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Strategic Management Theories

Contents

1 Identifying the Industry.

2 Analysis of the General Environment

2.1 Political Factors

2.2 Economic Factors:

2.3 Social Factors:

2.4 Technological Factors:

2.5 Environmental Factors

2.6 Legal Factors:

3 Analysis of Resources and Capabilities.

4 External Factors:

5 Core Competency Analysis

6 SWOT Analysis.

6.1 Strengths:

6.1.1 Large Portfolio:

6.1.2 Brand Equity:

6.1.3 Strong Financial Performance:

6.1.4 Product Quality:

6.2 Weaknesses:

6.2.1 Late Entrance:

6.2.2 Lagging in terms of marketing:

6.3 Opportunities:

6.3.1 Cloud technology and AI:

6.3.2 Digital market:

6.3.3 Acquisitions:

6.4 Threats:

6.4.1 Competition:

6.4.2 Regulatory Stress:

6.4.3 Trade Wars:

7 Analysis of current strategies.

8 Articulation of key issues and/or challenges for the firm..

9 Recommendations and Implications:

10 Sources:

1 Identifying the Industry

Company Name: Lenovo Group

Company Sector: Consumer Electronics

Operating Geography: China, Asia, Global

Lenovo, founded by Liu Chuanzhi in 1984, is a Chinese technology company which is currently operating in the design, manufacturing and selling of personal computers, laptops, mobile phones, smart televisions, servers, software, accessories and applications for third parties. The most notable products are, under the Think and Lenovo brand names, ThinkPad and Yoga, smartphones, tablet and laptop Computers.

2 Analysis of the General Environment

2.1 Political Factors:

The political conditions for companies in the 21st century continued to become quite significant. If the Chinese economy is the Lenovo castle, the political powers behind it have a significant part to play. China's local labels are now considered to prefer. However, these circumstances have also come to light in the world. Also US businesses are failing in many countries when doing business abroad. For debatable purposes, the EU levied fines on US technology giants. If Lenovo's impact on the market in developing or European markets is not as solid, then the political climate behind it is a big reason ().

2.2 Economic Factors:

After the recession, the world economy has changed a lot. Capital consumption and level of employment, all abandoned. Yet worldwide conditions are not the same. Many countries exist in a bad condition, a challenge to the business of Lenovo. Lenovo 's sales and earnings are impacted in many emerging markets due to the substantial currency fluctuations. The instability of the currency influences and tends to influence the products in the technology sector. Lenovo will continue to face serious macroeconomic uncertainties and the downturn in the Computing industry (Annual Report, 2019).

2.3 Social Factors:

Socially, digital device adoption has grown. It also manufactures a wide variety of electronics products, including iPhone, laptops and smart televisions, in addition to PCs. It's now China's second biggest brand of smartphones. The mobile and tablets continued to rise in sales as the PC market declined. In the thousands of years and the middle class, the need for digital technologies is extremely strong. They are a big part of the target demand for Lenovo. These social movements can have a significant influence on foreign brands such as Lenovo 's company. For Lenovo, a creative company, the hot trend in mobile computing is a chance (Country Meters, 2018).

2.4 Technological Factors:

Technology decided to play in the 21st century, and it would be difficult to be the pioneer for technology giants like Lenovo, without focusing on technical advancement. Besides this, the relentless emphasis on creativity is also crucial to the strong competition in the PC industry. Technological advances proceed and a modern invention does not take much time to get outdated and redundant. The competition is tough and Lenovo is still rising by acquiring the key names for its core company in the technology sector. In addition, Motorola mobility and System X were built by Lenovo, which was also part of IBM PC division, for its future development. In comparison, Lenovo's market share remains small in the smartphone sector. However, it has catcher momentum and in the coming years will get a lot of attention from Lenovo.

2.5 Environmental Factors:

In the 21st century, sustainability is a big theme. Big and small companies spend not only to manage prices but also to build a positive brand value through environmental activities. Such a picture would be very helpful for corporations as not only investors, but also policymakers are known to help firms that achieve a low carbon footprint and reduce their environmental effects.

2.6 Legal Factors:

Lenovo is subject to many regulations as a multinational corporation. These laws are more than necessary, from state to state and nation to nation. In millions of dollars’ responsibility will lead to high fines. Tax rules, labour laws, intellectual property laws and even the world impact Lenovo and all demand that they be upheld. This laws raise enforcement costs and any lawsuits can lead to unpredictably high penalties that damage the financial stability of a multinational company. Legal risks are therefore also a significant element that can trigger big stresses in Lenovo 's macroeconomic climate (Gartner, 2017).

3 Analysis of Resources and Capabilities

Identify and discuss the significance of the relevant resources that the firm possesses. It is important to distinguish between tangible and intangible resources, as well as recognise the implications of such. For example, certain intangible resources such as staff experience or corporate reputation are extremely important for the firm (Annual Report, 2019).

5 Core Competency Analysis

 

Rare?

Valuable?

Costly to imitate?

Non-substitutable?

