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Lenovo Case Study

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Words 1159
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C A S E S T U D Y 9

LENOVO’S 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 • RecommendaKons

Agenda

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

• Key Challenges of Lenovo from the case • RecommendaKons

Overview of

Global PC Industry

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 swiTly to change • Emerge of e-­‐commerce (online sales) hastened PC industry’s 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 vendor’s market posiKon, vendor consolidaKon can develop economies of scale in order to go into a global presence • Global PC industry currently affected by two major trends; commodiKzaKon 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

Overview of

Agenda

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

• Key Challenges of Lenovo from the case • RecommendaKons

From Emerging to Surging
1984
Established as Legend Group in Beijing Had product and distribuKon faciliKes in US, UK, Mexico, Malaysia, Hungry, China, and Brazil 2003 Changed its brand from Legend to Lenovo

About Lenovo:

2005 Acquired IBM’s PC division and became the world’s 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 implemenKng 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

From Emerging to Surging
2008
Lenovo enters the Worldwide consumer PC market with the new "Idea" Brand.

About Lenovo:

2009 Launched the new strategy “ Protect and Ajack”

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%

LENOVO’S GLOBAL BRAND BUILDING STRATEGIES

“TRANSACTIONAL MODEL”

LENOVO’S GLOBAL BRAND BUILDING STRATEGIES

C hina

RelaIonship model: bulk orders from big enterprises

TransacIonal model: serving customers with common requirements and who need lesser customizaKon. Target small-­‐ to mid-­‐size companies and individual customers

LENOVO’S GLOBAL BRAND BUILDING STRATEGIES

Global RelaIonship model: acquire IBM PC division

TransacIonal 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 Kme with bejer IT system

Agenda

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

• Key Challenges of Lenovo from the case • RecommendaKons

Key Challenges of LENOVO raise from the case

Key Challenge #1 Brand Building Challenges
Building
a global brand in highly commodiKzed 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 CompeIIon
Growing
compeKKon from internaKonal players

At home compeKKon with local PC producers & companies with lower prices

Key Challenge #4 Cost-­‐CuVng is the only soluIon to profit margin
Supply
chain network internaKonally

Outsourcing Trends (CMs: Contract manufacturers)

Key Challenge #5 ProliferaIon of technologies

Dual à MulKple à All in One FuncKons 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 • RecommendaKons

How Lenovo, as a state-­‐owned Chinese company, could prevent the negaKve viewpoint as endanger to US naKonal security?

How Lenovo, as a state-­‐owned Chinese company, could prevent the negaKve viewpoint as endanger to US naKonal security?

• Brand PorYolio Strategy

-­‐ Focusing more on “Product brand”

rather than “Corporate Brand”

• PR & Sponsorship/CSR Campaign

-­‐ MarkeKng and Partnership with world-­‐class events and exhibiKon i.e. Olympic Games, World Cup, or even NBA in US

-­‐ DonaKons, Social ResponsibiliKes Program in US to gain good corporate image

How Lenovo, as a state-­‐owned Chinese company, could prevent the negaKve viewpoint as endanger to US naKonal security?

• Focus on “Quality” and “InnovaIon”

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

• Household PC market in US

-­‐ Bejer 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 commodiKzed PC industry?

How to build a “global brand” in a highly commodiKzed PC industry?

• Customized products and services higher value added, unique product design, new product category • ConKnuous R&D for new innovaKon • Efficient resource uKlizaKon • EffecKve distribuKon channels

How to build a “global brand” in a highly commodiKzed PC industry?

• Create strong brand loyalty such as excellent customer service, aTer sales service • Rebranding – Lifestyle products not discounted products • AdverKsing and sponsorship for global event -­‐ Olympic games -­‐ NaKonal Basketball AssociaKon

How to cope with Counterfeits?

How to cope with Counterfeits? • ConInuously deliver new innovaIon to its products – R&D investment • Building Brand loyalty – Trust in quality • Secure intellectual property when outsourcing more operaIons to suppliers partners – TransiKon of technology and know-­‐how to suppliers should be done appropriately

How to improve SUPPLY CHAIN internaKonally?

How to improve SUPPLY CHAIN internaKonally?

• 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, OverproducKon, TransportaKon, WaiKng, Inventory, MoKon and Over-­‐Processing • SAP Socware: To deal with wide range of customers • Key KPIs: Cost, On-­‐Kme delivery, Cash conversion, Quality

Lean Six Sigma

How to sustain in Global CompeIIon?

How to sustain in Global CompeIIon?

• Maintaining compeKKve advantage on low cost • ConKnue with global brand image • Make use of the strong B2B market to expand to

B2C market

• Quickly adapt to any customer change

Other RecommendaKons

ForecasIng System • Risk Management: Sensing and Responding

Known-­‐Unknown Risk • Commitment Review by ExecuIve Management • Be Prepare • Collaborators turning to compeKtors • Foreign governments • Exchange rate fluctuaKon

. . . T H A N K Y O U
C A S E S T U D Y 9

LENOVO’S BRAND BUILDING STRATEGIE: TAKING THE COMPETITION TO COMPETITORS WITH “TRANSACTIONAL MODEL”

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