Lenovo case study

Résumé du document

IBM was founded in 1911 and had a rapid growth during the following years. In 1981, IBM created the Personal Computer. Nowadays, IBM is one of the most famous IT companies. In the beginning, IBM specialized in selling computers. Then the company expanded its business to software and services. In 1941, IBM announced that there is no future for IT electronics. So we can think that IBM wanted to develop the software and services part from this time and then, to cede the computer parts. Legend had been created in 1984 by 11 computer scientists. At the beginning, Legend was selling IBM computers and HP peripheral. Then the company started to build its own computers. In 2003, Legend became Lenovo and held 12.6% market shares in the Asia-Pacific region (Japan excluded).This makes Lenovo rank as the leader in this sector.

Extraits

[...] The turnover of Lenovo reached billion in 2004. This alliance is a good solution for Lenovo. The company buys notoriety, which is what it aimed. The firm already has production sites; the purchase of IBM PC division will increase economies of scale. This is an important point on a market like this where the offer already has a certain maturity. The base of IBM is very significant on European and American markets so this is a good development opportunity for Lenovo. [...]

[...] This makes Lenovo rank as the leader in this sector. The company has a good position in Asia, especially in China (there are about 4000 retailers in China). Several years later, Lenovo took over IBM's PC division. Is this an opportunity for IBM, for Lenovo or for both of them? There are some similar points in both companies' background which may explain why they finally make this logical alliance. We are going to discuss the logic of the mergers & acquisition and alliances that Lenovo have undertaken to-date. [...]

[...] If we take the point of view of IBM deciders, what other alternative did they have? Also, the PC market is much more standardised so, if they wanted to keep being competitive, they had to reduce costs and develop their services. The cost is the only factor which can be changed. In other words, labour costs have to be reduced. Today, China enables companies to hire qualified persons with low costs. This logic is actually the best for computer companies such as Lenovo and its competitors. [...]

[...] This made the success of IBM. Let's see if Lenovo will continue internationally and competitively thanks to their mass production. Bibliography Informations sur les groupes http://www.lenovogrp.com (le site ne semble plus accessible aujourd'hui, il a peut-être été réintégré au site officiel Lenovo.com depuis la rédaction de l'essai). [...]

[...] In 1981, IBM created the Personal Computer. Nowadays, IBM is one of the most famous IT companies. At the beginning, IBM was specialised in selling computers. Then the company expanded its business to software and services. In 1941, IBM announced that there is no future for IT electronics. So we can think that IBM wanted to develop the software and services part from this time and then, to cede the computer parts. Legend has been created in 1984 by 11 computer scientists. [...]