Personal computer systems and technology industry is strong and fast growing with increased move forward in technology hence companies in it are faced with high competition are subject to various factors that influence their operations. In that respect, this report seeks to provide Lenovo's market position by inspecting its industry and market environment as well as its competitiveness.
To get started with, the report provides a simple history of the company followed by a general environment analysis using universal five forces examination. The survey then has an industry analysis using porter's five forces and an interior competence research using SWOT examination method. In account of Lenovo's market and industry environment as well as its competitive placement, the article provides tips for appropriate business, corporate and business and international level strategies. The article finally provides a conclusion and a summary of the key studies about the company.
COMPANY HISTORY
Lenovo is the most significant computers producing Company in China with its origin back 1984 when star holding was started in a guard house and incorporated in China in 1988. However, Lenovo brand was made in 2004 when story modified its name to Lenovo and has since transformed itself through development and acquisitions of great brands with a perfect example of IBM Personal Computers division's acquisition in 2005. (Lenovo, 2013a)
Lenovo is the world's second major vendor of computers and a fortune 500 company respected at US$21billion with headquarters in Beijing China and Morrisville NEW YORK in US. The business has a workforce of around 26, 000 employees pass on across its functions in 60 countries. In conditions of products, Lenovo focuses primarily on creation of exceedingly manufactured personal technology with brands including; idea top quality consumer computers, servers, work stations, family mobile internet devices like smart cell phones and tablets as well as think brand commercial personal computers. (Lenovo, 2013a)
GENERAL ENVIRONMENT ANALYSIS
Generic five pushes analysis
Lenovo's operations are at the mercy of various causes including economic, social, political, scientific and environmental as well as competitive pushes. (xxxxx)
Economic forces
Economic forces that influence the business enterprise operations include; economic progress rate, exchange rate fluctuations, inflation rate and interest. In this awareness, the significant monetary development rate in China enhances demand for personal computers favorably impacting on the company's performance as the low unemployment rate leads to high throw-away income boosting computers demand. Alternatively, exchange rate fluctuations impact the value of Lenovo's comes back from its international market segments with a poor Chinese money and US Dollar resulting to higher value on international returns repatriation to China and US and vice versa. Furthermore, inflation rate influences consumer's purchasing power with China and US's low inflation rates improving consumers' purchasing ability hence increasing demand. Interest levels in the market also influence the affordability of financing hence the capability to borrow and spend. Thus the reduced interest levels in US and China increase investment in the market increasing competition as well as availing funding for Lenovo's opportunities. (xxxxx)
Social, cultural, demographics and environmental forces
Lenovo works within neighborhoods with varied social needs which require it to enhance sustainability and promote corporate and business citizenship through healthy & safe workplaces, safeness of its products, setting high ethical criteria, environment concerns and philanthropy. (Lenovo, 2013a)
The changing environment and its own concerns influences business operations for example; Lenovo must addresses its products design and supply methods as well as making means to decrease environment pollution by using better logistics and transportation means and applying reuse as well as recycling in development. (Lenovo, 2013a)
The changing society also dictates the ethics concerns like protecting and respecting other's intellectual property rights. Other social and demographic factors that impact Lenovo's functions include; high Chinese language population size that delivers a big market, life-style as well as personal preferences which determine customers demand for different brands as well as Chinese high literacy level which encourages personal computers demand. However, China has an ageing population that could lower computers demand scheduled to age influence on the power and need to work with computers. Wealth distribution in the society also determines how big is population that are able Lenovo's goods. (Lenovo, 2013a)
Political, legal and governmental forces
Government guidelines in China and US in favor of market liberalization rises entry of overseas businesses in the marketplaces hence increasing competition for Lenovo. Alternatively, China and US's steady political systems boost smooth business businesses while Middle East and Africa have high politics instability hence presenting a dangers and uncertainty for the business's investments. In addition, there are numerous labor laws and regulations that Lenovo must package with including laws on minimum income, retrenchment as well as labor disputes resolutions across all the 60 countries where it operates. (xxxxxx)
Technological forces
