You are on page 1of 38

CASE STUDY 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
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
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
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
LENOVOS GLOBAL BRAND BUILDING STRATEGIES
Gl obal
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?
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 build a global brand
in a highly commoditized PC industry?
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 cope with Counterfeits?
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

How to improve SUPPLY CHAIN internationally?
Global Supply Chain
Current Supply Chain Management
Lean Six Sigma: To eliminate 7 kinds of waste: Defects,
Overproduction, Transportation, Waiting, Inventory,
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?

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

How to sustain in Global Competition?
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

C A S E S T UDY 9
LENOVOS BRAND BUILDING STRATEGIE:
TAKING THE COMPETITION TO COMPETITORS
WITH TRANSACTIONAL MODEL
. . .THANK YOU