LENOVO’S BRAND BUILDING STRATEGIES: TAKING THE COMPETITION TO COMPETITORS WITH “TRANSACTIONAL MODEL”

1. C A S E S T U DY 9
LENOVO’S BRAND BUILDING STRATEGIE:
TAKING THE COMPETITION TO COMPETITORS
WITH “TRANSACTIONAL MODEL”

2. Agenda
• Brief Summary about the case
• Global PC Industry
• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations

3. Agenda
• Brief Summary about the case
• Global PC Industry
• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations

4. Overview of
Global PC Industry

5. Overview of
Global PC Industry
• Since early 1980s, PC industry has been the most dynamic
electronic industry sector
• The global PC industry reached mature level by mid-1990s
• Dell and Gateway starts their build-to-order
strategies, resulted to the total supply chain respond swiftly
to change
• Emerge of e-commerce (online sales) hastened PC industry’s
clock speed

6. Overview of
Global PC Industry
• PC-makers enjoys high profits 1990, however, they
experiences an extreme downfall in early of 2000
• In 2004, in order to maintain PC vendor’s market
position, vendor consolidation can develop economies of
scale in order to go into a global presence
• Global PC industry currently affected by two major trends;
commoditization which is about mass-produced and the
absence of mid-market, which separate to the customers
that demand cheapest products and that of exclusive
products

7. Agenda
• Brief Summary about the case
• Global PC Industry
• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations

8. About Lenovo:
From Emerging to Surging
1984 Established as Legend Group in Beijing Had product and
distribution facilities in US, UK, Mexico, Malaysia, Hungry,
China, and Brazil
2003 Changed its brand from Legend to Lenovo
2005 Acquired IBM’s PC division and became the world’s third
biggest PC-maker
2006 Lenovo started becoming a partner sponsor in sports
events and sigh the contract to become the sponsor of Beijing
Olympic 2008
2007 Started implementing a worldwide expansion plan by building the second
plant in India. Lenovo tried to solidify its presence in US by selling both brand
Lenovo and ThinkPad (a brand of IBM)
In August announced the taking over Packard Bell BV, the 5th biggest PC-maker
in Western Europe

9. About Lenovo:
From Emerging to Surging
2008 Lenovo enters the Worldwide consumer PC market with
the new "Idea" Brand.
2009 Launched the new strategy “ Protect and Attack”
2010 Lenovo introduced over 20 new devices at the consumer
Electronic show in Las Vegas
2011 In January Lenovo formed a PC joint venture with Japanese
IT company NEC, In quarter 3 Lenovo acquired Medion, a
German electronics manufacturing company .
2012 Lenovo took the 2nd place in global PC market share with
the share around 15%

11. LENOVO’S GLOBAL BRAND BUILDING STRATEGIES
“TRANSACTIONAL MODEL”

12. LENOVO’S GLOBAL BRAND BUILDING STRATEGIES
China
Relationship model: bulk orders from big enterprises
Transactional model: serving customers with
common requirements and who need lesser
customization. Target small- to mid-size companies and
individual customers

13. LENOVO’S GLOBAL BRAND BUILDING STRATEGIES
Global
Relationship model: acquire IBM PC division
Transactional model: become tech-sponsor for Turin
& Beijing Olympic games, partner with NBA, offer
both ThinkPad and Lenovo brand complement the
product offering
China-based supply chain model: fulfills every
order on time with better IT system

14. Agenda
• Brief Summary about the case
• Global PC Industry
• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations

15. Key Challenges of LENOVO
raise from the case

16. Key Challenge #1
Brand Building Challenges
Building a global brand in
highly commoditized
PC industry
Hurdles in building
strong brand
in the US market

17. Key Challenge #2
The Backyard Counterfeits
Chinese counterfeits of IT products & components

18. Key Challenge #3
Intense Competition
Growing competition
from international
players
At home competition
with local PC producers &
companies with
lower prices

19. Key Challenge #4
Cost-Cutting is the only solution
to profit margin
Supply chain network
internationally
Outsourcing Trends (CMs: Contract manufacturers)

20. Key Challenge #5
Proliferation of technologies
Dual  Multiple  All in One Functions
and Interconnected digital technologies

21. Agenda
• Brief Summary about the case
• Global PC Industry
• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations

22. How Lenovo, as a state-owned Chinese
company, could prevent the negative
viewpoint as endanger to
US national security?

23. How Lenovo, as a state-owned Chinese company, could prevent
the negative viewpoint as endanger to US national security?
• Brand Portfolio Strategy
- Focusing more on “Product brand”
rather than “Corporate Brand”
• PR & Sponsorship/CSR Campaign
- Marketing and Partnership with world-class
events and exhibition i.e. Olympic Games,
World Cup, or even NBA in US
- Donations, Social Responsibilities Program
in US to gain good corporate image

24. How Lenovo, as a state-owned Chinese company, could prevent
the negative viewpoint as endanger to US national security?
• Focus on “Quality” and “Innovation”
- Build key competencies on quality and innovation to
to overcome state owned Chinese company image
and narrow the gap of country of origin effect
• Household PC market in US
- Better penetrate to household PC market
segment in US where low loyalty to US origin
brand and concern more for affordable price
and efficient features

25. How to build a “global brand”
in a highly commoditized PC industry?

26. How to build a “global brand”
in a highly commoditized PC industry?
• Customized products and services
higher value added, unique product design,
new product category
• Continuous R&D for new innovation
• Efficient resource utilization
• Effective distribution channels

27. How to build a “global brand”
in a highly commoditized PC industry?
• Create strong brand loyalty such as excellent customer
service, after sales service
• Rebranding – Lifestyle products not discounted products
• Advertising and sponsorship for global event
- Olympic games
- National Basketball Association

28. How to cope with Counterfeits?

29. How to cope with Counterfeits?
• Continuously deliver new
innovation to its products
– R&D investment
• Building Brand loyalty
– Trust in quality
• Secure intellectual property
when outsourcing more
operations to suppliers
partners
– Transition of technology and
know-how to suppliers should be
done appropriately

30. How to improve SUPPLY CHAIN internationally?

31. How to improve SUPPLY CHAIN internationally?
• Why is supply chain important?
IT product: depreciate and become outdated easily
• Past: 30-day shipping from China to USA
• Present: Fully integrated global supply chain

32. Global Supply Chain

33. Current Supply Chain Management
• Lean Six Sigma: To eliminate 7 kinds of waste:
Defects, Overproduction, Transportation, Waiting, Inventor
y, Motion and Over-Processing
• SAP Software: To deal with wide range of customers
• Key KPIs: Cost, On-time delivery, Cash conversion, Quality

34. Lean Six Sigma

35. How to sustain in Global Competition?

36. How to sustain in Global Competition?
• Maintaining competitive advantage on low cost
• Continue with global brand image
• Make use of the strong B2B market to expand to
B2C market
• Quickly adapt to any customer change

37. Other Recommendations
• Forecasting System
• Risk Management: Sensing and Responding
Known-Unknown Risk
• Commitment Review by Executive Management
• Be Prepare
• Collaborators turning to competitors
• Foreign governments
• Exchange rate fluctuation

38. . . .T H A N K YO U
CASE STUDY 9
LENOVO’S BRAND BUILDING STRATEGIE:
TAKING THE COMPETITION TO COMPETITORS
WITH “TRANSACTIONAL MODEL”