leverage their brand more to generate higher margins • They are protecting their core markets in China and global commercial PC sales and attack in mobile, consumer and emerging markets • These attack business delivered roughly ½ of revenue so we should see improved total overall margin • Invest in innovation so should see high R&D costs, good ROI on these costs • Used to outsource ~ 70% of manufacturing but now moving into manufacturing space in an effort to be more vertically integrated and improve gross margins • Rising wages and......

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...| 4. Place | 3 | 5. Promotion | 3 | 6. Conclusion | 4 | Background of Lenovo Lenovo is a Chinese multinational computer technology company that was founded at 1 November of 1984 and was also approved by the Chinese government on that day. The headquarters of Lenovo Group Ltd was located in Beijing, China, and Morrisville, North Carolina, United States. Lenovo’s first major success was developing a circuit board that would allow IBM-compatible personal computers to process Chinese characters after several of failed plans. Reason of the failure was because they were compounded by the fact that its staff had little business experience. After keep on improving , Lenovo company eventually managed to manufacture and market computers using its own brand name on 1990.Since then , Lenovo had develop magnificently and also was listed in Hong Kong was incensement of nearly US$30 million on year 1994. Because of its good management, strong brand recognition, and growth potential , Lenovo’s stock market had been keep on raising until many analysts were optimistic about Lenovo. Lenovo issued a secondary offering of 50 million shares on the Hong Kong market in March 2000 to fund its continued growth and it was raised up to US$212 million. In year 2015, Lenovo Group Ltd had now become one of the most improved and famous computer technologies in this world. Product of Lenovo Lenovo expanded in a far-reaching way in 2005 through its obtainment of IBM's PC business,......

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...examiner of this assessment item may, for the purpose of marking this assessment item: reproduce this assessment item and provide a copy to another Griffith staff member; and/ submit this assessment item to a text-matching service. This web-based service will retain a copy of this assessment item for checking the work of other students, but will not reproduce it in any form. Examiners will only award marks for work within this assignment that is your own original work. I, hereby certify that: except where I have indicated, this assignment is my own work, based on my personal study and/or research. I have acknowledged all materials and sources used in the preparation of this assignment whether they be books, articles, reports, lecture notes, or any other kind of document or personal communication. I have not colluded with another student or person in the production of this assessment item unless group work and collaboration is an expectation of the assessment item. this assignment has not been submitted for assessment in any other course at Griifith, or at any other University or at any other time in the same course without the permission of the relevant Course Convenor. I have not copied in part or in whole or otherwise plagiarised the work of other students and/or other persons. I haven’t made this piece of work available to another student without the permission of the Course Convenor. Providing this declaration falsely is......

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Lenovo Wacc

...Lenovo Group Limited Background: Lenovo Group Limited is a technology company that is principally engaged in the sales of personal computers, tablets, smartphones and other cutting-edge technology. It is the global leader in personal computer sales.i While it operates in over 160 countries, 38% of its sales (over 68% of adjusted pre-tax income) come from China.ii Lenovo trades on the US OTC market (LNGVY) at $31.10 a share and trades on the Hong Kong stock exchange (0992:HK) at HKD11.94 a share. Its total market capitalization as of 9/19/2014 is about $16.2B with around 520.4M shares outstanding. Lenovo operates in over 160 countries and has a global headcount of 54,000. Lenovo breaks its performance into four geographic regions in its annual report: China, Asia Pacific (AP), Americas (AG), and Europe-Middle East-Africa (EMEA). In the fiscal year ended March 31, 2014, China accounted for 38% of total revenue, AP accounted for 16% of total revenue, AG accounted for 21% of total revenue, and EMEA accounted for 25% of total revenue. Additionally, revenue is broken up as follows: 51% is in notebook sales, 28% is in desktop sales, 15% is in mobile internet devices, and the rest is in other areas.iii Cost of Equity: Re=Rf + CRP + β (MRP) = 2.59% + .90% + .76 (3.07%) = 5.82% To calculate Lenovo’s cost of equity, I used a method of CAPM in which I added a country risk premium to the standard CAPM equation. Rf =2.59% In order to maintain consistency between cash flows and the risk......

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Lenovo

...LENEVO – BUILDING A GLOBAL BRAND Why did IBM want to sell its PC business? Why did IBM sell to Lenovo? Some of the main reasons why IBM decided to sell its PC business in the year 2004 are as follows, 1. UnprofitableOperations 2. MaturedPCMarket 3. Focusonservices Unprofitable operations: IBM experienced a great loss in its PC business between the period 2002 to 2004. The company lost almost one billion dollars selling personal computers during that period even after outsourcing most of its PC manufacturing in the year 2002. Also IBM failed to protect its PC intellectual property when the company outsourced its processor and OS development activities to Intel and Microsoft respectively. This allowed Intel and Microsoft to emerge as vigorous competitors for IBM, which in turn impacted IBM’s market share. This clearly indicates that IBM’s operational activities were not up to the mark. Matured PC Market: Many leading competitors started slashing the PC’s price and the average price of the PC system kept decreasing by 6% every year. Since IBM’s product were more innovation oriented, the company could not sell the premium product for a cheaper price. This scenario also increased the market share of leading vendors at the expense of IBM. IBM considered that the PC’s were more and more at the fringe. Clearly, IBM did not want to trade off the brand image by selling PC’s for cheaper price because of the saturating market. Focus on Services: IBM was getting out of the PC......

