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Lenovo: Building a Global Brand 
PRESENTED BY GROUP 5: 
RADHIKA GUPTA (07346) , IPSHITA VERMA (07325) , SUBHANSHU GUPTA 
(...
Lenovo 
acquires 
IBM 
The Global PC Business Timeline 
5 top players 
account for 50% 
of the market 
MS and Intel set 
b...
Lenovo 
acquires 
IBM 
Contracted 2006 Winter 
Olympics + 2008 
Summer Olympics 
Lenovo’s Business Timeline 
11 Computer 
...
Lenovo’s Acquisition of IBM 
Company's Ownership 
Structure 
13.2 
10 
14.7 
27.3 
34.7 
IBM 
Private investors 
Original ...
Reasons for Globalisation 
 Described as a match made in heaven 
 Lenovo had competency in SMEs 
(transactional model), ...
•Efficiency of Legend 
•Innovation of IBM 
•Low cost production 
•Supply chain efficiency 
•Perception towards Chinese Com...
Why do acquisitions fail? What did Lenovo do different? 
Lenovo took care of all these factors and made a number 
of chang...
BCG Matrix for Lenovo – Countries and Product Line 
Stars 
? 
High Market 
Growth 
Laptops 
Desktops 
Mobile Phones 
Hard ...
Key Issues 
“How to position the brand of Lenovo and its products in the global 
market to leverage success in the present...
Brand Management 
 Lack of awareness of Lenovo on a 
global level 
 Three major concerns of customers: 
 Innovation wil...
Building the Lenovo Master Brand 
IBM ThinkPad ThinkPad Unleashed Lenovo 3000 Series 
Source: Lenovo: Building a Global Br...
Branding and Communicating 
Positioning to choose? 
Innovation Efficiency 
India USA 
Source: Lenovo: Building a Global Br...
Recommendations 
Innovation 
Efficiency 
Branding Alternative Selected 
Master Brand 
 Using ThinkPad brand on other 
pro...
Lenovo 
holds 19.2% 
of the world 
PC business 
Present Scenario 
Sold off mobile and 
laptop business 
Acquires IBM’s 
PC...
Thank You 
Questions? 
Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 15
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Lenovo: Building a global brand

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Lenovo: Building a global brand