High technological progress in US and China in relation to personal computers and technology provides Lenovo an avenue to provide high quality products. Technology also provides new marketing avenues like websites and mobile applications through which Lenovo can reach an array of potential customers. Furthermore, the dynamic character of technology requires Lenovo to keep up considerable research and development operations as well as technology to keep up with the industry trends and meet the appearing clients' needs. (xxxxx)
Competitive forces
A company's competitiveness would depend on its capacity to address conclusion from other firms. In this admiration, Lenovo has a leading position in shipment of personal computers and in Chinese market talk about as indicated by its 30% share in Chinese Laptop or computer market and the 2012 third 1 / 4 total shipments share of 15. 7% as compared to HP's 15. 5%. In this respect, Lenovo is a respected company in a highly competitive market. (Gartner 2013)
INDUSTRY ANALYSIS
Porter's Five Makes Analysis
According to Porter's evaluation, there are five makes that determine a company's competitiveness on the market including; existing competitors, new entrants, substitutes and suppliers as well as clients bargaining electricity. (xxxx)
Existing rivalry
Personal pcs and technology industry has few prominent firms of relatively same size including Apple, Acer, Dell, Fujistu, Horsepower, AUS and Toshiba hence rendering it an extremely competitive industry. Apple is great in designs for products and invention while Acer has a substantial market presence and efficient supply string in many parts. On the other hand, Dell focuses on mature markets with good quality programmes, services and products for enterprise customers while Fujitsu has a great offer for a range of high quality products with global supply which includes desktops. (Lenovo, 2012) For the third quarter of 2015, the global market show for personal computers shipments were Lenovo 15. 7%, HP 15. 5%, Dell 10. 5 %, Acer 9. 9%, AUS, 7. 3% while some needed 41. 1%. (Gartner, 2013)
To enhance its competitiveness in accordance with the competitors, Lenovo uses development in its differentiation strategy generating opportunities in new marketplaces such as cloud computing, mobile internet and digital home. The company also depends on its strong occurrence in China fending off existing rivalry which may be illustrated by its significant 30% market talk about in China's computers market. (Lenovo, 2013a)
Potential entry
Massive research and development as well as invention on the market leads to increased products hence new entrants in to the market with market liberalization and low development cost also favoring access into Chinese language market. In that respect Lenovo is covered by its economies of scale and the high capital requirement of a firm to enter the market. The company also enjoys a strong brand locally and internationally deterring new accessibility as the new brands would have a doubting activity in building themselves to effectively contend with Lenovo. (Lenovo, 2013b) Furthermore, Lenovo has a determined Research and Development team increasing its overall customer experience as it drives down possession costs and durable, reliable and high quality products. (Lenovo, 2013a)
Substitutes
Technology industry is significantly improving with a appear of several substitute products. Lenovo's products have various substitutes with conditions of Ipads and other programs. However, the business applies its innovation capability to boost its products procedures through differentiation. This makes its products less substitutable by the type of these high quality, added advantages, reliability and durability hence creating a competitive edge over substitute brands. (Gartner, 2012)
Suppliers bargaining power
Due to the nature of the diverse suppliers in the industry in China, no or few suppliers have a substantial bargaining electricity over an organization presenting Lenovo a competitive edge. The availability of cheap alternative raw materials and labor in the Chinese market makes the labor and source suppliers have less bargaining electric power. Thus relative to other rivals who are located in other regions, Lenovo has a competitive advantage. (Gartner, 2012)
Buyers bargaining power
In the non-public computer and technology industry, consumers will often have a substantial bargaining power within the sellers due to large number of substitutes and variety of alternate products. However, Lenovo`s differentiation strategy places out its products from the others hence having a member of family benefits in bargaining vitality. In addition, the business's reach into difficult and less targeted markets like Middle East and Africa offers a significant bargaining electricity over customers hence can charge an increased price and have a competitive gain relative to rivals who shun the difficult markets. (Gartner, 2012)
INTERNAL COMPETENCIES ANALYSIS
SWOT Analysis
Strengths
Lenovo concentrates its operations in China which really is a speedily growing and emerging market.
It has a worldwide footprint with a wider grab its brands.
It targets large and general public sector and has strong brand built on advancement.
It comes with an efficient global source string and brands that reflects high quality, reliability, simplicity and secure technology like the booting pad and think pad.
Its brand is fitted to both rising and developed economies.
