Lenovo Business Strategy Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Use Porters five forces model to analyse an industry on the basis of the five competitive forces.
- Analyse the global PC & smartphone industry and how the five forces have affected Lenovo and rival firms and the impact on industry structure, attractiveness, and profitability.
- Understand how Lenovo has managed to defend against intense competition and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage.
1.0 INTRODUCTION
Lenovo is a Chinese technology firm founded by Liu Chuanzhi in 1984, currently engaged in the design, manufacture and marketing of personal computers, tablets, smartphones, smart televisions, servers as well as related software, accessories and third party applications. Key products include ThinkPad and Yoga tablets, smartphones as well as desktops and laptop PCs under the Think and Lenovo brand names.
The technology industry has one of the most profitable markets in the world with two major players Samsung and Apple having a combined global market share of 39.0% with other companies such as Lenovo, Xiaomi, Huawei, OPPO, extra, accounting for the remaining 69% of the smartphone market. Lenovo is however a low-cost technology company and has a global PC market share of 22.0% with major competitors HP and Dell having 22.5% and 15.2% market shares respectively according to vendor unit shipment of fourth quarter of 2017 (Gartner 2017). In addition, Lenovo had the 3rd highest Smartphone shipments in China totaling to 80 million units worldwide in 2017 (Statista 2018).