  1. 1. Lenovo: Building a Global Brand PRESENTED BY GROUP 5: RADHIKA GUPTA (07346) , IPSHITA VERMA (07325) , SUBHANSHU GUPTA (07355) , ANKIT GUPTA (07306) , DINESH AGGARWAL (07316) , AND NANDHAGOPAL MURALITHAR (07335)
  2. 2. Lenovo acquires IBM The Global PC Business Timeline 5 top players account for 50% of the market MS and Intel set basic PC standards IBM introduces first PC 1970 1982 1984 1985 1990s 2001 2004 HP acquires Compaq HP Dell sells directly to customers establishes JV in China Compaq comes out with IBM “Clone”  Most PC manufacturers followed retail store distribution model  In the 90’s, outsourcing and offshoring resulted in key PC components being produced outside the US  Dell sourced components from outside but assembles in US  Others shifted manufacturing completely offshore  Dell set up manufacturing in China, ends up as Lenovo’s biggest competitor  Early 2000s show consolidation trend, eg. Gateway acquired eMachines (new entity had 7% of US market) Source: Lenovo: Building a Global Brand, HBS Case Study Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 2
  3. 3. Lenovo acquires IBM Contracted 2006 Winter Olympics + 2008 Summer Olympics Lenovo’s Business Timeline 11 Computer scientists form NTD 1984 1987 1989 1990s 1999 2004 2004 Legend to Lenovo China’s market leader (21.5% share) NTD renamed as Legend Computer Launched own brand PC and laptops Company First original product launched: “Legend” Chinese-character card  In 96, Legend marketed PCs with Intel’s premium chip  Increased sales volumes  Operational costs down  Lenovo overtakes IBM in China (7% market share)  Signed IPA with Microsoft and alliance with IBM to sell PCs with pre-installed OS and IBM software  In 2000s, China entered WTO, Legend considered marketing efforts and eyed foreign market  One option, Globalisation with specialisation in few product categories  Second option, Localisation with increased range of product categories for Chinese market Source: Lenovo: Building a Global Brand, HBS Case Study Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 3
  4. 4. Lenovo’s Acquisition of IBM Company's Ownership Structure 13.2 10 14.7 27.3 34.7 IBM Private investors Original founders Public Academy of sciences  For IBM, the deal was a way to shed an unprofitable operation and concentrate on consulting services  IBM had two options:  First was a potential acquisition by Lenovo  Second was to spin out the PC division to a private equity firm  For Lenovo, the deal was a way to globalize and cater to larger markets  As part of this deal, Lenovo gained:  The right to use IBM logo on its products for 5 years  Two major product offerings – ThinkPad and ThinkCentre desktop brands  Conditions levied and agreed upon: Source: Lenovo: Building a Global Brand, HBS Case Study Lenovo not to compete with IBM services and consulting group IBM logo only to be used on Think family products Used on products advertised; not as separate logo IBM provide global support for 5 years Access to IBM’s 30,000 strong enterprise sales team Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 4
  5. 5. Reasons for Globalisation  Described as a match made in heaven  Lenovo had competency in SMEs (transactional model), while IBM had a grip on the large businesses (relationship model)  IBM claimed brand value and innovation, while Lenovo brought in the strengths of production efficiency Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 5 Pressure to globalize Resources and Capabilities Source: Lenovo: Building a Global Brand, HBS Case Study, Journal of Management Studies paper on resource capability model
  6. 6. •Efficiency of Legend •Innovation of IBM •Low cost production •Supply chain efficiency •Perception towards Chinese Companies •Involvement of Chinese Government •Low margins •Developing the global supply chain •Fast Global Exposure •Expertise of PC industry •Merging innovation with efficiency •Synergy in values of both companies •Brand IBM overshadowing LENEVO •Threat to IBM brand image & existing customer base •Market movement away from PCs •Global competition SWOT Analysis: LENEVO Source: Lenovo: Building a Global Brand, HBS Case Study Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 6
  7. 7. Why do acquisitions fail? What did Lenovo do different? Lenovo took care of all these factors and made a number of changes in the organisational structure and culture, keeping in mind the needs, vision, and mission of the organisation. Ward succeeds Yang as CEO Focus on Winning Management Restructuring Cultural Integration Source: Lenovo: Building a Global Brand, HBS Case Study Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 7
  8. 8. BCG Matrix for Lenovo – Countries and Product Line Stars ? High Market Growth Laptops Desktops Mobile Phones Hard drives Cash Cows Dogs High Market Share Source: Lenovo: Building a Global Brand, HBS Case Study Low Market Share Low Market Growth Stars ? High Market Growth APAC Europe USA Cash Cows Dogs High Market Share Low Market Share Low Market Growth Product Lines Country Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 8
  9. 9. Key Issues “How to position the brand of Lenovo and its products in the global market to leverage success in the present environment” KEY ISSUE Branding of the new identity Source: Lenovo: Building a Global Brand, HBS Case Study New Organizational Complexity Intense Competition Cost Cutting for Profit Margin Brand Management Challenges  1 to 138 markets served  Ability to respond rapidly to opportunities  International Players: Brand image  Local Players: Price  International supply chain network  Outsourcing Trends  Lack of awareness  Image issues Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 9
  10. 10. Brand Management  Lack of awareness of Lenovo on a global level  Three major concerns of customers:  Innovation will slow down  Quality would suffer  Service and support would be outsourced Issues Initiatives overseas  Bad image in the US – Chinese government involvement  Deal brought a lot of publicity  Positive: Chance to capitalize on IBM’s strategic relationships  Negative: Chinese firms get low marks on trustworthiness  Turin Olympics sponsorship helped with awareness  “ThinkPad unleashed” to show innovation under Lenovo  Structured the deal to include ongoing worldwide services and support from IBM Branding Alternatives Master Brand Unilever Toyota/Lexus Intel, HP House of Brands Apple iPod Brand Division Synergy Approach Source: Lenovo: Building a Global Brand, HBS Case Study Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 10
  11. 11. Building the Lenovo Master Brand IBM ThinkPad ThinkPad Unleashed Lenovo 3000 Series Source: Lenovo: Building a Global Brand, HBS Case Study Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 11
  12. 12. Branding and Communicating Positioning to choose? Innovation Efficiency India USA Source: Lenovo: Building a Global Brand, HBS Case Study Phase 1  Sign off on Ads with ThinkPad instead of Lenovo  Objective to maintain ThinkPad sales momentum Phase 2  “ThinkPad Unleashed” campaign for Turin Olympics  Message that Lenovo innovates ThinkPad better than IBM Phase 3  Stress that Lenovo Master brand stands for innovation  Away from IBM and ThinkPad to Lenovo brand products Communication Strategy ThinkPad X41 • Tablet series launched • Innovation credit to IBM ThinkPad Z60 • Titanium cover • Stress on Lenovo Torino Olympics Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 12
  13. 13. Recommendations Innovation Efficiency Branding Alternative Selected Master Brand  Using ThinkPad brand on other products would dilute brand value of ThinkPad brand  Focus on master brand name “LENOVO”  Number series to avoid detraction from Lenovo brand Source: Lenovo: Building a Global Brand, HBS Case Study Positioned as a Global Firm 138 countries English Official Language Restructured company to integrate IBM and Lenovo Headquartered at Purchase, New York 50% top jobs went to people across the world Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 13
  14. 14. Lenovo holds 19.2% of the world PC business Present Scenario Sold off mobile and laptop business Acquires IBM’s PC Division 2004 2005 2008 2009 2011 2014 2014 Yang hands over CEO role to Ward and then Amelio Source: IBM Website; Motorola Blog; Market Share Statistics Acquires IBM’s server business Lenovo NEC joint venture Acquires Motorola from Google Yang resumes CEO post World PC Business 2014 (Q2) Lenovo 19.2 17.7 7.9 13.3 6.9 35 Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 14 HP Dell Acer Asus Others
  15. 15. Thank You Questions? Saturday, 01 November 2014 LENOVO: BUILDING A GLOBAL BRAND - HBS CASE STUDY 15

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