Lenovo Group Lenovo Group Ltd. Ltd.

Prepared by: Prepared by: Pu ZhaoPu Zhao Mei Wu Mei Wu

Taryn HausoTaryn Hauso Marty Marty

Bearce Bearce

Lenovo Group Ltd.Lenovo Group Ltd.

• IntroductionIntroduction• HistoryHistory• Globalization AnalysisGlobalization Analysis• Competitor AnalysisCompetitor Analysis• SWOT AnalysisSWOT Analysis• Future OutlookFuture Outlook• RecommendationsRecommendations

Introduction to Lenovo Introduction to Lenovo Group Ltd.Group Ltd.

Established in 1984, by 11 employees, with Established in 1984, by 11 employees, with total capital of 25,000 U.S. dollarstotal capital of 25,000 U.S. dollars

Changed name from Legend to Lenovo for Changed name from Legend to Lenovo for globalization purposes globalization purposes

------"For overseas markets, Lenovo will be used alone," "For overseas markets, Lenovo will be used alone," said the firm said the firm

Owner of IBM PC brandOwner of IBM PC brand The third-largest computer maker on the The third-largest computer maker on the

world scaleworld scale The dominant Chinese computer marketer for The dominant Chinese computer marketer for

over 10 years. over 10 years.

Important Records of Important Records of LenovoLenovo

1984—1984—With an initial capital outlay of only RMB200,000, (US$25,000) LeWith an initial capital outlay of only RMB200,000, (US$25,000) Lenovo’s founding chairman Liu Chuanzhi, together with 10 like-mindenovo’s founding chairman Liu Chuanzhi, together with 10 like-minded colleagues, launches the New Technology Developer Inc. (the predecd colleagues, launches the New Technology Developer Inc. (the predecessor of the Legend Group) funded by the Chinese Academy of Sciences.essor of the Legend Group) funded by the Chinese Academy of Sciences.

1988—1988—Legend’s Chinese-character card receives the highest National Legend’s Chinese-character card receives the highest National Science-Technology Progress Award in China. Legend Hong Kong is estScience-Technology Progress Award in China. Legend Hong Kong is established.ablished.

1996—1996—Legend becomes the market share leader in China for the first tiLegend becomes the market share leader in China for the first time.me.

1999—1999—Legend becomes the top PC vendor in the Asia-Pacific region anLegend becomes the top PC vendor in the Asia-Pacific region and heads the Chinese National Top 100 Electronic Enterprises ranking.d heads the Chinese National Top 100 Electronic Enterprises ranking.

2004—2004—Lenovo becomes an Olympic worldwide partner. It is the first ChLenovo becomes an Olympic worldwide partner. It is the first Chinese company to become a computer technology equipment partner of inese company to become a computer technology equipment partner of the TOP.the TOP.

2005—2005—Lenovo completes the acquisition of IBM's Personal Computing Lenovo completes the acquisition of IBM's Personal Computing Division, making it a new international IT competitor and the third-largDivision, making it a new international IT competitor and the third-largest personal computer company in the world.est personal computer company in the world.

2006—2006—Lenovo introduces the first dual-core ThinkPad notebook PCs, iLenovo introduces the first dual-core ThinkPad notebook PCs, improving productivity and extending battery life for up to 11 hours.mproving productivity and extending battery life for up to 11 hours.

Globalization StrategiesGlobalization Strategies

Cooperation Cooperation Merger and Acquirement Merger and Acquirement Promote Brand Awareness through Promote Brand Awareness through

involving important sports eventsinvolving important sports events

CooperationCooperation

Main Reason:Main Reason:

Shortage of Oversea Sale Shortage of Oversea Sale channels and Public Relations.channels and Public Relations.

Standards for choosing partners:Standards for choosing partners:

1. With Complementary 1. With Complementary strengths strengths

2. Proper size2. Proper size

Merger and AcquirementMerger and Acquirement

The most important measure for The most important measure for most ambitious companies is to most ambitious companies is to expand its market shares.expand its market shares.

To form its new strengths as soon as To form its new strengths as soon as possible.possible.

A good sample in globalization is A good sample in globalization is obtaining IBM PC Division through obtaining IBM PC Division through M&A.M&A.

