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Case
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Reference no. 905-020-1
Published by: Asia Case Research Centre, The University of Hong Kong
Published in: 2005

Abstract

Since its inception in 1984, Lenovo Group Limited had grown from a company engaged primarily in the distribution of imported computers, to being the largest information technology corporation in the People ’s Republic of China (PRC). While Lenovo was able to hold onto its market leadership position, competitive pressure from Dell, IBM, Toshiba and Hewlett-Packard was increasing, with the group taking large hits, mainly at the hands of Dell. Engaging in a series of price wars to retain the low end of the consumer segment, Lenovo was also struggling to maintain its stronghold in corporate sales to Chinese government ministries and schools. With the PC market in China maturing rapidly, Lenovo’s main challenge was to develop a business model that would not only combat Dell’s direct selling model but would also take advantage of the group’s traditional strengths. With a view to meeting the group’s projected target of becoming a member of Fortune 500 by 2010, it seemed that Lenovo was looking towards tapping international markets, as well as exploring alternate product diversification strategies in the local market. Lenovo’s predicament highlighted the growing pains faced by many Chinese companies, as they strove to become global players while defending their domestic market share from foreign rivals.
Location:
Other setting(s):
2004

About

Abstract

Since its inception in 1984, Lenovo Group Limited had grown from a company engaged primarily in the distribution of imported computers, to being the largest information technology corporation in the People ’s Republic of China (PRC). While Lenovo was able to hold onto its market leadership position, competitive pressure from Dell, IBM, Toshiba and Hewlett-Packard was increasing, with the group taking large hits, mainly at the hands of Dell. Engaging in a series of price wars to retain the low end of the consumer segment, Lenovo was also struggling to maintain its stronghold in corporate sales to Chinese government ministries and schools. With the PC market in China maturing rapidly, Lenovo’s main challenge was to develop a business model that would not only combat Dell’s direct selling model but would also take advantage of the group’s traditional strengths. With a view to meeting the group’s projected target of becoming a member of Fortune 500 by 2010, it seemed that Lenovo was looking towards tapping international markets, as well as exploring alternate product diversification strategies in the local market. Lenovo’s predicament highlighted the growing pains faced by many Chinese companies, as they strove to become global players while defending their domestic market share from foreign rivals.

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Location:
Other setting(s):
2004

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