SWOT Analysis of Lenovo

SWOT Analysis of Lenovo – Strengths, Weaknesses, Opportunities, & Threats.

Lenovo SWOT develops an in depth analysis to find out the strengths & weakness of, and the opportunities & threats for Lenovo Group.

Company Overview

Lenovo Group Ltd., also known as “Lenovo” is one of the most popular Chinese multinational technology companies. The headquarter is in Beijing, China, and in North Carolina, United States. It manufactures and sells electronic products. The most of the popular products are tablet computers, smartphones, electronic storage devices, and smart televisions. It became the largest personal computer vendor by unit sales in 2015.[2] The product lines it sell are ThinkPad, IdeaPad, IdeaCentre, Yoga, and ThinkCentre .

 

The SWOT Analysis of Lenovo

 

Strengths of Lenovo

Complete Line of Products – It has a complete product line from smart phones to data center.

Vertical Integration – In this era of globalization, most of the tech companies outsource their products to low wage or production cost companies. Here, it is different. It kept most of the production within its own country, China, building a vertical integration. By this, it achieves low cost as well as high controlling on its production process and efficiency. [3]

Knowledge of China Market – China is one of the most populated countries and a large market of smartphones in the world. As the company was originated in China, it created a strong knowledge in China. It helps it to adjust the supply and demand of smartphones in the market.

Low Cost Production – every company wants to achieve low production cost as it gives great advantages to making great profit. In this era of technology, where China produces tech products at a very low cost, most of the companies goes to China to have their products developed at a low cost. For Lenovo, China is the country where it originated. So, it already has the cost efficiency.

Strong Product Portfolio – It offers different type of products including personal computers, smartphones, tablet computers, electronic storage devices, workstations, servers, IT management software, peripherals, storage devices, printers, televisions, scanners, and smart televisions. The diversified portfolio of products gives it to offer variety of products all over the world. By this, it achieves stabilized earning throughout the year.

Competent in Merger and Acquisition – Lenovo acquired Motorola from Microsoft and x86 server business from IBM. It also acquired IBM’s popular ThinkPad notebook computers.

Workforce Diversity – It has its operation in 60 countries. [1] It is a priority for the company to achieve full potentiality of the diversity. The company is committed to provide discrimination free environment to its employees. The company is fair to the Hiring of new employees, employee promotions, and compensation of employees. It ensures equal opportunities and harassment free environment. [4]

 

Weaknesses of Lenovo

Differentiation – When it is about the price, Lenovo uses premium price. Of course, it reserves a brand value and differentiates it from other brands; still, it is a big barrier for making a high profit.

Avoiding Cultural and Managerial Chaos – In 2004, Lenovo sent a team of 4 members to IBM to make the deal of merger and acquisition. That time, only one member of the team was able to speak English language. Till then Lenovo, never came out of Chinese speaking zone to do business.  Today, Lenovo has its operations in more than 60 countries. They have come out of their zone and started doing business avoiding cultural and managerial barriers. Where other companies are not too much strong in the Non-English spoken area for example in China, Lenovo adopted the new cultures in Non-Chinese regions.

Lay-offs of Existing Employees – Lenovo reported the lay-off 3200 employees as the profit declined by 51% in the first quarter of 2015. Though the workforce was from the non-manufacturing part, but still it creates a panic among all the employees of losing their jobs in case of any bad time of the company. [5]

 

Opportunities for Lenovo

Change of Target Market – change of target market may increase the revenue. Lenovo only targets those people who have brand awareness and advanced concept about tech products. [6] If they target the mass market, they can increase their profit margin.

Full Functionality in the Developing Countries – If Lenovo gets full functionality in the Asian developing countries such as India, Bangladesh, and Pakistan then it may increase its profit margin.

Collaboration with Telecom Sectors – They must build the strategic alliance with different telecom companies from different countries. Together they develop new distinctive distribution advantages.

Shifting Smartphone Focus – Lenovo was thinking of shifting its focus from China market to the market of rest of the world. [7] Chief Executive Officer (CEO) at Lenovo, Yang said, “Our first strategy is that we shift focus to the rest of the world.”

 

Threats for Lenovo

Threats of Substitute Products – Though, people are more concerned about the quality products; still they are interested in low priced product as well. When they compare the prices, they do not want to spend large amount of money for having a smartphone which has features close to brand smartphones. Again, if they buy computer peripherals, the people from middle class communities prefer to buy low priced products.

Negative Sales Growth of Smartphone Industry – for the first time in the history, the smartphone market experienced a negative growth in the year 2016. If it continues, Lenovo may experience a negative sales growth in future as well.

Increasing Competition – Apple Inc. [Apple SWOT] is the most successful company in the industry. Asus [Asus SWOT] shifted a large portion of its R&D budget to its mobile segment. Also, popular brands from China such as Xiaomi and Oppo have already entered in the international market and increased competition. These companies are grabbing smartphone and laptop market shares.


Competitors’ SWOT


Resources Used to Develop the Lenovo SWOT

  1. http://shop.lenovo.com/us/en/landing_pages/lenovo/about/quality/
  2. https://en.wikipedia.org/wiki/Lenovo
  3. http://www.infobarrel.com/Lenovos_Vertical_Integration
  4. https://www.lenovo.com/social_responsibility/us/en/Lenovo_Policy_Commitment_to_Diversity_and_Nondiscrimination.pdf
  5. http://www.crn.com/news/channel-programs/300077782/despite-lenovo-americas-growth-partners-see-weakness-in-pc-server-demand.htm
  6. http://www.jgbm.org/page/19%20Wang%20Wen%20Cheng%20.pdf
  7. https://www.bloomberg.com/news/articles/2015-08-12/lenovo-profit-beats-estimates-on-cost-cuts-for-servers-phones

Author: faizul

Sheikh Faizul Haque, the founder of GotAbout, graduated from North South University, Bangladesh. His major was Finance and Accounting. Faizul has been writing in business blogs since 2013, also has a strong interest in Behavioral Finance, Risk Management, and Portfolio Management.

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