Case Study Of IBM Under-Dog Takes Over The Big-Blue

1. Why did IBM want to sell its PC business? Why did IBM sell to Lenovo? The reasons that IBM wanted to sell its PC business to Lenovo are: • • • To shed an unprofitable operation as the company saw the limitation and more competitors in the market. Selling its PC business to Lenovo would help them increase market share, especially in Asia. IBM shifted their business from producing PCs to concentrating on consulting service. Therefore, merging with another company will help them cut the operational cost. Lenovo is one of the world’s leading manufacturers in PC market after Dell and HP. Its brand is best known in China and Asia-Pacific region. The company is the China’s PC market leader with 21.5%

As a global leader in the PC market, Lenovo’s success rests on its ability to deliver consumer centric innovations in products that deliver a blend of mobility, performance and price. Design is an infrastructural element that helps define every aspect of a company, including Web site, stores, customer support, packaging, and messaging as well as its products. Lenovo has a well-earned industry reputation for delivering superior quality products. Quality is a fundamental component and commitment to customer satisfaction by delivering products that are of superior quality to comparable offerings from their competitors is the key to Lenovo’s success. In recent years, Lenovo relies heavily on local manufacturing strategies to shorten

IBM needs to grow revenue and stay competitive in the dynamically changing computer marketplace of the 1990’s by maintaining technological leadership and accepting the organizational transformation which needs to be undertaken for them to excel. IBM needs to recapture their previously held powerful position in the personal computer and microprocessor markets and regain value in the company which will increase its stock value and competitive advantage in the marketplace.

2016 is said to be “Record Breaking Year” for Chinese Investors. According to Forbes News, five major acquisitions of U.S companies and stakes totaled up to 28.16 Billion dollars. Yet, this was only a quarter of China’s entire outward investments in 2016. Many foreign firms suppose that China’s oversea merging and investing in next decade will reach tremendous amount, but it will not occur as they expected depending on Emma Johanningsmeier’s current event reports on Wall Street Journal about “New Chinese Regulations and wary foreign governments hamper M&A investors” in august 2017.

Not only is the global business environment competitive, it requires developing appropriate strategies to guarantee profitability and breaking-even. Lenovo has adopted strategic alignment of its environment and in improving its competitiveness in the technology sector. Headquartered in Beijing, China, it has with offices in Morrisville, North Carolina in the US and other regions globally. Founded in 1984, Lenovo is one of the largest and fastest growing vendors of personal computers (PCs) globally and ranked third in providing “Smart Connected Devices.” This report examines strategic realignment and associated changes in Lenovo aimed to enhance its competitiveness globally.

IBM, the biggest IT company in the world, from more than 80 years is the lider in supporting the innovation in business. The company offers complex solutions, adjusted to customers requirements.

As direct exporting is the new proposed strategy in 3.1.1, Lenovo will be focusing on the pressures for global integration which is to seek cost reduction through economies of scale and arbitrage benefits. As Lenovo wanted to attain competitive advantage through cost leadership strategy, they first have to cut down their cost in order to be able to sell product with lower price. Hence, the pressure of global integration in cost reduction is identified there.

In December 2004, Lenovo 's acquisition of China 's leading computer manufacturers IBM 's PC division of $ 1.75 billion dollars. The transaction generated $ 13 billion business, which accounts for 8% of the global PC market. The takeover meant the integration of IBM by Lenovo 's

Founded in June 1911, IBM has always been a leading company in the technology industry and at the forefront of innovation. It is a manufacturer of computer hardware and software, and also provides infrastructure, hosting and consulting services. Before the 2000s, IBM was the largest PC vendor in the world. However, the hardware sales have continually declined since 2000, and IBM sold its PC group to Lenovo in 2004, as well as its x86 Server Business in 2014. In the new era of the technology industry, IBM has faced the challenge to transit from a hardware manufacturer to a service company.

Both Dell and HP are two strong players in PC industry which refers to an industry where companies produces PCs (desktops and notebooks), handheld devices (smart phones and tablets), and workstations. However, with growing global expansion, Dell and HP’s performance differs. Dell, once the world’s largest PC maker in 2001, has continually lost its market share to HP and Acer since 2007 (Guglielmo 2009). The cause is rooted in two differences of these companies: company diversifications and core competences. Therefore, how firms can continually survive in the PC business is more of an issue for Dell than for HP.

Lenovo is one of the largest famous personal computer makers in the world. Today, Lenovo strives to be the global market share leader in each of the market we serve. On September 24, in 2004, Lenovo purchased the personal computer business and the brand “ThinkPad” famous computer IBM in the IT industry all over the

China has been one of the favourite places for the Foreign Investment for the last 40 years. Many Foreign Investors have made Equity Joint Ventures in China to expand their business. From late 1970s, China granted for the

Similarly, majority of respondent also have a positive view on the use of Lenovo is cooperative for office work, internet access, file management, student work and entertainment as rest people have neutral opinion. Thus this indicates that Lenovo have a good brand performance and brand imagery which satisfies customers need in the area that is most important to them which implies that Lenovo convey a stronger brand meaning.

Lenovo is a Chinese multinational technology company with headquarters in Beijing, China. It is the world’s largest PC vendor and one of the world’s leading smart phone companies listing on the Fortune 500 list that having major research and manufacturing centers over the world.

Compaq and Dell stole IBM’s PC market with the right price and the right message.