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Lenovo

...customers can be a source of advantage. Dealing with the sophisticated and demanding customers at national with low cost computers since 1996 and current domestic leader in PC industries in China. Huge market (half population of the world: China and India, and aggressively growing economy with double digit economic growth) [3] Related and Supporting Industries: Local clusters of related and mutually supporting industries is main advantage. Regional based and personal interaction easy and effective. Strategic alliance of Lenovo with TCL in china and IBM in U.S. [4] Firm Strategy, Industry structure and rivalry: Firms strategy to invest in technical excellence in IT industry, Competitive local industry structure & strong rivals with IBM based on government policy Lenovo had achieved USD 1.6 billion in sales accounts 45% of their total worldwide sales even with economic downturn. Its market share rose last year at 1.8 % to overall of 30.5 % (Lenovo Corp, 2009) National Disadvantage No disadvantage from its China base. But there is no replacement plan when China increases its labor price which is likely to be in the near future. Example: The case of Apple manufacturing unit in China. (21 people committed suicide due to work pressure till June 2009). (Source BBC, 9 June, 2010) Also, in the sigma associated with Chinese products with a reputation skimping on quality to achieve low cost which mistrust the customers. In the light of the CAGE framework and......

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Lenovo

...When we talk about Lenovo, IBM is an inevitable subject. This company is definitely one of the most famous computer firms in the world. The company has got a nickname "big blue" for its innovative culture and the product branding. In 1981, IBM has introduced its first PC to the market. In 1992, ThinkPad series and ThinkCenters began to enter the market, which has gained a very good reputation by its quality service and innovative design. In December 2004, the PC division of IBM including the "Think" series was sold to Lenovo Group, which is the biggest PC manufacturer in China. This acquisition has been considered as an important step for Lenovo's going global. Today, Lenovo has become one of biggest PC makers in the world. ▪ Important Issues 1. the global market outside of China Lenovo has been the leader in Chinese PC market since 1996. It announced the entering into global market by taking over IBM PC in 2004. If we look at Lenovo's annual reports of the recent years, about half of the sales have always been completed in China. Although Lenovo has got a quite good performance in this biggest PC market in the world, in other countries, the influence of this brand is still limited. taking the world's second PC market - America for example, after IBM PC has been sold, the five biggest PC market share became HP, Dell, Apple, Toshiba and Acer. Lenovo has not been able to entered the main PC market in US yet, while IBM has already quit the competition. Table 1: Top......

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Lenovo

...COURSE: MKT. 2500*08 Semester: Spring 2010 Professor: Prof. Vaccaro Company Name: Lenovo Group Limited STUDENT NAME& EMAIL& PHONE #: LENOVO CASE PAPER For Principles of Marketing MKT. 2500 With Citations & References Table of Contents I. Background a. The Industry b. The Company c. Product/Services d. Target Market II. Key Issues/Problems III. Alternative Solutions a. Alternative #1 b. Alternative #2 c. Alternative #3 IV. Key Recommendation Ⅴ. Bibliography/References Pg. 3-5 Pg. 3 Pg. 3-4 Pg. 4 Pg. 5 Pg. 5-8 Pg. 9-10 Pg. 9 Pg. 9 Pg. 10 Pg. 11 Pg.12 I. Background a. The Industry “The global PCs market has seen a shift in consumer preference to the budget range PC, from the PC at the cutting edge of technology. Consequently, despite increasing volume sales, the majority of PC markets have lost value in recent years. Strong growth in the Asia-Pacific markets have somewhat buoyed the global market. The global PCs market reached a value of $142.9 billion in 2003, having grown with a compound annual growth rate (CAGR) of 0.7% in the 1999-2003 periods. The leading revenue source for the global PCs market in 2003 was the desktop sector, which accounted for 69.3% of the market’s value. In value terms, this sector was worth $99 billion in 2003. During the next five years, the market is expected to experience steadily......

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Lenovo Market Report

...Strategy for Lenovo Company Table 1. Introduction 2 2. Motives of international expansion strategy of Lenovo 2 3. Determination of target market 4 3.1 Macro environment factor 4 3.2 Characteristic of Lenovo Company 6 4. Market entry mode 7 4.1 Exporting mode 7 4.2 Licensing and franchising mode 8 4.3 Joint Venture 9 4.4 Wholly owned subsidiary 10 5. International competitive strategy 10 5.1 Strategy clock model 11 5.2 Center identification 13 6. Challenges and suggestions 15 6.1 Challenges 15 6.2 Suggestions 16 7. Conclusion 17 1. Introduction In the current commercial economy, the global economy has changed rapidly in the near decades. Barrier of trade between the different borders has been not a headache for many multinational companies any more. What is more, in accordance with the data from WTO, the increase of multinational trade is becoming more and more dramatically in comparison with the global output. (Liu, 2005) As a result, it is suggested that current economic system is transferred to be more globalised, integrated and interdependent. Thus for many enterprises or just like your company Lenovo, to have a plan on the international expansion strategies is of the essence. 2. Motives of international expansion strategy of Lenovo Lenovo, which was found in 1984 with 11 engineers gathered in a boardroom in China, has achieved unbelievable success since its foundation. However, in spite of Lenovo......

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