Lenovo: Building A Global Brand Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

The company Lenovo started its operations in the year 2004. The history of the company has been quite long, in 1984; Legend Holdings was basically formed with a total amount of 200,000 RMB ($25,000) in the Chinese market. However, the company started to expand and grow itself in the Personal Computer market, where the company has grown to become of the largest PC Company in China.

Moreover, the company changed the name for the company from Legend to Lenovo in the year 2004. The company successfully integrated and acquired IBM Personal Computer Division in the year 2005. The company has paid almost $1.25 billion for the International Business Machine computer business and it has also assumed an amount of $500 million of the IBM debt. The acquisition that took place between the IBM and Lenovo made the two companies the third largest in terms of the volume.

Along with this, the company has been constantly looking to acquire different firms and different business where it has looked to penetrate into the new markets. For example, Lenovo made a joint venture with NEC which is a Japanese Information Technology company. The joint venture made Lenovo own 51% of the total shares, whereas the NEC had the hold of remaining 49% shares in the company.

The company has more than 30,000 employees that have been working in more than 50 countries. Moreover, the products manufactured by Lenovo are offered in approximately 150 countries worldwide. The company has been headquartered in Beijing, China and the Morrisville, North Carolina, United States. Along with this, the research centers of the company are located in Shanghai, Beijing, Yokohama, and Shenzhen. The company also has manufacturing plants in Brazil and India.

Question 01

Why did IBM want to sell its PC business? Why did IBM sell to Lenovo?

The reason which actually made IBM sell its Personal Computer business unit was because the firm has been facing increasingly intense and stiff competition in the PC market. Moreover, the company faced challenges from the rival firms who have been offering similar services as that of IBM. This was the major reason which made the management of IBM decide to sell off its PC business.

Moreover, the competitors for IBM were not only offering low priced products, but they have offered it with a better quality as well. Along with this, another major reason which leads to IBM selling its PC business because, the management felt that being a part of the service market shall be more profitable and revenue generating with increased revenues.

Moreover, the idea behind the sale of IBM was because the company has been a market leader in high value solutions. The decision taken by the management of IBM was to sell its PC division because the company has been planning to keep its focus on the enterprise and small and medium sized business segments where they wanted to leverage the value and also provide all its customers with the optimum services.

Since, the Personal Computer market has been faced with increased number of completion where the rivals have been offering economies of scale, hence, the company decided to sell its PC division.

The decision of IBM to sell itself to Lenovo was made by the management and authorized professionals of Lenovo taken under the leadership and skills of Chuanzhi Liu, who himself has been the role model for Lenovo due to this technical ability and experience in the field of ever growing computers in the ongoing era, this venture was acquired by Lenovo for the IBM’s PC business in 2005.

IBM is the giant in the PC industry made the company to achieve a lot more percent of shares in the market, which reached up to the 5.2 per cent mark of market share in the global arena of PC Industry and also raised its popularity among common end users.

The reason IBM sold itself to Lenovo was because they had the measures and plans and being in the market for a number of years had the view that they will provide the enhanced level of services and new customers due to which finance of the company could be enhanced.

Moreover, Lenovo itself had been quite successful with the economies of scale as most of the PC used for business purposes is being Lenovo even sound manufacturing services can become the preferred supplier of personal computers for IBM.................

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