A Case Study of Lenovo Strategies
Case @ China
The Roadmap
Cheung Kong GSB Case Study Centre
for Lenovo to Go Global
—A Case study of Lenovo Group Strategies
I.Lenovo: refocus on PC operation
On December 8 , 2004, Lenovo consummated a deal with IBM whereby Lenovo was to acquire IBM’s desktop and laptop PC unit and its R&D and procurement operations worldwide for the sum of US$1.25 billion. On May 1 2005, Lenovo completed its acquisition of IBM’s PC Unit. “Using an analogy, our enterprise is well likened to a tortoise but our foreign competitor is more like a rabbit. Instead of racing against the rabbit heads-on, we would rather ride on its back and let it carry us forward,” said former Lenovo Chairman Liu Chuanzhi. L e n o v o a c q u i r e d I B M ’s P C U n i t w h e n i t s management succession had neared completion. To become the world’s top PC maker is the ideal of the Lenovo leader Liu Chuanzhi and Yang Yuanqing, though they expressly acknowledge that it will not be an easy goal to attain. When Yang Yuanqing assumed office, he laid out an ambitious three-year blueprint to transform Lenovo into a major international corporation diversified in IT operation and leading in technology. But for Lenovo—an established business well beyond its prime stage of entrepreneurship, it is not at all easy to turn from a strong enterprise into a great international corporation. As its three-year plan fell short, Lenovo had no alternative but to rethink its past strategy and refocus 132 China Economist November 2007 st th
on core operations. Acquiring IBM’s PC Unit at the end of 2004 was a sign of the real start of Lenovo going global. At the same time, Lenovo struggled to make a successful handset debut in 2005 when China’s mobile phone market was at a low point. In retrospect of several strategic transformations at Lenovo, we may wonder whether Yang Yuanqing’s “refocus” this time could jumpstart Lenovo onto a trajectory of opportune growth for the next five years. Another question is whether
The Roadmap
Cheung Kong GSB Case Study Centre
for Lenovo to Go Global
—A Case study of Lenovo Group Strategies
I.Lenovo: refocus on PC operation
On December 8 , 2004, Lenovo consummated a deal with IBM whereby Lenovo was to acquire IBM’s desktop and laptop PC unit and its R&D and procurement operations worldwide for the sum of US$1.25 billion. On May 1 2005, Lenovo completed its acquisition of IBM’s PC Unit. “Using an analogy, our enterprise is well likened to a tortoise but our foreign competitor is more like a rabbit. Instead of racing against the rabbit heads-on, we would rather ride on its back and let it carry us forward,” said former Lenovo Chairman Liu Chuanzhi. L e n o v o a c q u i r e d I B M ’s P C U n i t w h e n i t s management succession had neared completion. To become the world’s top PC maker is the ideal of the Lenovo leader Liu Chuanzhi and Yang Yuanqing, though they expressly acknowledge that it will not be an easy goal to attain. When Yang Yuanqing assumed office, he laid out an ambitious three-year blueprint to transform Lenovo into a major international corporation diversified in IT operation and leading in technology. But for Lenovo—an established business well beyond its prime stage of entrepreneurship, it is not at all easy to turn from a strong enterprise into a great international corporation. As its three-year plan fell short, Lenovo had no alternative but to rethink its past strategy and refocus 132 China Economist November 2007 st th
on core operations. Acquiring IBM’s PC Unit at the end of 2004 was a sign of the real start of Lenovo going global. At the same time, Lenovo struggled to make a successful handset debut in 2005 when China’s mobile phone market was at a low point. In retrospect of several strategic transformations at Lenovo, we may wonder whether Yang Yuanqing’s “refocus” this time could jumpstart Lenovo onto a trajectory of opportune growth for the next five years. Another question is whether