Lenovo Group Ltd

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(ME/9462066/Jan14/1) Explain the strategic and economic aspects of managing the vertical chain of a company or an organization. In your answer examine the make-buy dilemma, agency costs and the relevance of incomplete contracts. Lenovo & IBM Lenovo Group Ltd. is a Chinese multinational technology company with headquarters in Beijing, China, and Morrisville, North Carolina, United States. It designs, develops, manufactures and sells personal computers, tablet computers, smartphones, workstations, servers, electronic storage devices, IT management software and smart televisions. In the second quarter of 2013 Lenovo was the world's largest personal computer vendor by unit sales. (Wikipedia, 2014) In January 2014, Lenovo finalized the acquisition of IBM x86 Server Business for $2.3bn.The x 86 server businesses include servers that power corporate data centers, the servers business whose 26 percent revenue decline has led to layoff predictions at IBM ,Lenovo was opportunistic to take this deal for itself. As part of the agreement, IBM will continue to develop its Windows and Linux software for the server platform. As part of the deal, approximately 7,500 IBM employees around the world, including those based at major locations such as Raleigh, Shanghai, Shenzhen and Taipei, are expected to be offered employment by Lenovo along with the International System Technology Company facility at Shenzhen, near Hong Kong. (Www-03.ibm.com, 2014) By this requisition Lenovo aims to compete in the server market with the major rivals HP and Dell and become a global server provider through reaching 13.9%, Market share, Lenovo’s share before requisition was 1% only. (Wong, 2014) Hence, my objective here is to evaluate the alliance between Lenovo and IBM, a cross-border alliance between a Chinese and a U.S. company, and to analyze whether this partnership will take Lenovo further step
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