0% Seoeraphic based structure became affective in April 2012 with the creation of new report HE pusiness units as fllows: (1) China, (2) Asia-PacficfLatin America (APLA), (3) Burope- Middle East-Airca (EMEA), and () North America. The new geographical structure, according ‘0 Lenovo, enables the firm to stay as close to its customers as possible. Strategy Lénove is still primarily a PC company, but demand for PCS is falling; however, demand for Smariphones is rapidly growing, so Lenovo is shifting gears. In smartphones, Lenovo ne ‘compet- ing wih Chinese rivals, such as Huawei Technologies Co Lid. and ZTE Corp, tht ae already Gitons the top-five smariphone companies globally. Although the second-bigeest smartphone vender in China, Lenovo has begun selling smartphones in Russia, Indonesi the Philippines, ing, Vsimam, but the company faces suff competion globally from Samsung Becton ts Ltd, and Apple Inc, “Selling Pear jot Supplers and to Keep down costs. Speaking on this topie, Yuanging ssid Selling PCs i like selling fresh fruit The speed of innovation is very fast ex ‘you must know £00 $0 Keep up with the pace, control inventory, to match supply with demand and hone very fest mover” Lenovo benefited from its vertical integration after flooding affooed toot on ive manufacturers in Thailand in 2011 because the company could continue ‘manufacturing opera- ‘enovo began to accentuate vertical integration aftr a meeting in 2009 in whick Yuanging, aia the head of Lenevo's supply chain, analyzed the costs versus the benefits of nchowe na CARINE and decided to make atleast $0 percent of Lenovo's manufacturing inhowe Lonny tie! Technology Officer George He said that verieal integration hasan imran soe ig rod- var development He stated, “If you look at the industry tends, most innovations for Pox eave, Phones tablets and smart TVs ae related to innovation of key components—display, battery and ing very closely with key parts suppliers." 5 Lenovo has partially moved production ofits ThinkPad line of computers to Japan. ThinkPads are produced by NEC in Yamagata Prefecture. Akael Said, “As a Japanese, Yam glad to sce the retum to domestic prods Carolina, For Lenovo's third quarter of 2012 that ending December 2012, the company reported a Auanecy profit of $200.0 million, up 30 percent from a year previously. That amount eeeccoa its previous record of $163 million, on strong sales of sinartphones and tabler computers. For the fist quarter, Lenovo's revenue grew 12 percent from a year previously to $9.4 billion, but the bulk of dhat still came from its PC business. Lenovo shipped 9.4 milion smartphones in the ‘hts quarter, all but sbout 400,000 of them however in China. CEO Yang says “the smartphone Zuriness outside China is ‘sil inthe fist stago’and Lenovo needs to invest to gain mae share before focusing on profitability." The company’s third-quarter revenues in the ‘rowing PC market rose 7 percent to $7.9 billion, Tenove’s global marketshare in PCs increased to 15,9 percent in the third quarter, tal 1g Neularly at home in China, the world's biggest market for mobile phones and PCe {jbo a one-tenth of Lenovo's third-quarter revenues in 2012 ame from is mobile Internet 'ess—mainly consisting ofits smartphone sales in China, which ‘on, although that was only 11 percent of total revenue. The com. >F media tablets rose 77 percent to 800,000 units. MIDE now con. (ibutes 1 percent of Lenovo's overall revenue. At the en of the tied quarter in 2012, Lenovo is ‘mumber-three worldwide in Smart Connected Devices (PC's, tablets, and smartphones). CASE 20 + LENOVO GROUP LIMITED, 2¢