lenovo case presentation
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LENOVO’S BRAND BUILDING STRATEGIES: TAKING THE COMPETITION TO COMPETITORS WITH “TRANSACTIONAL MODEL”TRANSCRIPT
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C A S E S T U DY 9
LENOVO’S BRAND BUILDING STRATEGIE:TAKING THE COMPETITION TO COMPETITORSWITH “TRANSACTIONAL MODEL”
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Agenda• Brief Summary about the case• Global PC Industry• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations
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Agenda• Brief Summary about the case• Global PC Industry• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations
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Overview of
Global PC Industry
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• Since early 1980s, PC industry has been the most dynamic electronic industry sector
• The global PC industry reached mature level by mid-1990s
• Dell and Gateway starts their build-to-order strategies, resulted to the total supply chain respond swiftly to change
• Emerge of e-commerce (online sales) hastened PC industry’s clock speed
Overview of
Global PC Industry
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Overview of
Global PC Industry• PC-makers enjoys high profits 1990, however, they
experiences an extreme downfall in early of 2000
• In 2004, in order to maintain PC vendor’s market position, vendor consolidation can develop economies of scale in order to go into a global presence
• Global PC industry currently affected by two major trends; commoditization which is about mass-produced and the absence of mid-market, which separate to the customers that demand cheapest products and that of exclusive products
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Agenda• Brief Summary about the case• Global PC Industry• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations
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About Lenovo:From Emerging to Surging
1984 Established as Legend Group in Beijing Had product and distribution facilities in US, UK, Mexico, Malaysia, Hungry, China, and Brazil
2003 Changed its brand from Legend to Lenovo
2005 Acquired IBM’s PC division and became the world’s third biggest PC-maker
2006 Lenovo started becoming a partner sponsor in sports events and sigh the contract to become the sponsor of Beijing Olympic 2008
2007 Started implementing a worldwide expansion plan by building the second plant in India. Lenovo tried to solidify its presence in US by selling both brand Lenovo and ThinkPad (a brand of IBM) In August announced the taking over Packard Bell BV, the 5th biggest PC-maker in Western Europe
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About Lenovo:From Emerging to Surging
2008 Lenovo enters the Worldwide consumer PC market with the new "Idea" Brand.
2009 Launched the new strategy “ Protect and Attack”
2010 Lenovo introduced over 20 new devices at the consumer Electronic show in Las Vegas
2011 In January Lenovo formed a PC joint venture with Japanese IT company NEC, In quarter 3 Lenovo acquired Medion, a German electronics manufacturing company .
2012 Lenovo took the 2nd place in global PC market share with the share around 15%
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LENOVO’S GLOBAL BRAND BUILDING STRATEGIES
“TRANSACTIONAL MODEL”
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ChinaRelationship model: bulk orders from big enterprises
Transactional model: serving customers with common requirements and who need lesser customization. Target small- to mid-size companies and individual customers
LENOVO’S GLOBAL BRAND BUILDING STRATEGIES
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LENOVO’S GLOBAL BRAND BUILDING STRATEGIES
GlobalRelationship model: acquire IBM PC division
Transactional model: become tech-sponsor for Turin & Beijing Olympic games, partner with NBA, offer both ThinkPad and Lenovo brand complement the product offering
China-based supply chain model: fulfills every order on time with better IT system
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Agenda• Brief Summary about the case• Global PC Industry• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations
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Key Challenges of LENOVO raise from the case
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Key Challenge #1Brand Building Challenges
Building a global brand inhighly commoditizedPC industry
Hurdles in buildingstrong brandin the US market
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Key Challenge #2The Backyard Counterfeits
Chinese counterfeits of IT products & components
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Key Challenge #3Intense Competition
Growing competitionfrom international
players
At home competition with local PC producers &companies with lower prices
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Key Challenge #4Cost-Cutting is the only solutionto profit margin
Supply chain networkinternationally
Outsourcing Trends (CMs: Contract manufacturers)
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Key Challenge #5Proliferation of technologies
Dual Multiple All in One Functionsand Interconnected digital technologies
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Agenda• Brief Summary about the case• Global PC Industry• Lenovo: From Emerging to Surging
• Key Challenges of Lenovo from the case
• Recommendations
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How Lenovo, as a state-owned Chinesecompany, could prevent the negative
viewpoint as endanger to US national security?
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How Lenovo, as a state-owned Chinese company, could prevent the negative viewpoint as endanger to US national security?
• Brand Portfolio Strategy - Focusing more on “Product brand”
rather than “Corporate Brand”
• PR & Sponsorship/CSR Campaign - Marketing and Partnership with world-class
events and exhibition i.e. Olympic Games,World Cup, or even NBA in US
- Donations, Social Responsibilities Programin US to gain good corporate image
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How Lenovo, as a state-owned Chinese company, could prevent the negative viewpoint as endanger to US national security?
• Focus on “Quality” and “Innovation” - Build key competencies on quality and innovation to
to overcome state owned Chinese company imageand narrow the gap of country of origin effect
• Household PC market in US - Better penetrate to household PC market
segment in US where low loyalty to US origin brand and concern more for affordable price and efficient features
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How to build a “global brand”in a highly commoditized PC industry?
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• Customized products and serviceshigher value added, unique product design,new product category
• Continuous R&D for new innovation
• Efficient resource utilization
• Effective distribution channels
How to build a “global brand”in a highly commoditized PC industry?
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• Create strong brand loyalty such as excellent customer service, after sales service
• Rebranding – Lifestyle products not discounted products
• Advertising and sponsorship for global event- Olympic games- National Basketball Association
How to build a “global brand”in a highly commoditized PC industry?
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How to cope with Counterfeits?
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• Continuously deliver new innovation to its products– R&D investment
• Building Brand loyalty– Trust in quality
• Secure intellectual property when outsourcing more operations to suppliers partners– Transition of technology and
know-how to suppliers should be done appropriately
How to cope with Counterfeits?
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How to improve SUPPLY CHAIN internationally?
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• Why is supply chain important? IT product: depreciate and become outdated easily
• Past: 30-day shipping from China to USA
• Present: Fully integrated global supply chain
How to improve SUPPLY CHAIN internationally?
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Global Supply Chain
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Current Supply Chain Management
• Lean Six Sigma: To eliminate 7 kinds of waste: Defects, Overproduction, Transportation, Waiting, Inventory, Motion and Over-Processing
• SAP Software: To deal with wide range of customers
• Key KPIs: Cost, On-time delivery, Cash conversion, Quality
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Lean Six Sigma
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How to sustain in Global Competition?
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• Maintaining competitive advantage on low cost
• Continue with global brand image
• Make use of the strong B2B market to expand to B2C market
• Quickly adapt to any customer change
How to sustain in Global Competition?
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Other Recommendations
• Forecasting System
• Risk Management: Sensing and Responding Known-Unknown Risk
• Commitment Review by Executive Management
• Be Prepare• Collaborators turning to competitors
• Foreign governments• Exchange rate fluctuation
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C A S E S T U D Y 9LENOVO’S BRAND BUILDING STRATEGIE:TAKING THE COMPETITION TO COMPETITORSWITH “TRANSACTIONAL MODEL”
. . .T H A N K YO U