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Lenovo Group: Innovation and Expansion in the Digital Age
MarketLine, November 2012, Pages: 24
In 1984, the Chinese Academy of Sciences provided funds of CNY200,000 (around $25,000) to found the New Technology Developer Inc., which, following a series of name changes and several acquisitions, would go on to become Lenovo Group Limited, a global IT company with revenues of almost $30bn in its FY2011/12.
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- MarketLine Case Studies describe topics such as innovative products, business models, and significant company acquisitions.
- Fact-based and presented in an accessible style, they explain the rationale of commercial decisions and illustrate wider market and economic trends.
Through product innovation, the establishment of a national sales network, a focus on the Chinese consumer, and brand recognition, Lenovo has established itself as a leading player in the Chinese PC market, holding a 35.2% market share in Q1 of its 2012/13 financial year.
Through a number of mergers, acquisitions, and joint ventures, Lenovo has managed to grow its global footprint in recent years, increasing market share in both mature and emerging markets in the process.
Spurred on by technological advancement and consumer trends, Lenovo has diversified its hardware offering, and now offers tablet PCs and smartphones in addition to traditional PC products.
Your key questions answered
- How did Lenovo grow from a small start-up company to become the top player in the Chinese PC hardware market?
- How has Lenovo expanded into the international market, and what strategies has it employed to boost its global footprint?
- How has Lenovo adapted to changes in the technological landscape?
THE COMPANY IS A MARKET LEADER IN CHINA
- The company’s initial innovation kicked off Chinese optimized computing
- Legend capitalized upon the growing Chinese PC market
- The group has responded to challenges in the Chinese market
-- Prior to FY2005/06, China accounted for the vast majority of Lenovo’s revenues
-- A maturing market and competitors’ growth in market share threatened Lenovo’s stability
-- Lenovo’s acquisition of IBM’s PC division further consolidated its Chinese dominance
LENOVO HAS GROWN ITS GLOBAL FOOTPRINT
- The acquisition of IBM’s Personal Computing division paved the way for global expansion
-- The acquisition led to the creation of a multinational PC player
-- Ensuing partnerships with IBM further facilitated Lenovo’s global expansion
-- The acquisition of IBM’s PC division quadrupled Lenovo’s revenues and established the company in the US
-- Lenovo utilized global events in order to promote the Lenovo brand name outside of China
-- Lenovo now focuses on regional sponsorships, rather than global ones, to target key markets
- Lenovo has established a strong presence in other mature markets through further acquisitions and joint ventures
-- The 2011 acquisition of Medion AG expanded Lenovo’s Western European presence
-- Lenovo’s joint venture with NEC Corporation created another market leader
-- Lenovo’s mature market revenue has dramatically increased in recent years
- Lenovo has recently expanded this strategy to Brazil
-- The Brazilian market is expected to achieve very strong growth to 2016
-- Lenovo has invested heavily in its Brazilian operations this year
-- Lenovo has acquired another consumer electronics company in Brazil
LENOVO IS DIVERSIFYING ITS HARDWARE PRODUCT OFFERING
- The IT market is changing
-- Lenovo sees product diversification as complementary to its PC offering
-- Apple’s success is reflective of market change
- Lenovo has entered the smartphone market
-- Lenovo has reacted to industry trends by reacquiring its mobile handset business
-- Pricing and brand recognition have been key to Lenovo’s smartphone success
-- Lenovo will target emerging markets next with its smartphones
- Lenovo has entered the tablet PC market
-- Lenovo offers tablet PCs both within and outside of China
-- Hybrid tablet PCs innovate Lenovo’s traditional PC offering
- Lenovo has established itself as a global IT hardware provider
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