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Lenovo Group is a highly innovative and international technology company which consists of the Lenovo Group and the original IBM Personal Computing Business Division. As a leader in the global PC markets, Lenovo is engaged in development, manufacturing and sales of the most reliable, safe and easy-to-use technology products and professional services. Lenovo mainly produces desktop computers, servers, laptops, printers, handheld computers, motherboards, mobile phones and other goods ("Today in history," 2012). Since 1996, Lenovo PC sales began to be the first in the Chinese domestic market. In recent years, with a rapid development, Lenovo has achieved the second largest sales in the world (Parrish, 2011).
Lenovo brings excellent experience in business. This essay will give a succinct analysis of Lenovo Group in terms of marketing strategy, global business, corporate culture, internal management, and its ethics.
Lenovo's marketing strategy
Today, because of the fierce market competition, business owners must defeat their rivals by a surprise action. A brilliant marketing plan can make a business from being usual to extraordinary, weak to strong. Lenovo has a marketing-mix-theory-based strategy called "4P". The so-called 4P includes: product, price, place and promotion.
In regard to products, on a global scale, "Lenovo offers customers the award-winning ThinkPad notebooks and ThinkCentre desktops, featuring the ThinkVantage Technologies software tools, as well as ThinkVision monitors and a full line of PC accessories and options" (About Lenovo,n.d.). In China, Lenovo's PC products accounts for one-third market share. With its leading technology, easy-to-use features, personalized design, as well as a wide range of solutions, Lenovo's products are widely welcomed by Chinese users. Lenovo also has an extensive product line for the Chinese market, including mobile handsets, servers, peripherals and digital products.
As to price, Lenovo recognized that it is impossible to survive without brand support in the competitive environment. The company used a long-term marketing strategy of "high quality and low price." In the beginning, Lenovo chose to development computers with 286 chips. In the process of producing these "286" products, Lenovo had attached great importance to quality management, and stringent requirements in every aspect of the procurement, manufacturing and outside processing. Because of the strict quality requirements and high-end components, this made the company's products cost more than the manufacturers in Taiwan and Hong Kong.
However, the company did not price its product to be expensive, but adopted a low-cost strategy. Each product had one to two dollars lower than the price of similar products in the Hong Kong market. Such a high quality and low price strategy, in the beginning of the implementation, led Lenovo to suffer large losses. However, due to the very short life of the 286 products, this loss of momentum did not last long. Lenovo had created its own reputation, attracting a large number of loyal users. When "286" products had been gradually eliminated, Lenovo had launched its own high-end "386" and "486" microcomputer, and received a great deal of success due to the created good brand image. It is reported that Lenovo motherboard's sales grew from 30,000 in 1990 to 5 million in 1995 (Chen, 2008).
In the aspect of the place, Lenovo mainly put the product development division and sales division at Hong Kong's base because the Hong Kong's market, as a world re-export center, compared with the China mainland, was more sophisticated and more international for Lenovo's engineers to timely get up-to-date information and to know new technology from various channels. Opposite, Lenovo set up its production division in China mainland to take advantage of cheaper labor.
As to promotion, Lenovo Group carried out large-scale promotional activities several times in the country, including focuses on the promotion of business computers and strong summer promotions, and discount promotions policy which successfully gained remarkable achievements.
Lenovo has been a leader in PC industry in China, and now it has become a leader in the world as well. However, on its way to become a successful multinational corporation, the aforementioned marketing strategies were absolutely not enough.
Global Business and Strategy
Lenovo used mergers and acquisitions for its international investment strategy. Investing in IBM is a good example to prove Lenovo's multi-business development strategies. In 2004, Lenovo purchased IBM's PC division. IBM which revolutionized the global computer industry when it launched its first desktop in 1981 sold its PC business to Lenovo in a $1.75billion deal (Wright, 2004). Two years after the implementation of the investment strategy, Lenovo has established branches in more than 60 countries around the world.
Since Lenovo successfully bought IBM's PC business, they have had the advanced business laptops, richer product mix, remarkable capacity in research and development, and more powerful ability to innovate. Lenovo and IBM formed a long-term strategic alliance. IBM became Lenovo's preferred provider of services and Lenovo became IBM's preferred PC suppliers.