The ability of Learning

Yes

Yes

No

No

Capability of Competing on Price

Yes

Yes

Yes

Yes

The Ability to Establish and Manage Effective and Efficient Distribution Network

Yes

Yes

No

Yes

Innovation and Entrepreneurship

Yes

Yes

Yes

Yes

Lure of Brand Opportunity

Yes

Yes

Yes

Yes

Source: Hanson (2017, p421)

Lenovo has valuable learning skills that are one of its key competencies to create potential. Its clients became a significant form of learning. Thanks to its close connexions with consumers and a large Software delivery network, Lenovo has learnt from its clients. In addition, Lenovo has been aggressively pursuing support from consumers in order to direct the production of goods and services. The multinationals had also become a centre of information. As previously mentioned, Lenovo has learnt a great deal of marketing, operations, staff preparation, product design and customer relations from HP, IBM and Compaq, while developing its own brand. The third learning channel is the own study and development operations. Instead of using strictly modern technology, such as large-scale integrated circuits and electrical switches, it has come to the understanding that adequate R&D should be coupled with industrial and development processes.

6 SWOT Analysis

6.1 Strengths:

6.1.1 Large Portfolio:

Lenovo 's leading asset is a wide product range. This is also a significant source of competitive benefit for the brand. The company has continued to broaden its product / service mix, rather than focusing on a single source of profits. The organisation of Lenovo is split into two major divisions. The company restructured its business last year and merged the two main business divisions, including PCSD and Mobile Business Division, to form the IDG or Smart Devices Division. The data centre group is another business division of Lenovo (Annual Report, 2019).

6.1.2 Brand Equity:

The focus on quality contributed to Lenovo's increase in brand value. The firm has maintained a strong emphasis on the quality of its products and the use of superior raw materials. Because of this, the products have gained success more quickly. Improved sales often reflect customer interest and increased market share. One of the key factors that affect revenue and profits is the personal computer market that has become more hyper-competitive and brand value. Lenovo is now exhibiting high brand value, demonstrating strong strategic pressure, as its profits and revenues are increasing in different parts of the world, China and Latin America included.

6.1.3 Strong Financial Performance:

The financial results of Lenovo were excellent in the last fiscal year. For the first time in its history the company crossed the $50 billion mark. Lenovo's overall sales in 2018/19 rose from 45.35 billion dollars in fee 2017/18 to 51 billion dollars. For Lenovo it represents a big turning point. The company has thus succeeded in establishing itself as a leading HP, Dell and Apple competitor. While the PC industry continues to face difficulties, over the past few years the business has maintained a consistent emphasis on product consistency.

6.1.4 Product Quality:

Lenovo 's emphasis on product consistency is another big asset. Lenovo not only emphasises on consistency in other regions, but also on desktops, notebooks and smartphones. This is also a key reason why its products are getting more popular in different parts of the world. The focus of Lenovo is on quality control and the quality management system of Lenovo is embedded into its business structure. This helps to keep quality control central to the organisation approach and to improve the quality standard of product.

6.2 Weaknesses:

6.2.1 Late Entrance:

While Lenovo has established itself world-leading on the personal computing market, its rivals are well ahead in several important areas. The mobile industry was late in Lenovo. Mobile computing expands more rapidly and there is enormous rivalry in this sector. But, after Motorola Mobility was acquired for the first time in 2018, the company announced gains from the Mobile Market Community. Lenovo plans to turn its mobile business division into a structural transition. They have decreased their community costs and aim to optimise their network range of products.

6.2.2 Lagging in terms of marketing:

Lenovo is less aggressive than its closest competitors in publicity and promotion. Compared to leading rivals such as HP and Apple, its marketing approach is less concentrated. Lenovo has a strong product range which is primarily directed at medium-sized customers. A good marketing campaign nonetheless limits the impact of rivalry on a company. This is not just the flaw of Lenovo. In contrast with its American partners, other Chinese technology brands too do not work too well in marketing. His product consistency and competitive pricing policy are Lenovo 's primary reason for success.

6.3 Opportunities:

6.3.1 Cloud technology and AI:

The financial efficiency of Lenovo is steadily improving. The company will pursue new sales and growth opportunities with solid cash flows. The corporation is firmly at its heart, but it cannot rely on one source of sales. Although the brand is strong. In addition, it also has to invest in high growth fields such as 5 G, artificial intelligence, IoT and cloud infrastructure in addition to the telecommunications sector. This would boost the portfolio and client base of Lenovo. Through investing in these areas, the business will see more growth.

6.3.2 Digital market:

Faster than ever, digital marketing is rising. It has been the primary marketing outlet for millions of corporations worldwide. While Lenovo is a pioneer in the Computer market, its customers must also be engaged and maintained globally. The firm must engage in digital media and the loyalty of its clients. Besides internet advertising, e-mail marketing, the organisation may use new platforms to better reach its clients and handle client relations.

