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Lenovo International Business

Essay by   •  April 25, 2017  •  Essay  •  2,684 Words (11 Pages)  •  1,137 Views

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QUESTION 2(A)

1.0 INTRODUCTION  

The multinational company that I have decided to use for this report is Lenovo. It is a multinational company (MNC) with a headquarter in Beijing, China. The reason I chose Lenovo is because I believe that they have an interesting journey from being an underdog to being the industry leader and a wonderful set of internationalization strategies. In this report, I am going to identify and evaluate those particular strategies they used to internationalize the company.

2.0 HISTORY OF LENOVO

        Lenovo is a chinese multinational technology company that sells various types of  IT gadgets and devices. It was initially known as Legend Holdings and originally developed from a small government funded venture and now to a very well known company all around the world for fantastic personal computers. Lenovo was founded by Liu Chuanzhi, in 1984. The company initially started with a restricted budget of 200,000 yuan and a group of 10 engineers. Back then, their sole purpose and focus consisted of distributing and installing foreign computers to households in China. As a start up company, Lenovo had many failed ventures but its first success occurred when they invented a circuit board that allowed International Business Machines (IBM) personal computers to operate in Chinese characters.

        Then, the Chinese Government eventually granted Liu Chuanzhi a permission to start a subsidiary in Hong Kong. In the 1990s, their very first personal computers was launched in the market. The company started making a name for itself in the domestic market by selling computers using its own name. Sales developed rapidly and by 1996, the organization turned into market leader for personal desktop sales in China. That same year, Legend additionally presented its first laptop. By 1998, it had delivered its millionth PC and in 1999 it turned into the biggest PC seller in the Asia-Pacific district. The organization expanded its product line in 2002 with its first supercomputer, the DeepComp, advertised as the speediest PC accessible in China. In 2003, Legend presented the Lenovo brand and logo in arrangement for the organization's venture into business sectors past the Asia-Pacific area.

3.0 STRATEGIES USED FOR INTERNATIONALIZATION

After doing some research, I have found that investment strategy, brand strategy and sports events marketing strategy are the three internationalization strategies mainly used by Lenovo.

3.1 INVESTMENT STRATEGY

Internationalization improvement can be accomplished by two essential methodologies known as mergers and acquisition and self developing. In this case, Lenovo has utilized the first method for its investment strategy. Mergers and acquisitions are utilized as a kind of participate system. It manages buying, offering, isolating and coordinating organizations or comparative divisions to help the organization to create and become speedier in its business region. Below are one of the most successful acquisitions made by Lenovo in the past 8 years.

1) IBM

International Business Machines Corporation (IBM), also know as "BIg Blue," is an American technology organization that produces, creates, and offers computers around the world. It was set up in 1911 through a merger of three unique organizations. Before Lenovo procured it, IBM was one of the greatest PC merchants in the world as far back as 1996. Until 2004, when Lenovo gained its PC business, it was still the third smash hit organization and held 5.5 percent of the global market share.International Business Machines Corporation (IBM), here and there likewise alluded to as "BIg Blue," is an American technology organization that produces, creates, and offers computers around the world. It was set up in 1911 through a merger of three unique organizations. Before Lenovo procured it, IBM was one of the greatest PC merchants in the world as far back as 1996. Until 2004, when Lenovo gained its PC business, it was still the third smash hit organization and held 5.5 percent of the global market share. On December 8, 2004 Liu Chuanzhi initially declared Lenovo's procurement of IBM's PC business to the public. Lenovo gained IBM's PC, laptop, manufacturing plants, R&D department, service centers  and distribution channels of the PC business by paying 1.25 billion USD to IBM. As per their agreement, Lenovo and IBM turned out to be long term key partners which cooperate towards similar objectives. IBM has the priority to get administrations from Lenovo and to be the provider for Lenovo. Then again, Lenovo would always be IBM's first choice for buying PCs. Lenovo has profited from this acquisition in three ways. To begin with, the organization permanently has the ThinkPad brand. Plus, the company took IBM's advanced PC manufacturing technology. Lastly, Lenovo gotten its worldwide assets, including universal sales channels and management groups. These advantages Lenovo obtained from IBM helped Lenovo to enhance its business revenue. Two years into the acquisition, Lenovo had built up branches in 60 different nations and distribution channels in 160 distinct areas around the world. This acquisition helped Lenovo accomplish its internationalization in distribution channels, production technology, worldwide ownership and financing. Prior to this acquisition, Lenovo never existed on the list of top five PC merchants by worldwide market share for unit sold. It did not have headquarters abroad. It was not notable by clients abroad. In any case, after the acquisition, it all of a sudden turned into the third on the rundown of the top five PC sellers by global market share units sold, and set its headquarters in the USA. Besides, the acquisition of IBM enhanced Lenovo's popularity and reputation around the world, and improved its image culture and impact.

3.2 BRAND STRATEGY

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Lenovo has been applying various strategies for different communications in the market. In this case, among every one of the strategies Lenovo utilized, naming and pricing are the key strategies for its internationalization.

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