Lenovo Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Lenovo, originally known as Legend Group, is one of the largest personal computer (PC) manufacturers in the world. It employs more than 25,000 people and has more than 66 overseas branches, operating in more than 166 countries across six continents. Lenovo is the best-known brand in China and Asia, with $164 billion annual turnover in 2007.

Legend was originally established in 1984 by 11 Chinese computer scientists with initial capital outlay of RMB 200,000 (US$25,000), headed by Lenovo’s founding chairman Liu Chuanzhi. In 2003 the company changed its official business name from Legend to Lenovo. As the most respected Chinese technology company, Lenovo offers a range of product categories, including personal computers, networking products, software and peripherals, mobile handsets, and other digital products. Its award-winning Think products (Thinkpad notebooks, Think-Certer desktops, etc.) have been ranked as premium-brand leaders in the global PC industry. As the leading technology company in China’s information technology (IT) industry, Lenovo commands more than one-third of the PC market in China, 7.6 percent of market share in the world. According to Gartner’s marketing report, Lenovo is ranked the fourth PC seller in the world compared to HP, Dell, and Acer, with market shares of 18.3 percent, 14.9 percent, and 9.5 percent, respectively, in 2007.

Lenovo’s development can be divided into three significant stages: initial development (1984–93), domestic growth (1994–2003), and going international (2004–). In the early 1980s, China experienced significant changes both politically and economically.

Information systems and technology development became the fastest growth areas in China. With 11 employees, Lenovo began selling foreign computers to Chinese customers. Its initial entrance into the PC market was as a sales agent of IBM. Slowly, the company began to grow by developing and commercializing its own IT products. In 1988 Lenovo launched its own brand of personal computer and established its Hong Kong branch. After nearly 10 years of initial development, Lenovo completed its role change from a sales agent to a computer manufacturer.

Between 1994 and 2003, Lenovo entered its rapid domestic development era. The company realized that the Chinese PC market was not yet captured by major international players, such as IBM, Compaq, or even Acer. Very quickly, Lenovo decided to develop and retail PCs at a low cost to Chinese customers. This strategy made Lenovo a huge success. In 1996

Lenovo became the market share leader in China for the first time and commanded 27 percent share of the PC market in China by 2003. In 1994 Lenovo was listed on the Hong Kong stock exchange and became a constituent stock of the Hang Seng Index in 2000. After 20 years of development, Lenovo successfully became a leading brand in the IT industry and an important player in China and Asia. In 1999 the company was ranked in the Chinese national top 100 electronic enterprises and became the top PC vendor in the Asia-Pacific region. In 2000 it was ranked in the top 10 of the world’s best-managed PC vendors.

After holding the leader position in Chinese and Asian markets, Lenovo aims to expand its business internationally to succeed in the long term. Acquiring IBM’s Personal Computing Division was a milestone in the history of Lenovo’s international expansion that made it China’s “go global” star. On December 8, 2004, Lenovo announced acquisition of IBM’s PC business with US$650 million in cash and US$600 million common stock. This strategic alliance gave Lenovo’s customers preferred access to IBM’s world-class customer services and enabled Lenovo to take advantage of IBM’s powerful worldwide distribution and sales network. The business transaction with IBM made Lenovo the world’s third-largest PC business with approximately US$12 billion annual revenue for 2003.

The success of the company is also highly correlated with its emphasis on technology innovations.

Lenovo is the first Chinese company to introduce PCs to households in China and first developed the Legend Chinese Character Card that could be used to translate English operating software into Chinese characters. This pioneering innovation has affected the lives of millions of Chinese and received the highest National Science-Technology Progress Award in China. Additionally, Lenovo’s three research centers—China, Japan, and the United States—have produced many world-class advanced PC products. The company now holds more than 2,000 patents and has won hundreds of technology and design awards. Its extraordinary research and development capability has distinguished Lenovo from its competitors.

Bibliography:

Jerry Biediger et al., “Strategic Action at Lenovo,” Organizational Dynamics (v.34/1, 2005);
IBM Press Room, “Lenovo to Acquire IBM Personal Computing Division,” www.ibm.com (cited March 2009);
Lenovo Company History, lenovo.com.cn (cited March 2009);
Gua Hua Sun, “Lenovo’s Annual Profit Double Increased,” Hexun News (May 23, 2008);
Wie Xie and Steven White, “Sequential Learning in a Chinese Spin-Off: The Case of Lenovo Group Limited,” R and D Management (v.34/4, 2004).

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