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Industry Strategy And Analysis

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Introduction

Lenovo or Lenovo Group is the largest PC maker in the world and a Fortune 500 frontrunner in smart connected devices. Other than laptops and PCs, Lenovo also sells peripherals, printers, scanners, smartphones, tablets, and smart TV’s. The company has employees in more than 60 companies with over 52,000 employees. Lenovo’s customer base has reached more than 160 countries and has a net worth of about $43 Billion. The company was founded in 1984 in Beijing and is now also headquartered in Morrisville, North Carolina. Lenovo puts a big emphasis on being and staying competitive. Lenovo states: “Our mission is to become one of the world’s great personal technology companies. We aspire to achieve this objective by leading in three key areas: Personal Computers: Lead in PCs and be respected for our product innovation and quality.” Lenovo’s success has clearly been driven by this mission and the following paper will explain. This has been instilled in their culture from the sales representatives of their company to the CEO. This paper will discuss Lenovo’s key elements, structure, success factors, and segmentation variables. Industry Key Elements and Structure Within its Computer hardware electronics industry, Lenovo is ranked the fourth PC seller in the world compared to HP, Dell, and Acer, with market shares of 18.3 percent, 14.9 percent, and 9.5 percent, respectively.

Among the 60 countries that Lenovo operates in, the company has joint ventures with EMC (Lenovo EMC – seller of network-attached storage solutions) and NEC (producer of personal computers for Japanese markets). Lenovo’s consumer markets consist of Government entities, K-12 education services, Data Centers, Health facilities, Larger enterprises, and higher education. Lenovo has 53 suppliers to help leverage its procurement spend, incorporate the most competitive supplier prices, and focus on corporate & social responsibility (Lenovo.com). Although Dell, HP, and Lenovo maintain their dominant positions in the corporate market, there are threats of substitute products. Take for example a Notebook. Notebook’s substitute products are tablets, Ipads, Microsoft Surface, Samsung, Galaxy notes, personal computers and smart phones. Although these substitutes are all priced low, the Notebook still holds its place as the multi-tasker and more storage space (Businesswire, 2014). Lenovo is operating in a Hypercompetitive Industry. “In a hypercompetitive industry such as information technology, competitive advantage comes from an up-to-date knowledge of environmental trends and competitive activity, coupled with a willingness to risk a current advantage for a possible new advantage.

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Examine a company within the industry (HP). Assign a rating to each factor from 5 (outstanding) to 1 (poor) based on HP’s current response to that particular factor. Each rating is a judgement regarding how well that company is specifically dealing with each key success factor. 4. In Column 4 (HP Weighted Score) multiply the weight in Column 2 for each factor by its rating in Column 3 to obtain that factor’s weighted score for HP. 5. In Column 5 (Lenovo Rating) examine a second company within the industry— in this case, HP. Assign a rating to each key success factor from 5.0 (Outstanding) to 1.0 (Poor), based on Company Lenovo’s current response to each particular factor 6. In Column 6 (Company B Weighted Score) multiply the weight in Column 2 for each factor times its rating in Column 5 to obtain that factor’s weighted score for Company B. 7. Add weighted scores for all factors to determine total weighted scores for both HP and Lenovo. The total weighted score indicates how well each company is responding to current and expected key success factors in the industry’s environment (Wheelen, Hunger, Hoffman & Bamford, 2018). Some key things to highlight from the Key Success Factors are that Lenovo’s rating for consulting and integration are higher. This is important because this shows the company to be successful long term. Consulting and integration are important in the Computer Technology industry, especially because Lenovo operates on a global level. Managed services is a fairly new dynamic for both HP and Lenovo. Computer technology companies are starting to steal this market from MSP (Managed Services providers). It will be interesting to see which competitors does this best in the managed services sector. Lenovo is operating an above average industry mix with a weighted score of 4. Compared to HP with a weighted score of 3.75. Segmentation variables and External Factors Segmentation variables are drivers of the external factors. Market segmentation is useful tool for organizations large and small. As competition rises, different segmentation approaches are being used to help target marketing segments. One basic model of market segmentation is the next segmentation approach. “The general nested model is a practical and comprehensive means for segmenting business markets. Nest approach consists of 5 bases and corresponding segmentation variables:

  1. Demographics- industry, company size and customer location;
  2. Operating variables – technology, user status, and customer capabilities;
  3. Purchasing approaches- purchasing function organization, power structures, buyer-seller relationships and purchase policies/criteria;
  4. Situational factors -urgency of order fulfillment, product application and size of order; and
  5. Buyer’s personal characteristics-buyer-seller similarity, attitudes toward risk and buyer motivation/perceptions” (Weinstein, A. 2011).

Lenovo’s three segmentation variables are industry in regards to Demographics, buyer motivation in regards to buyer’s personal characteristics, and buyer-seller relationships in regards to operating variables. External strategic factors for Lenovo include the following opportunities and threats: Opportunities: Division of products, European country market expansion into England, Italy, France, Germany. Lenovo takes over to become the largest computer seller, diversification of its line of products. Threats: Too many cheap products available, competition from other shoppers, foreign exchange rate fluctuations, increase in government regulations, new product advances. From the analysis, we can see that that industry is not as important to strategy success as is the market positioning of Lenovo.

Conclusion

Lenovo’s long-term development is inseparable from a unified and correct guiding ideology. Only with the right long-term strategic planning for the guide, use its own characteristics with people in enterprise management strategy for the management of Lenovo, Lenovo will be able to establish a sound management system in order to guide the company to be stable, healthy and rapid development. Lenovo’s development strategy planning is based on external analysis, against Lenovo’s actual work, introduce the total development goals, according to the target provides companies level, business layer and functions layers development strategy. Under the overall thinking of development strategy, it should develop a series of possible specific strategies. The success of the company is also highly correlated with its emphasis on technology innovations. Lenovo is the first Chinese company to introduce PCs to households in China and first developed the Legend Chinese Character Card that could be used to translate English operating software into Chinese characters. This pioneering innovation has affected the lives of millions of Chinese and received the highest National Science-Technology Progress Award in China. Additionally, Lenovo’s three research centers—China, Japan, and the United States—have produced many world-class advanced PC products. The company now holds more than 2,000 patents and has won hundreds of technology and design awards. Its extraordinary research and development capability has distinguished Lenovo from its competitors.

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