Dell vs Lenovo Case Solution
Introduction to LENOVO
Lenovo was founded in the year 1984. It was founded by Mr. Liu Chuanzhi. It is marked as the 2nd largest PC maker all over the world. Lenovo was consolidated in Hong Kong in 1988 under the tag of its previous name i.e. Legend. The company acquired IBM personal computer in 2005 since then it has become a worldwide brand. “Think Pad” notebooks and “Think Center” desktops are the leading market brand of Lenovo.
Introduction to DELL
Dell wa sfounded in November 4th 1984. Dell is a U.S based multinational company that sells, develops computer related products and service. It was founded by Mr. Michael Dell. It is ranked 41 in the fortune 500 companies list. Numerous employees are working with Dell. It is ranked as the 3rd largest PC maker around the globe.
Dell’s Business Model
Dell’s business model is dependenton these principles:
I. Low-Cost
Dell conducts its business operation all over the world in many different markets. The manufacturing plant is situated in those markets where labor cost is low with highly productive work forces thus; Dell is able to address the low cost factor. The choice of location is very efficient and effective as it strikes to those regional markets in order to minimize delay between the purchase of raw material till finish goods and the delivery,there fore it was initial competitive advantage for them.
II. Build to Order
Dell’s strategy was comprised of direct selling and build to order approach. In this approach,Dell was operating with the lowest inventory level in the industry. It was providing Della cost advantage as high excess of inventory increased the cost of production. Dell was also overlapping the distribution channels and it targets the end consumer therefore,it reduces the cost even further. On top of that Dell was offering the customization options which made it become attractive and customer centric.
III. Direct customer relationship
Due to the direct relationship with the customers, Dell got the knowledge of its customers. This helped Dell to identify the customers’ needs and trends early therefore; this gave the desired products to its customer before any competitor can.
Lenovo Business Model
Importation offshore business model is depending on these principles:
Relationship with Wholesaler
Lenovo’s strategy was to maintain close contact withthe customers at corporate level. It handles all the transactionswith the distributors. Importing is done by wholesaler therefore; it reduces the effort of the workforce and it is betterto involve in making strategy to compete with the competitors.
Protecting the profit
SinceLenovo is targeting through its immense network distribution thereforeithasaccess to almost 13000 sale points in its local distribution channel out of which 80 % wereexclusivedistributors. The advantages of distribution channel were to attract as many customers as they could. It helpedthe company to increase the sales of computer in terms of units and protect its profit from encroachment by competitors.
Effective Marketing & Distribution Strategy
Lenovo has a strong marketing campaign that involves the best sales staff which helps them to add numbers in the income statement of the company. It delivers the products to the distributors with large discount rate as compared to competitors. In addition to this, ithad thefirst mover advantage because it was aware of the fact it isa Chinese based company and itstarget market addressed the Chinese audience rather than going to a foreign market.
Similarities
Dell Lenovo
Service is reliable as compared to others like Sony, HP Services are also reliable and it is easy to get original and compatible parts of Lenovo laptops
Low Cost strategy Low cost strategy
Dell will meet customers’ expectations of highest quality
Mission statement is based on Quality and operational efficiency
• Dell will meet customers’ expectations of leading technology
Lenovo represents world-class hardware, service brands and software.........................
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