It has the capacity to attract top talent from diverse backgrounds providing variety that assists all cultures. (Lenovo, 2013a)
Weaknesses
The company's structure hiders its capability to grow beyond personal pcs' market since its source centers and service capacities would lead to customers suffering a wide variety and multiple venders. (Gartner, 2012)
Opportunities
Emerging market segments like Africa and Midsection East raises demand for computers as markets liberalization increases the probability of venturing into new marketplaces.
Low labor cost and cheap inputs in the Chinese language market can be used to enhance competitiveness.
Increased research and development in the industry provides usage of knowledge necessary for introducing services that meet changing customers' needs.
Increasing globalization provides an chance of Lenovo to enhance its supply string to reach more market segments.
Increased global use of internet and technology raises demand for computers hence an possibility to produce and sell more. (Lenovo, 2013b)
Threats
Lenovo encounters an erosion of its differentiation strategy in its Think vantage as companies like Microsoft counters the offer with free offers lowering its unique tools' value.
Entry by new providers with lower creation cost and increasing research threatens Lenovo's current competitive benefits.
Market liberalization is increasing competition in Lenovo's dominated markets like China.
Copyright infringements and intellectual property robbery risk.
Global economic doubt negatively influences demand for computers threatening Lenovo's functions in locations like the European countries. (Gartner, 2012)
STRATEGIES RECCOMENDATIONS
Lenovo should apply strategies that seek to improve utilization of its strengths, treat its weaknesses, optimize on the available opportunities and cure as well as avert the prevailing threats at business, corporate and business and international levels. The strategies should also be based on thought that Lenovo is the leading company in Computer market enjoying a substantial market share of 30% in china and 15. 7% globally in an industry that experienced a 8% drop in PC sales in 2012. Thus Lenovo's personal computers business is a Cash Cow corresponding to BCG matrix with high market share in an industry which has a low expansion in sales. (Gartner, 2013)
Business level strategy
Business level strategy can be involved with making a competitive edge for individual products and market segments focusing on reaching a significant goal earnings level as well as satisfying customers' needs. In this esteem, Lenovo should apply cost management strategy considering that it already likes economies of range from its ability to source for cheap labor and inputs. In addition, it has a greater capability of delivering value to clients at relatively lower prices with efficiency in its source chain also boosting its ability to reach diverse market at a realistic price. (xxxx)
The strategy requires increased creativity for low priced products and establishment of solutions that are difficult to imitate and copy as well as having a good control on overheads and production costs. This plan would work with Lenovo's efficiency and appropriate in vending off competition from all the five porter forces. (Lenovo, 2013b)
Corporate level strategy
There are numerous changes in technology, competitive environment and regulatory environment that require a change in corporate and business strategy in order to leverage on the business resources and create competitiveness. This will be through activities that set up a competitive advantage by taking care of different business lines as well as concentrating on decisions within the industry and markets engaged to earn above normal results. In this thought and with Lenovo's personal computers business being truly a cash cow, the business should apply related diversification strategy which includes entry into new areas by employing levers of markets in terms of products, support and services geographically and in value string. This will gain the company through greater profitability and faster progress as it accrues resources including; skills, skills and solutions as well as physical property and markets. Furthermore, this will create demand and cost linkages between business lines as well as enhance sharing of value string activities hence copy of central competencies. (xxxx)
International strategy
With increased globalization, Lenovo needs to enhance its international businesses through international strategies that resonate with it business level and cooperate level strategies. Therefore, Lenovo should apply acquisition strategy promoting accessibility into new international market segments where the attained businesses would provide market experience and linkages hence offering it a competitive advantage. (xxxx)
CONCLUSION AND Conclusions ABOUT LENOVO
From the evaluation, Lenovo comes out as a leader in the non-public computer and technology industry being a fortune 500 company, most significant provider of personal computers in China as well as the second largest globally. The research also suggests Lenovo to be enjoying a competitive advantage over its opponents in China and other market segments like the Middle East, and Africa which are believed as difficult market segments. However, the business's operations are subject to various factors ranging from economic, communal, environmental, politics, and technical factors which have an impact on its operations. Furthermore, Lenovo enjoys economies of level because of its large operations and its research and development as well as invention which functions as key drivers of its success. In this value, the best option strategies for Lenovo to use include; cost control business level strategy, related diversification corporate and business strategy and acquisition as its international strategy.
