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U.S. MARKET NEW ENTRY STRATEGY
Daniel Fernandez <IA12B003> Kenichiro Yoshida <IM10O015> Kaori Onodera <IM12O006> Kathleen Choo <IM12Y001> Mark Li <IM12Y008> Rachel Liu <IM12Y009> Natt Nijianskul <IM12Y011>
S. consumer market. of utilising the capabilities from Lenovo-NEC partnership to serve the U. Comprehensive suggestions with respect to the new entry strategy. operational configuration. consumer laptop market with “Thin-and-Light” ultrabooks and Halo concepts? Bigger picture – For Lenovo as a group. Analyse the value chain and Lenovo’s activities using ADDING Value Framework to identify activities that should be undertaken to add value to Lenovo Group through successful entry into the U. . How we expect our suggestions will directly (profit) or indirectly (brand) add value to Lenovo Group. if any.S. consumer market? Can Lenovo successfully compete in the U. and marketing mix. what is the key advantage. with or without the Japanese assets and capabilities? Our methodology Use CAGE Distance Framework together with internal/external analysis of Lenovo-NEC to identify SWOT.Overview Key questions Smaller picture – How can Lenovo-NEC Japan use its unique resources and capabilities to effectively enter into and compete in the U.S. Define the concepts of “Thin-and-Light” and “Halo” and devise a detailed plan for entry. Our findings Pros and cons of Lenovo-NEC’s strategy as presented to us by Rod Lappin. including what the new concepts should look like in terms of strategic positioning .S.
etc. Strength = Lenovo has historically been successful in integrating the assets and capabilities acquired through M&A transactions. 5e. Market? History = Lenovo grew inorganically (through M&A) to become a force in PC industry. Lenovo’s way of doing business: Note on X-Y Axes: HP & Dell: Source: C.A. Transnational management : Text and Cases. large enterprise. 2008 Local Adaptation . but rather to be able to cope with local demand in all senses of products and services. Lenovo can gain marketshare by more effectively adapting to the U. P. S. Local adaptation ≠ localisation of language. Locally adaptive because their offerings are sold to all segments (e.g. Bartlett. Both are facing turmoil at the moment. for instance. market.S. commercial. Global responsiveness = more standardised business processes. Ghoshal. consumer. Chapter 4. McGraw-Hill/Irwin. government). No need to be at the extreme of any dimension to achieve market leadership Apple.W. Globally responsive because business processes are highly standardised. Local adaptation = be in the locality and operate the business to fit in.New Entry Strategic Positioning Global Responsiveness Where should we be for the U.S. SMBSME. Beamish. including products and services.
e. Prioritise local adaptation without compromising other strengths.AAA Triangle for Lenovo: how should the new entry’s MNE strategy evolve for the U.? Today Efficiency Today New Entry Efficiency => Aggregation Locally adaptive => Adaptation i. do better at leverage existing international assets (especially in the U. Harvard Business Review. Be more innovative. exploiting differences Does not necessarily mean that design has to be changed or adapted to local taste. Go service-oriented something that customer appreciate more in the longer term and will add brand loyalty as a surplus to brand equity. Managing Differences: The Central Challenge of Global Strategy. the relative position on each axis is dictated by Lenovo’s strategy.e. March 2007 .S.S.). Being on the extremes is not necessarily optimal. How: Note on Adaptation: Is Apple locally adaptive?: Locally adaptive So what for Lenovo?: Innovative Source: P. too! The almost universal standardisation of Apple products and services aim to serve a relatively homogenous end-user. customising processes and offerings to meet local markets' unique needs Innovative => Arbitrage i. Product-wise: NO! Service-wise: NO. exploit existing scale.Ghemawat. Don’t try to be Apple.
2012. high-priced NEC Lenovo offerings that build brand equity for Lenovo.S. Lenovo-NEC’s entry into the U. by offering upscale. • Increase willingness to pay of entire product line. consumer segment.Lenovo’s Strategy Lenovo’s strategy is to Protect and Attack. It protects its core markets and attacks rivals in their core markets.S. consumer market purports to serve the following strategic purposes: • Attack rivals HP and Dell by increasing Lenovo’s competitiveness in the U. February 4. . both consumer and commercial. Source: Rod Lappin.