6.3.3 Acquisitions:

Lenovo has begun to generate benefit for the company with the purchase of Motorola Mobility. In 2018, the Mobile Market Division reported earnings for the first time. If successful, acquisitions lead to growth and expansion of the market. Lenovo will be able to buy more similar firms to boost its market share and its profits in the future. The company is well positioned for accelerated growth in future with a good outcome. In addition, purchasing smaller companies would allow Lenovo to acquire and improve market profitability in its portfolio.

6.4 Threats:

6.4.1 Competition:

The largest challenge to Lenovo is the level of rivalry in the informatics market. The PCSD Group represents the company's most significant source of sales. Lenovo is, however, set among some of the best players such as HP, Apple and Dell.

6.4.2 Regulatory Stress:

One of the other big obstacles for PC brands is the regulatory burden in the PC industry. High regulatory burden is placed on personal computer firms around the world. First, this led to higher demands and costs associated with enforcement and, second, limits opportunities of expansion.

6.4.3 Trade Wars:

The trade wars in China influence the Chinese and US brands alike. Tariffs have been boosted a lot by the Trump Administration, which contribute to higher running costs. A significant blow was given to another Chinese company Huawei. While Lenovo did not face major difficulties, trade wars continue to affect all major corporations.

7 Analysis of Current Strategies

Lenovo soon became the pioneer in the Computer industry. The business has quickly expanded in the laptop and tablet industries due to its emphasis on consistency. But its price strategy is another explanation for its growth. For the middle class customers, the company launched a wide variety of goods. These inexpensive, high-quality goods have helped to grow its consumer base more rapidly. However, with the advent of social phones the personal computer industry is diminishing (Annual Report, 2019).

In order to maintain their momentum, the company must also work on other fields. The Mobile Company Community has begun to deliver strong results. This is the first time that the company gained the versatility of Motorola in the last fiscal year. Amid all this, the mobile and Laptop markets are still very complex, and the focus on the consistency of the product and research and development will be retained at Lenovo. Digital marketing and consumers' digital engagement in an increasingly uncertain and controlled world should also be a key priority of the company for consistent success. The US-China trade war is intensifying and may in one way or another impact Lenovo. For the first time in its lifetime, the sales hit $50 billion which is an achievement. However, holding the momentum is a struggle when it stands against strong rivals like Apple, HP and Dell (Ashish, 2018).

Opportunities in fields like 5 G, AI, IoT and cloud storage are rising. Lenovo has a stable reputation and could invest in new technology to achieve increased productivity. The emphasis on marketing, branding and consumer service would also help to generate further traction, which is crucial to exponential growth.

8 Articulation of Key Issues And/or Challenges for The Firm

As local governments prolonged their Lunar New Year holiday and put stringent travel restrictions to curtail the spread of the coronavirus, world's biggest PC producer faced interruptions in its supply chain. A major Lenovo plant, while its factories in the towns of Shenzhen and Hefei have resumed their work on 10 February, is the source of the outbreak in Wuhan. Lenovo said in a statement: "The vast majority of factories in China re-opened and are operating on a small basis, but their vendors and even logistics networks in the countries remain affected." 'Nevertheless, with its huge worldwide presence, Apple and its suppliers have dropped on Thursday after the iPhone maker warned of their revenues that the current quarter is not up to the mark as the outbreak of a coronavirus declines, exploiting its position as a multinational business, with worldwide production capability and supply chain efficiencies.' (Annual Report, 2019)

9 Recommendations and Implications on Lenovo Group Analysis

This report has following two major recommendations for Lenovo:

  • Improve Global Supply Chain management
  • Consider Sustainable Development an important aspect in global growth strategy

The Environment and Energy Strategy at Lenovo acknowledges that climate change is a major problem and agrees that we should all do our best to minimise the GHG emissions. It protects not just our emissions from Scope 1 and 2 GHG but also our emissions from our supply chain from Scope 3. Suppliers are required by the RBA or CDP (Carbon Disclosure Project) programme to disclose their environmental effects.

Emission monitoring does not only include their cumulative inventory of emissions, but also discloses their mitigation targets publicly. Furthermore, we mandate providers to monitor their use of water, waste generation and their respective reduction targets. For these activities, we have identified unique supplier goals. The annual GHG emissions reduction of over 3%, publicly announced mitigation levels, independent monitoring and CDP top level success rates are necessary to reach the highest production rates.

Application of these recommendations will help the company diminish the rivalry threat to the company in an era of pandemic.

10 Sources for Lenovo Group Analysis

Annual Report (2019) “Lenovo Group Limited” Quamnet.com

Ashish (2018) “Why Haven’t Satellite Phones Become the Norm?” Science ABC 

Chu Ben (2017) “Further slowdown is expected if inflation reaches 3 per cent as experts predict it will” The Independent

Country Meters (2018) “literacy of population” Country Meters 

Cox Josie (2017) “Smartphone demand hits fresh record for the second quarter of 2017” The Independent 

Easton Jonathan (2017) “PC prices have been raised by a third since Brexit” 

Gartner (2017) “Gartner says worldwide PC shipments Declined by 2 percent in 4Q17 and 2.8 percent for the year” Gartner.com 

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