The Strategies to Promote The Strategies to Promote Brand AwarenessBrand Awareness

TOP (The Olympic Partner )partnersTOP (The Olympic Partner )partners photo Source: http://www.lenovo.com/torino/us/partnership.shtmlphoto Source: http://www.lenovo.com/torino/us/partnership.shtml

NBA partnersNBA partners AT&T partnersAT&T partners

Challenges in Challenges in GlobalizationGlobalization

Ability of Culture adaptation Ability of Culture adaptation

In April 2005, a manager (Sales) of Dell In April 2005, a manager (Sales) of Dell Int. tried to use unusual tactics to Int. tried to use unusual tactics to persuade IBM’s customers to purchase persuade IBM’s customers to purchase Dell products in his mail, “every dollar Dell products in his mail, “every dollar they spent on these IBM systems is they spent on these IBM systems is directly funding the Chinese government.”directly funding the Chinese government.”

Brand AwarenessBrand Awareness

Competitors Competitors (main)(main)

Acer Inc. (Taiwan, China )Acer Inc. (Taiwan, China )

Dell Inc. (United States)Dell Inc. (United States)

Hewlett-Packard (United States)Hewlett-Packard (United States)

AcerAcer

Leading manufacturer of notebook, Leading manufacturer of notebook, tablet, handheld, desktop computerstablet, handheld, desktop computers

The gap is narrowing. Acer's global The gap is narrowing. Acer's global market up to 6.8 percent in the fourth market up to 6.8 percent in the fourth quarter quarter

While Lenovo shrunk to 7.1 percent, While Lenovo shrunk to 7.1 percent, according to the market research according to the market research company Gartner. company Gartner.

In third quarter of 2005, Acer had 4.7 In third quarter of 2005, Acer had 4.7 percent and Lenovo had 7.3 percent percent and Lenovo had 7.3 percent

Acer's success derives from its Acer's success derives from its effective use of the "channel" effective use of the "channel" marketing model, which pairs it with marketing model, which pairs it with local distributors to help its products local distributors to help its products gain traction gain traction

Key Financials Key Financials

Company Type Company Type Public (Taiwan: Public (Taiwan: ACERACER))

Fiscal Year-End Fiscal Year-End DecemberDecember 2005 Sales (mil.) 2005 Sales (mil.) $9,654.0$9,654.0 1-Year Sales Growth 1-Year Sales Growth 37.2%37.2% 2005 Net Income (mil.) 2005 Net Income (mil.) $257.3$257.3 1-Year Net Income Growth 1-Year Net Income Growth 17.3%17.3% 2005 Employees 2005 Employees 6,5546,554 1-Year Employee Growth 1-Year Employee Growth (0.1%)(0.1%)

Dell Inc.Dell Inc.

World's #1 direct-sale computer World's #1 direct-sale computer vendor vendor

Provides a broad range of computer Provides a broad range of computer and entertainment products for the and entertainment products for the consumer and enterprise markets consumer and enterprise markets

Markets third-party software and Markets third-party software and peripherals peripherals

Key FinancialsKey Financials

Company Type Company Type Public (NASDAQ (GS): Public (NASDAQ (GS): DELLDELL))

Fiscal Year-End Fiscal Year-End JanuaryJanuary 2006 Sales (mil.) 2006 Sales (mil.) $55,908.0$55,908.0 1-Year Sales Growth 1-Year Sales Growth 13.6%13.6% 2006 Net Income (mil.) 2006 Net Income (mil.) $3,572.0$3,572.0 1-Year Net Income Growth 1-Year Net Income Growth 17.4%17.4% 2006 Employees 2006 Employees 66,100 66,100 1-Year Employee Growth 1-Year Employee Growth 18.0%18.0%

Hewlett-PackardHewlett-Packard

Provides enterprise and consumer Provides enterprise and consumer customers a full range of high-tech customers a full range of high-tech equipmentequipment

Known for product innovation, the Known for product innovation, the company's corporate development is company's corporate development is a tale of reinvention a tale of reinvention

Boasts an IT service organization Boasts an IT service organization that is among the world's largest that is among the world's largest