S.S. educational attainment. will benefit from the depreciation of YEN [E] / [A] Based on CAGE analysis in Appendix : (C ) Cultural distances. – from Yonenzawa to North Carolina [C] Export from Lenovo-NEC to the U.S. (A) Administrative distances.S. discourages purchase of expensive electronics [C] Low WTP for multi-functioned products. and Japan Opportunity Risk Long delivery time rooted from geographical distance – China and Japan [G] Territorial disputes in the East China Sea may have disastrous consequences on world trade and international relations [A] Disposable mentality in the U. (E) Economical Distances .Will Japanese Design Work in America? Similarities and Differences between the U. and productivity [E] Local adaption possible through complementary capabilities (i. simplicity in functionality is preferred to complexity is design [C] External Internal High recognition of Japanese-branded products [E] / [C] High perception of quality and technology from Japan [C] Similarities in GDP/capita. principal operations and research center) both from Japan and the U. (G) Geographical distances.e.
com/laptop-buying-guide/ . Sleek.cnet. High quality A/V components.” October 4. 2012. an American will consider the following dimensions in a laptop and expect: – – – – – – – Long battery life. intuitive design. Thin volume and lightweight.? Thin and light are only two of many necessary dimensions… • At $1.300 and above. High quality display.S. Source: “CNet Laptop buying guide: Breaking out the most important things to know when shopping for a new laptop. Low heating and noise. Available at http://reviews.Is “Thin-and-Light” Good Enough? What is the Definition of “High-End” in the U. At least 2 years of product durability.
cnet.perceived positioning.Product Strategy Product Family .engadget. . Made in Japan NEC HIGH Yoga 1200 700 Expected positioning loosely drawn from reviews of the La Vie: • http://www.au/whyyou-cant-have-the-worldslightest-ultrabook339341473.com. and leveraging NEC R&D QUALITY PERCEPTION Future COMMERCIAL CONSUMER Premium Category – ESSENTIAL IDEAPAD THINKPAD BYOD trend LaVie Leverage the NEC "Made in Japan" rub-off to best advantage.htm • http://www. considering the higher relative costs of an R&D & manufacturing capability focused on sophisticated consumers with high WTP.me/nec-lavie-xultrabook-gets-launched/ MEDIUM 599 500 LOW Also see next slide for table of Lenovo’s included product features.com/201 2/11/15/lenovo-ideapad-yoga13-review/ • http://itstruck.
Thin-and-Light: + Supplies a key product feature demanded by consumers. .Market Positioning: Fighting the Right Fight? Market Positioning – a potential weak connection in dual-prong strategy $600 $1. .100 “Halo” products: + Have the potential to raise brand perception. $300 $1. HP and Dell: Niche Markets Strategy: Gain traction in the U. not a sustainable competitive advantage.S. consumer market by successfully outcompeting rivals in the high-end niche markets.300 SEGMENT: Basic Productivity SEGMENT: Entertainment HP and Dell: Core Market Strategy: Steal market share by offering superior products and services at similar prices to HP and Dell. .Not clear that consumers prefer an all-in-one device to a product ecosystem.Easily copied by competitors.
500 (average retail price) × 25% (retailer’s margin // generally retail-cut in the U. is not this high) × 3% (operating margin generated by high-end PC) 67.300 range) × $1.400 US$ 1.600 US$ 1.Capturing Highly Profitable Market Potential? Price positioning and Profit calculation 10% 25% $ 1300 PC 70 % 18% 16% 14% 12% 10% 8% 6% 4% 2% Distribution of volume and Sales Revenue Volume $ 700 PC >>>>> Calculations and assumptions (all assumptions are done conservatively) 67.48M [Assume Lenovo’s extra 10% segment share would yield ~ US$ 150 US$ 200 US$ 250 US$ 300 US$ 350 US$ 400 US$ 450 US$ 500 US$ 550 US$ 600 US$ 650 US$ 700 US$ 800 US$ 900 US$ 1.100 US$ 1.500 US$ 3.500 US$ 1.000 US$ 1.4M× 10% × $1.800 US$ 1.4 M cumulative units sold (all vendors) × 10% (volume share of high-price segment of over $1.900 US$ 2.S.300 US$ 1.000 45 % 0% .500 × 75 % × 1% × 3% = $227.200 US$ 1.700 US$ 1.000 US$ 2.
