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Lenovos Acquisition of IBMs PC Division: A Short-cut to be a World Player or a Lemon that Leads Nowhere?

2. Identification of the problem(s), causes and negative effects: 2.1 2.2 Identification of the problem(s); Identification of the potential negative effects that will appear if the problem(s) is/are not going to be solved; 2.3 Identification of the causes that led to the appearance of this/these problem(s).

2.1 Identification of the problems ; The acquisition of IBM PC division as part of the expansion strategy. Cultural and political barriers Difficulty of the integration of the brand The company was unfamiliar with customer service, customer relationship and different marketing strategies The lack of understanding customers, competition

2.2Identification of the potential negative effects that will appear if the problem(s) is/are not going to be solved; Negative effects: Inability to maintain cost competitiveness. Other expansion strategies might be too difficult to apply and it would take a lot of time to get the same access to international markets in other ways. Consumers could start to switch away in spite of the progressive rebranding. Inability to maintain cost competitiveness.

2.3Identification of the causes that led to the appearance of this/these problem(s). - Lenovos share of world PC market was only 2.2% and the company ranked number nine, behind Dell, HP, IBM, Fujitsu/Siemens, Acer, Toshiba, NEC and Apple and therefore it wanted to increase its market share position. - Having 27% of market share in China, it became the leader in its country thus Lenovo wanted to expand at a global level. - Lenovo tried using a strategy which consisted in expanding to non-PC areas which has failed and then it concentrated only on PC products. - The main cause for the financial problem was the pressure from the market leader Hewlett-Packard and Dell which led to fierce cost competition, which made the firm even harder to raise its margin.