In order to get a better sense for Lenovo’s outlook in terms of the corporate market and the impending loss of the IBM branding, it is helpful to analyze the company’s strengths, weaknesses, opportunities and threats in terms of the problem. These key parameters are summarized here. Strengths Lenovo’s major strengths lie in its current brand image and market share. On the international scale, Lenovo ranks third in corporate sales behind Hewlett-Packard and Dell.
It shows tremendous capability for improvement, however, due to its clearly superior reputation for high quality, high end products inherited from IBM.In addition, executives maintained from IBM’s notebook division provide the valuable experience that a relatively new foreign player normally would not have in the corporate (especially US) market. However, Lenovo already has a strong base in China, with a 29% share of China’s PC market. There is limited competition for existing IBM/Lenovo corporate customers, because of existing reputation and connections formed by transferred IBM staff. The historic brand image and continuing innovation in the high-end market makes products like the ThinkPad X300 a “must-have” for a CEO to show off and use.The strength here lies in the capability for creativity in producing a high-end product with all the bells and whistles necessary for a corporate executive. Lenovo provides a highly versatile notebook product line, in addition to its high-end ThinkPad.
As a “one-stop shop” company, Lenovo shows promise – its product lines covers mid to high end products, now supporting Linux products. In addition, in-house manufacturing specialization allows for lower marginal costs – this leads to a more competitive position for a price war. WeaknessesSince Lenovo is a new player in the international stage it has plenty of weaknesses in its outlook.
In general, its team has less market knowledge than local experienced players in the US market like HP and Dell. Lenovo has just begun to develop its service team in the US – it still manages to provide top of the line customer service, but the system is not optimized. Lenovo’s major weakness, however, is in the stigma associated with Chinese products and companies with a reputation for skimping on quality to achieve low costs.A customer in the states is likely to mistrust the Lenovo brand in favor of the more wellknown and trustworthy, American IBM logo.
It is this weakness that Lenovo must overcome in the next year as the IBM branding disappears from its products. Opportunities With low marginal costs and a wide product spectrum, Lenovo has the opportunity to become a one-stop powerhouse in the corporate market, providing high-end executive computers with the IBM ThinkPad line, and high-quality, middle-spectrum computers for lower level employees on the corporate ladder.In addition, a developed electronics department allows Lenovo the opportunity for creating synergies between corporate addons like cell phones and Pocket PCs. Threats In general, the weakness of the US economy and the dropping value of the dollar might pose a threat to Lenovo’s growth. Rivalry between Lenovo and other companies in the corporate market like HP and Dell already pose a significant challenge, but Apple is showing a growing strength in the corporate market that must be addressed as Lenovo seeks to become the dominant international corporate player.