Case Study 9
Lenovo’s brand building strategies:
Taking the competition to competitors with “transactional model”
Suggested case discussion questions
Explain Lenovo’s early strategizing efforts and its future plans
Lenovo has production and distribution facilities in the US, UK, Mexico, Malaysia, Hungary, China and Brazil. This growth has been achieved through innovation, operational efficiency and customer satisfaction. The acquisition of IBM’s PC division helped it become the world’s third biggest PC-maker. The business model Lenovo appeared to be following was based on a combination of raising brand awareness, consolidating domestic production and expansion overseas mainly through acquisition. Lenovo cemented its commitment to India by investing $11 million to construct a second manufacturing unit in Himachal Pradesh, India, capable of producing two million units annually. With the construction of its second plant, Lenovo expected to improve its supply chain efficiency and better serve its growing customer base in the region. In the US, Lenovo relies mainly on its sales of ThinkPad (a brand of IBM) laptops to business customers. It wants to be among the US’s top-five PC companies, through selling Lenovo-branded products through retail stores. In Europe, it is looking to acquire Packard Bell BV, the fifth biggest PC-maker in Western Europe. From mid-2007, Lenovo plans to target China’s low-income consumers by offering a new PC at a retail price of 1,499 renminbi (£100).
Critically explain Lenovo’s relationship model and transactional model approach to business
In China, Lenovo follows two business models: relationship model and transactional model. To target and establish long-term business relationships with big enterprises, Lenovo follows a relationship business model – under which it receives bulk orders of pre-configured PCs from big enterprises. On the other hand, to target small- to mid-size companies and individual...
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