geographic disadvantage and the efficiency of targeting only the dense markets U.S.S. 2012 .’s poor infrastructure conditions coupled with wide geographic spread = high cost impact on supply & distribution • Source #1: The Economist.Product Strategy Distribution – U. Report by the Department of the Treasury with the Council of Economic Advisers. March 23. April 28 2011. America’s Transport Infrastructure. Life in the slow lane • Source #2: A New Economic Analysis of Infrastructure Investment.
S.Global Supply-Chain for La Vie MANUFACTURING PROCUREMENT Lenovo’s Global Procurement Strong bargaining power vis-à-vis input suppliers Factories in Japan DISTRIBUTION Customisation in U.S. Lenovo’s Distribution Channels Economies of scale Improve brand-image and Willingness to Pay Improve market responsiveness and CRM Normalise exchange rates Cost savings High-quality input materials purchased at competitive prices Manufacturing factory in North Carolina High demand for La Vie Let us make it in the U.! .
EXPERIENCING • Premium shelf space.Adding Value through Effective Promotion Tools for Effective Promotion of Lenovo in the U. MOBILE WORLD. CALL CENTERS . Ads on Financial Times. concept only • Multimedia ads to cover all targeted customers (Creative YouTube features. E3) AD CAMPAIGN Multimedia.S. Sponsored stories on Facebook) DEBUT TRADE SHOW as the debut to improve exposure (CES. Integrated Marketing Campaign PRELAUNCH Concept promotion focus on LIGHTNESS • Product in dark. free-trial – To EXPERIENCE the LIGHTNESS & • Banner-ads linked to LENOVO E-SHOP • Consistent Ads channels as PRE-LAUNCH but product focused Improve WTP by ADDING-VALUE Extended Warranty Customised Consultancy and Support Service Gift card/vouc her & trade-ins credits Offer software/service packages Business-related for BYOD User Games/Movie editor For FUN users … Trade-ins as extended CRM tool 24-HOURS PROLONGED PROFESSIONAL COMPREHENSIVE END TO END On-site EXPERTS QUICKRESPONSE U.S.
intuitive design Channels • Retailer e.500 13”. display. Amazon.500 .13” Display Key Features • Thin and light • Long battery life • Low heating and noise • Sleek.300 .$2. intuitive design La Vie X Young Urban Professionals $1.g. newegg • Lenovo Web Channels • Top-shelf at premium retailer (not limited to IT retailer) .La Vie Segmentation and Recommendation BYOD-ORIENTED La Vie Z Affluent College Students $1. BestBuy • Etailer e.g.500 .000 11” . and graphics card • Desktop replacement • Low heating and noise • Sleek.$3.g. Amazon. BestBuy • Etailer e.500 17” Display Customised Components Key Features • High quality CPU. newegg • Lenovo Web Channels • Retailer e. memory.15” Display Key Features • Enhanced productivity • Thin and light • Longer battery life • Sleek.$2.g. intuitive design • Large SSD storage [Future] La Vie G? PC Gamers $2.
S. ③ Incorporate NEC Lenovo’s design ③ View NEC Lenovo simply as an philosophy into all of Lenovo’s future experiment in selling products made product offerings. with consumer users. heterogeneous in their needs.S. Entry La Vie in the U.S. Consumer Market: Strategic Keys to Success Do! Do Not! ① Attack HP and Dell by selling La Vie ① Expect to win most of the U. ② Underestimate the demands of the ② Recognise the limitations of “ThinAmerican consumer.S. consumers. not as global purchasing trends. consumer market with an expensive. it does not lead to high-end technical features at sustainable competitive advantage. Users are stand-alone product.Summary: Successful U. for Japan to U. . She will expect and-Light”. X and Z to the U. market competitive prices and lead View as design philosophy.S. improve Lenovo’s brand perception high-end “Thin-and-Light” product. consumer.
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