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Lenovo’s Five Industry Forces Essay

In recent years, competition in the IT market economy has turned fierce. To survive competition, all organizations need to be fully aware of the prevailing business environment and industrial forces to ensure that their products conform to the customer’s expectations as the taste and choice of the customer changes rapidly over time. Lenovo has utilized unique competitive marketing strategy over the years to achieve rapidly increasing share of the market. Its products are reliable, durable and of high quality, but there is always a great deal of threat from leading competitors in the market. Recent weakening of the US economy, falling dollar value and fierce competition among rivals are some of the irritants to Lenovo’s growth.

As a global leader in the PC market, Lenovo’s success rests on its ability to deliver consumer centric innovations in products that deliver a blend of mobility, performance and price. Analysis of marketing research data so collected indicate that all organizations need to be in touch with their business market environment and feel the pulse and ever changing expectations of customers.

Lenovo is a business that is built on product innovation, a highly efficient global supply chain and strong strategic execution. Its products range from exceptionally engineered laptops, ultrabooks, tablets, desktops and servers. According to research, for businesses to understand adequately the nature of the competition and the industry forces that they face, they must define their market accurately by recognizing a broad base of its competitors. Major dominating competitors of Lenovo’s personal computers division are Apple Inc., Hewlett-Packard and Dell. Lenovo’s strategy is to develop latest PC’s that are efficient, light in weight with latest features and of course with low competing price as there is cut throat competition in the market.

With innovativeness, entrepreneurial spirit and teamwork across various cultures, Lenovo has captured the global market and positioned itself within a short life span as a next generation global company of PC’s. The general state of national as well as international economies effect profoundly the performance and prosperity of a company as economies are rarely stable and fluctuate quite often. Poor economic conditions make the environment more complex and managers’ jobs more difficult and demanding.

The global recession that occurred in 2009 and the fall in global demand and the slow down in economic growth translated into a substantial reduction in global trade. As we already know, it affected the cross-border trade of virtually all countries and economic sectors and some industries are still battling with high inflation. Research shows that while Lenovo’s rivals are outsourcing, its in-house production has helped Lenovo stay upbeat with the competition by lowering their prices which is a key advantage to grow economically. Technology development impacts substantially on people’s lives and companies’ fortunes. In a highly competitive global marketplace all organizations need to be fully aware of the prevailing business environment and at the same time ensure that their products are upcoming conforming to the customer’s expectations that change rapidly over time.

Lenovo has utilized unique competitive marketing strategy over the years to achieve rapidly increasing share of the IT market by introducing new and innovative products to its consumers including the state of the art portable lightweight notebooks, tablets and thinkpads. Customer behavior is influenced by sociocultural background such as use of language, use of colors, presentation styles and acceptance and trust inspired by the presented product. In addition, the earning capacity of the target customer group also determines their buying behavior. Lenovo have a strong foundation in place having established their products available worldwide exclusively for customers from different sociocultural and income level backgrounds Taking a cue from the demographic segmentation, manufacturers can design products that are relevant to a majority of the target market. The changing lifestyle trends require innovating or transforming the existing product to keep up with their needs.

Changes in populations in terms of their size and characteristics are thus very important to managers as it helps to predict the size and growth rates of markets, and the need for specific products. Lenovo originated in China and has expanded its operations worldwide by focusing on the demographics of different countries by targeting younger generation for their latest X1 Carbon which is their latest light design ThinkPad. Lenovo’s growth also comes from small towns, not just big cities Political and legal environment influences the marketing decisions since business functions as per the set rules by the concerned government (s). China may be the second largest trading partner of the U.S., but the road to this increasingly close relationship has not been an easy one.

Despite the differences in political systems in the two countries: centralized political system in China and a federalist political system in US, business interactions between the Lenovo and it US partners as well as customers has grown overtime. Lenovo has utilized this to its advantage to stay competitive in the IT market by utilizing cheap labor and other operational costs from China and relying on advanced technological from its US partners. Thereby, Lenovo is able to supply superior quality laptops, tablets to its customer’s world-wide a relatively lower price. Lenovo is one of the fastest growing PC companies today and it is an excellent choice of industry to enter in. According to research, as per its sale records in the market, it is considered the world’s second-largest PC vendor serving customers in more than 160 countries. Lenovo has built its business on product innovation, efficient global supply chain and strong strategic execution.

Even in tough and highly competitive environment, the company is thriving well reaffirming that the company is executing its plans well and it continues to deliver excellent industrial growth. Lenovo excelled in their business since in the last year as they earned $8 billion in revenue and $141 million as net profit. This year company is progressing aggressively as Lenovo’s first quarter recorded highest market share of 15 percent and profits up by 30 percent. They are taking appropriate risks by introducing new products to the target market and it looks like they have adopted the business concept very well.

Given Lenovo’s continued growth over the past several years, I do believe that it is a good industry to enter. In order to make right business decisions, Lenovo seems to have carried out extensive research and analysis on demographic segmentation in identifying the target population for it various products across the globe. As such Lenovo has in its cabinet a product matching with varied tastes, preferences, beliefs, temperaments, price etc. of different population groups. Depending upon the population strata targeted it has devised specific marketing strategies.

Fletcher, Owen. (October 13, 2011). Lenovo passes Dell to become world’s No 2 PC maker. MarketWatch, The Wall Street Journal. Retrieved on November 10,
2012, from http://www.marketwatch.com/story/lenovo-passes-dell-to-become-worlds-no-2-pc-maker-2011-10-13 Loretta Chao. (July 9, 2012). As Rivals Outsource, Lenovo Keeps Production In-House. The Wall Street Journal. Retrieved on November 10, 2012, from http://www.ecommercejobs.com/2012/07/lenovo.pdf Ling, Zhijun (2005). The Lenovo affair: the growth of China’s computer giant and its takeover of IBM-PC.

Retrieved on November 10, 2012, from http://books.google.com/books?id=Mg7TdU9E3d0C&printsec=frontcover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false Wang, et.al. The Strategic Marketing Management Analysis of Lenovo Group. The Journal of Global Business Management. Retrieved on November 10, 2012, from http://www.jgbm.org/page/19%20Wang%20Wen%20Cheng%20.pdf Jones, Gareth R. and George, Jennifer M. (2013). Essential of Contemporary Management. Pg 126-129.

Lenovo. Retrieved on November 10, 2012, from http://www.lenovo.com The future is here – Lenovo. (July 1, 2010) Retrieved on November 10 2012, from http://www.lenovo.com/ww/lenovo/pdf/report/E_099220100628a.pdf

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