Swot Analysis On Lenovo Strategic Management (Essay Sample)

Lenovo Strategic Management
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Lenovo Strategic Management
Strategic management consists of the formulation and implementation of major goals of the organization and the kind of initiative it takes by its top management on the behalf of its stakeholders, basing on the resources available and assessment of both the internal and external environment that the organization compete (Stark, 2015, 17). Lenovo is one of the largest personal computer manufactures in the world. Currently, the company strives to be one of the major markets shares. In 2004, it purchased the personal computer business and the famous IBM Company. This significant move made by the company was one of the best international strategies in the IT industry. Currently, the company is global application in sales and also owning cooperation plants in many countries and package plants in 7 countries. Its product is sold in more than 80 countries.
The objectives of the paper are to analyze the Lenovo competitive strategies, differentiation statrategies, and markets shares and SWOT analysis of the company.
SWOT analysis of Lenovo
Lenovo experiences major challenges as an IT company, even though it purchased the world leading company IBM. It integrated IBM strategies which have revived the company. The company strategic plans revolve on major six force model. This model helps the organization to achieve holistic assessment by identifying all the structural underlying of its competition environment and the profitability. The porter’s six forces provide a well structured framework which is significant in defining the corporate strategies that determine the overall attractiveness of the organization.
The company focuses on the six forces namely suppliers, end users, substitutes, complementary products, competition and the new entrants.
There are different dimensions that rivals with the organization which can compete on. For instance on the prices, improvement of the company products quality and services, and innovation strategy. Lenovo has been successful in its business operation after purchasing of the IBM which strengthened its markets share and out doing companies like Dell industry.
The company has a high bargaining power as it has managed to get its products in the United States and other countries. Moreover, the company is threatened by other companies like Toshiba and Samsung which have bigger bargaining power with large market shares unlike Lenovo.
The company end users who are the consumers of their products have relatively continued to increase. In 2012, the company under new management it was more successful. The company also targets at expanding its markets in North America which will also be its cornerstone in the IT industry.
The strategic planning of solving unfair competition from rival companies like Hp the company has come up with alternative strategies that have seen profiting it. This has been captured in the product innovations and also expanding its markets in other countries they operate in. Lenovo investment in the IT sector has increased by 67% between the period of 2011 t0 2012. This is a significant move.
Additionally, it’s difficult for the new entrants company to be successful when it gets into the markets. Though, if it happens to achieve it monopolizes the market making it to have a bigger share of market than late entrants. It’s evident that, changing early adopters of specific products is difficult. Moreover, through is aggressiveness, it has managed to establish itself in seven countries and also expanding its market in more than 80 countries. The market prices of their products are relatively low and affordable than other companies’ products. For instance the Dell computers are expensive.
The most important aspects are product substitution mainly the ultra mobile PCs and the ultra light laptops (Parnell, 2013, 101). Lenovo needs to invest more in advertisement of this product in many media channels. Even though, most of the companies ignore them but they are relevant in product promotion. The products are manufactured with the aim of targeting only the young generation.
S Is possible to propose and justify Lenovo forward strategies on its products and services using SWOT method.
SWOT analysis of Lenovo
STRENGTHS
The company has been successful due to the following factors, low cost of production, it has set up its hardware at cheaper cost for instance in Brazil, China and Argentina. It also focus in merging and acquisition with other firms, vertical integration, deeper understanding of the China markets, and lastly it has strong patents portfolio. For instance, after the acquisition of stoneware and Compaq and helped R&D firm. It gathered relevant patents portfolio which are correlated with its software businesses and the Personal computers.
Weakness
Lenovo experience wider range of challenges regarding its business operation despite emerging as one the largest IT industry globally. Its challenges involve poor branding perception which is upheld in the developed countries. The company has its primary markets mainly in Asia. However, it has found it difficult to penetrate Europe and US markets due to consumer perception on poor products. large percentage of Lenovo revenues comes from the sales computer sales and laptops which have customized its products. It’s evident that computer hardware products offered by the company have low profit margins.
Opportunities
The company has capitalized more on growing its market shares in Asia than other regions. For instance, its products have massive penetration of the Indian markets. It’s also ranked4th as one the largest sellers of tablets. Acquiring of the patent acquisition has been a major benefit to the company in its sustainable growth. Additionally, the company has found a business niche in manufacturing of tablet. This has seen the company expanding its market. Its also analyzed that, due to Lenovo focused on tablet manufacturing its expected to grow with 2 digits in the coming few years.
Threats
The company threats are as a result of the following factors; intense competition from its rival companies in terms of technology, reputation, quality, brand and range of products. Its competitors are Acer, Toshiba, Apple and Dell. Saturations of Smartphone in the developed countries have limited the company penetration in these countries (Marković et al., 2016, 184). Another threat is as a result of profit margin reduction on the company hardware, it’s argued that, the company major income is from selling of its hardware products which are characterized with cheaper prices. Lastly, there is rapid change in technology which the company need to focus on to avoid being irrelevant in IT industry.
Competitive strength
The competiveness strength of the Lenovo is a result of good management. The company has a well structured organizational setting that boosted its operation (Balmer 2016, 18). Moreover, strategic choice theory can be used to describe the company success. The theory clearly describes the roles played by the leading groups in influencing the organization in making relevant choices. The theory put more emphasis on the organizational management team to make choices that might end the organizational dynamics. Additionally, the company competitiveness can be analyzed in terms of market shares, profitability and the sales. Currently the company has the second largest share in the market with 30%. Though, the company has failed to establish itself in the mature markets (Ward and Peppard, 2016, 980).
Figure 1: Lenovo market share
Source: Lenovo Company documents
It’s also important to note that as a result of good management and support from the company stakeholders. The company market shares are rapidly overtaking its rivals. The overall sales growth and revenues have gone up. For instance in the fiscal year 2011, the company received sales of $ 21.6 billion, this represents an increase of 30% annually (Parnell, 2013, 65).
Figure 2: Revenue by product
Source: Lenovo company documents
Strategic choices
Lenovo strategic choices are focused on targeting marketing choices. The company considers several factors while selecting the target markets; first, customers who are literate with high level of education and below age of 45-years old. They major idea is that these customers are major consumer of the company products. Second, the company targets city customers who are aware of its products (Fan et al 2016, 54). Moreover, the company brand is perceived to have a comparative advantage thus choosing these customers is of high significant to the company. Lastly, the company targets the developed rural markets. The population is perceived to have high purchasing power of the company products. It also engaged in enlightening of the rural areas by provision of free movies which have later brought a positive impact on their products. According to the market surveys, Lenovo has 70% of the marked share in the end products. However, its middle end count of the market share range from 40%-50%. While the lower end of products is 10% lower in the market share (Chen, 2015, 88).
Additionally, the company is subjected to price war. The company has never demonstrated any event of revising its price war. Though it’s effective price strategies have enabled it to compete favorably with its competitors, its sales have continued to increase despite all allegations of low prices on its products. The company has also kept its corporate image at bay. With varyi...