C A S E S T U DY 9

LENOVOS BRAND BUILDING STRATEGIE:

TAKING THE COMPETITION TO COMPETITORS
WITH TRANSACTIONAL MODEL
 Agenda
Brief Summary about the case
Global PC Industry
Lenovo: From Emerging to Surging

Key Challenges of Lenovo from the case

Recommendations
 Agenda
Brief Summary about the case
Global PC Industry
Lenovo: From Emerging to Surging

Key Challenges of Lenovo from the case

Recommendations
 Overview of
Global PC Industry
 Overview of
Global PC Industry
Since early 1980s, PC industry has been the most dynamic
electronic industry sector

The global PC industry reached mature level by mid-1990s

Dell and Gateway starts their build-to-order

strategies, resulted to the total supply chain respond swiftly
to change

Emerge of e-commerce (online sales) hastened PC industrys

clock speed
 Overview of
Global PC Industry
PC-makers enjoys high profits 1990, however, they
experiences an extreme downfall in early of 2000

In 2004, in order to maintain PC vendors market

position, vendor consolidation can develop economies of
scale in order to go into a global presence

Global PC industry currently affected by two major trends;

commoditization which is about mass-produced and the
absence of mid-market, which separate to the customers
that demand cheapest products and that of exclusive
products
 Agenda
Brief Summary about the case
Global PC Industry
Lenovo: From Emerging to Surging

Key Challenges of Lenovo from the case

Recommendations
 About Lenovo:
From Emerging to Surging
1984 Established as Legend Group in Beijing Had product and
distribution facilities in US, UK, Mexico, Malaysia, Hungry,
China, and Brazil

2003 Changed its brand from Legend to Lenovo

2005 Acquired IBMs PC division and became the worlds third

biggest PC-maker

2006 Lenovo started becoming a partner sponsor in sports

events and sigh the contract to become the sponsor of Beijing
Olympic 2008
2007 Started implementing a worldwide expansion plan by building the second
plant in India. Lenovo tried to solidify its presence in US by selling both brand
Lenovo and ThinkPad (a brand of IBM)
In August announced the taking over Packard Bell BV, the 5th biggest PC-maker
in Western Europe
 About Lenovo:
From Emerging to Surging

2008 Lenovo enters the Worldwide consumer PC market with

the new "Idea" Brand.

2009 Launched the new strategy Protect and Attack

2010 Lenovo introduced over 20 new devices at the consumer

Electronic show in Las Vegas

2011 In January Lenovo formed a PC joint venture with Japanese

IT company NEC, In quarter 3 Lenovo acquired Medion, a
German electronics manufacturing company .

2012 Lenovo took the 2nd place in global PC market share with
the share around 15%
LENOVOS GLOBAL BRAND BUILDING STRATEGIES
TRANSACTIONAL MODEL
 LENOVOS GLOBAL BRAND BUILDING STRATEGIES

China
Relationship model: bulk orders from big enterprises

Transactional model: serving customers with

common requirements and who need lesser
customization. Target small- to mid-size companies and
individual customers
 LENOVOS GLOBAL BRAND BUILDING STRATEGIES

Global
Relationship model: acquire IBM PC division
Transactional model: become tech-sponsor for Turin
& Beijing Olympic games, partner with NBA, offer
both ThinkPad and Lenovo brand complement the
product offering
China-based supply chain model: fulfills every
order on time with better IT system
 Agenda
Brief Summary about the case
Global PC Industry
Lenovo: From Emerging to Surging

Key Challenges of Lenovo from the case

Recommendations
Key Challenges of LENOVO
raise from the case
 Key Challenge #1
Brand Building Challenges

Building a global brand in

highly commoditized
PC industry

Hurdles in building
strong brand
in the US market
Key Challenge #2
The Backyard Counterfeits
Chinese counterfeits of IT products & components
Key Challenge #3
Intense Competition

Growing competition
from international
players

At home competition
with local PC producers &
companies with
lower prices
Key Challenge #4
Cost-Cutting is the only solution
to profit margin
Supply chain network
internationally

Outsourcing Trends (CMs: Contract manufacturers)

Key Challenge #5
Proliferation of technologies

Dual Multiple All in One Functions

and Interconnected digital technologies
 Agenda
Brief Summary about the case
Global PC Industry
Lenovo: From Emerging to Surging

Key Challenges of Lenovo from the case

Recommendations
How Lenovo, as a state-owned Chinese
company, could prevent the negative
viewpoint as endanger to
US national security?
 How Lenovo, as a state-owned Chinese company, could prevent
the negative viewpoint as endanger to US national security?

Brand Portfolio Strategy

- Focusing more on Product brand
rather than Corporate Brand

PR & Sponsorship/CSR Campaign

- Marketing and Partnership with world-class
events and exhibition i.e. Olympic Games,
World Cup, or even NBA in US
- Donations, Social Responsibilities Program
in US to gain good corporate image
 How Lenovo, as a state-owned Chinese company, could prevent
the negative viewpoint as endanger to US national security?

Focus on Quality and Innovation

- Build key competencies on quality and innovation to
to overcome state owned Chinese company image
and narrow the gap of country of origin effect

Household PC market in US
- Better penetrate to household PC market
segment in US where low loyalty to US origin
brand and concern more for affordable price
and efficient features
How to build a global brand
in a highly commoditized PC industry?
 How to build a global brand
in a highly commoditized PC industry?

Customized products and services

higher value added, unique product design,
new product category

Continuous R&D for new innovation

Efficient resource utilization

Effective distribution channels

 How to build a global brand
in a highly commoditized PC industry?

Create strong brand loyalty such as excellent customer

service, after sales service

Rebranding Lifestyle products not discounted products

Advertising and sponsorship for global event

- Olympic games
- National Basketball Association
How to cope with Counterfeits?
 How to cope with Counterfeits?

Continuously deliver new

innovation to its products
R&D investment
Building Brand loyalty
Trust in quality

Secure intellectual property

when outsourcing more
operations to suppliers
partners
Transition of technology and
know-how to suppliers should be
done appropriately
How to improve SUPPLY CHAIN internationally?
 How to improve SUPPLY CHAIN internationally?

Why is supply chain important?

IT product: depreciate and become outdated easily

Past: 30-day shipping from China to USA

Present: Fully integrated global supply chain

Global Supply Chain
 Current Supply Chain Management

Lean Six Sigma: To eliminate 7 kinds of waste:

Defects, Overproduction, Transportation, Waiting, Inventor
y, Motion and Over-Processing

SAP Software: To deal with wide range of customers

Key KPIs: Cost, On-time delivery, Cash conversion, Quality

Lean Six Sigma
How to sustain in Global Competition?
 How to sustain in Global Competition?

Maintaining competitive advantage on low cost

Continue with global brand image

Make use of the strong B2B market to expand to

B2C market

Quickly adapt to any customer change

 Other Recommendations

Forecasting System

Risk Management: Sensing and Responding

Known-Unknown Risk

Commitment Review by Executive Management

Be Prepare
Collaborators turning to competitors
Foreign governments
Exchange rate fluctuation
 . . .T H A N K YO U
CASE STUDY 9
LENOVOS BRAND BUILDING STRATEGIE:
TAKING THE COMPETITION TO COMPETITORS
WITH TRANSACTIONAL MODEL