Key FinancialsKey Financials

Company Type Company Type Public (NYSE: Public (NYSE: HPQHPQ)) Fiscal Year-End Fiscal Year-End OctoberOctober 2006 Sales (mil.) 2006 Sales (mil.) $91,658.0$91,658.0 1-Year Sales Growth 1-Year Sales Growth 5.7%5.7% 2006 Net Income (mil.) 2006 Net Income (mil.) $6,198.0$6,198.0 1-Year Net Income Growth 1-Year Net Income Growth 158.5%158.5% 2005 Employees 2005 Employees 150,000150,000 1-Year Employee Growth 1-Year Employee Growth (0.7%)(0.7%)

Key FinancialsKey Financials

Revenues $86,696.0 Revenues $86,696.0 8.5% 8.5%

Profits 2,398.0 Profits 2,398.0 -31.4 -31.4

Assets 77,317.0 Assets 77,317.0 -- --

Stockholders' Equity 37,176.0 Stockholders' Equity 37,176.0 -- --

SWOT AnalysisSWOT Analysis

Strengths Strengths 1.1. The brand chrematistic The brand chrematistic a. honesta. honest b. innovative b. innovative c. good service c. good service d. easy to used. easy to use2.2. Price advance Price advance 3.3. Environmental factorsEnvironmental factors

SWOT AnalysisSWOT Analysis

WeaknessWeakness

1.1. Lack of international managing Lack of international managing experienceexperience

2.2. Brand influenceBrand influence

3.3. Ability of getting profitAbility of getting profit

SWOT AnalysisSWOT Analysis

OpportunitiesOpportunities

1.1. In charge of IBM PC DivisionIn charge of IBM PC Division

2.2. Important sporting eventsImportant sporting events a. a. TOP (The Olympic Partner)TOP (The Olympic Partner)

b. NBA partnerb. NBA partner

c. AT&T Williams partnerc. AT&T Williams partner

SWOT analysisSWOT analysis

Threats Threats

1.1. Software pirateSoftware pirate

2.2. Powerful competitorsPowerful competitors

Future OutlookFuture Outlook

From East to WestFrom East to West High brand awareness High brand awareness One of most competitive companies One of most competitive companies

in the world.in the world.

RecommendationsRecommendations

Short-term ways: Short-term ways:

Distribution Model should be innovated to be efficient. Distribution Model should be innovated to be efficient. Existence Model: Lenovo—Wholesaler—Retailer—Existence Model: Lenovo—Wholesaler—Retailer—

ConsumerConsumer Alternatives: Alternatives: 1. Lenovo—Discount Retailer (Wal-Mart)—1. Lenovo—Discount Retailer (Wal-Mart)—

Consumer.Consumer. 2. Lenovo—Consumer (through Ecommerce 2. Lenovo—Consumer (through Ecommerce

and and Agent) . Agent) . Continue to rely on its financial advantages for R&D, Continue to rely on its financial advantages for R&D,

struggle for talented employees .struggle for talented employees .

Through establishing and implementing of Through establishing and implementing of more rational strategies of localization and more rational strategies of localization and spreading its corporation culture to avoid spreading its corporation culture to avoid cultural difference and reduce the possibility cultural difference and reduce the possibility of conflicts.of conflicts.

Reduce the possibility of duplication of Reduce the possibility of duplication of investment, and strive for cooperation, instead investment, and strive for cooperation, instead of competition, and to transfer rivals between of competition, and to transfer rivals between the cooperators. the cooperators.

Good use merger and acquirement strategy, Good use merger and acquirement strategy, principle of which is that use abundant capital principle of which is that use abundant capital to transfer its disadvantage to become to transfer its disadvantage to become advantages in a short period. advantages in a short period.

Promotion Brand Awareness through Promotion Brand Awareness through increasing advertising investment. increasing advertising investment.

RecommendationsRecommendations

Long- term waysLong- term ways

1. Devote itself to its leading area, distinguish 1. Devote itself to its leading area, distinguish what are the disadvantage parts and cut them. what are the disadvantage parts and cut them.

2. Promote its ability to predict marketing 2. Promote its ability to predict marketing needs, for example, cooperate with government needs, for example, cooperate with government agencies to analyze markets.agencies to analyze markets.

The EndThe End

Questions?Questions?

Answers?Answers?