Besides, after the acquisition, Lenovo used a dual-brand strategy in its brand promotion. The brand of "Lenovo" in the world was not as famous as it in China, but the brand of "THINK" in a foreign country was very well-known for its products. So, the branding strategy in Lenovo's foreign markets was to enhance the popularity by taking advantage of the brand of "IBM" to create the international markets, while the brand of "THINK" was to improve the reputation. But making the brand of "Lenovo" to be the most famous in the world was the ultimate goal of Lenovo group. In the future, Lenovo will abandon the brand of "IBM" soon or later.
Corporate Culture, Management and Ethics
Lenovo Group was originally based on "family culture" which was a corporate culture that made the whole company as a family. It included equality, innovation, learning, and many other cultural elements. The "family culture" of Lenovo mainly represented cultural atmosphere and spirit of the enterprise in the start-up period. Because of Lenovo's internationalization process the aspect of "family culture" has been unable to meet the needs of the enterprise's development. Therefore, this moral standard was also quietly changed.
In business, a company is not a family and definitely it should not be a family. In a market economy, company and individual are two relatively independent subjects of interest. It means that there is only permanent relationship of interests between the two, and lifelong reliance and trust do not exist. Therefore, advocating the company is a family looks warm, but actually as a corporation which was pursuing profit, it is impossible to build a company like a "family".
In fact, with the internationalization, as mentioned early, Lenovo's demands of culture and ethical standards were changing. According to Audi (2009), he said "Corporate culture is determined in part by the style of corporate governance" (p.99).New managers brought updated management experience and then realized that the corporate culture needed to be rebuilt. They began to move their focus from the so-called "family" culture onto "responsibility." Until now to establish corporate social responsibility and to cultivate the personal responsibility to the enterprise is the core of the Lenovo culture. Liu, former CEO of Lenovo said: "the reason why Lenovo Group has been able to get some success is that Lenovo is taking an owner's responsibility of a ship to be a captain" (Zhang, 2004). Liu has consistently believed that to build a company was the same as to build a people. He insisted on instilling corporate culture to employees by ideological and technical training. The CEO required his employees to be dignified and imposing enough to do things, and to be trustful and diligent, so that they could justifiably make money.
This is Lenovo's â€‹â€‹remodeling process of values. Business competitions are fierce. Sometimes because of profits, the "morality" cannot withstand a single blow. The ethical standards of the enterprise are not to pursue to be perfect and noble, but to abide by the bottom line, with integrity and respecting clients. If a company's leaders can meet their core standards, it has been very good. However, if an enterprise does not have a moral bottom line, it is very easy to lose its standpoint to do something which violated the moral that they has advocated, so that the so-called corporate ethics is like a beautiful soap bubble, which is vulnerable.
Nevertheless, global PC market has had a slow development with low profits; some giants such as Hewlett Packard are facing loss. Lenovo should find new revenue growth opportunities as soon as possible. To move their focus from PC industry to mobile or internet market may be a good option. Lenovo should take advantage of its technological superiority to lunch more new mobile devices such as tablets and smartphones.
In terms of the enterprise itself, Lenovo's managers should think about their ethics that when their main rivals are struggling, if Lenovo has the chance to take over the dominant position, they should reasonably compete with them. To hit its rivals when they are down will never take reputation and goodwill for Lenovo. Besides, by means of mergers and acquisitions, Lenovo's manager has many ways to absorb distinct management experience from different countries. These mergers and acquisitions will change Lenovo's structure so that management needs to be adjusted to cater the employees from all over the world.
After nearly two decades of effort, Lenovo has basically established a modern enterprise system, and explored the way for China's large state-owned enterprises. In the early 1990s, Lenovo first gained a large market share in China, and then used the "4P" strategy successfully to compete with some powerful companies outside of the China mainland. Lenovo fully learned and absorbed the advanced management experience of the successful companies in the West during its merges and acquisitions process; it combined this experience with China's local characteristics gradually refined with Lenovo's unique concept of enterprise management, and formed the core competitiveness. The ethics of taking responsibility will lead Lenovo to become a moral model in China. Today, Lenovo's marketing and global strategies, the standard of ethics, and the corporate culture and management methods are updating, which makes them to align with the recent global business environment.