Case Study

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Question 1: What are the forms of competitive advantage that contributed to the success of the organisation in the case? Before the acquisition of IBM’s PC division in May 2005, Lenovo was not well known in the global market and all of its sales were from China. After the acquisition, Lenovo used its low-cost manufacturing clout to turn IBM’s ailing operations around and leverage on IBM brand existing global distribution networks to expand globally. Lenovo also utilize IBM’s global sales capability and international management expertise to achieve more product differentiation and brand building. Lenovo allied with IBM to provide a full range of solutions to customers ranging from small-medium enterprises to large corporations. They also used two business models known as relationship model and the transactional model. The relationship model would cater to the upper end of its business, with more emphasis on direct selling to large corporations the transactional model would generate market demand among the SME crowd and individual customers. To improve its US sales, the new Lenovo repackage computer products sold to Chinese consumers so that they would appeal to the US market, which had different designs and colour preferences. To create global brand awareness, Lenovo began to raise its profile by enlisting celebrity help, Brazilian footballer, Ronaldinho and also sign deals such as the Williams Formula One race-car team in Europe. Lenovo restructured the company by hiring a new CEO, William Amelio, a former executive with Dell. Question 2: Describe each level of the strategies used and how they contributed to the organisation’s competitive advantage. Using corporate- level strategy, Lenovo have created value through related diversification by acquisition of IBM’s PC division. With related diversification, they can leverage core competencies of one

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