How lenovo managed to duplicate its chinese success in India?

1. WAC Assignment-2
“Doing” the Act: Lenovo and Corporate Reputation
Submitted to:
Prof. Manaswini Acharya
Submitted by:
Roll No.: 14PGDM005
Section: A
Date of Submission: August 07, 2014

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Executive Summary
The case highlights the key elements of entering into an emerging market with international,
well-positioned players and discusses the entry of Lenovo in the Indian market where the
problem was compounded by perceptions of IBM connection and Chinese origin. It followed the
innovation strategy approach to gain the market share. Will Lenovo India be able to replicate the
success model in China?
The case presents the challenges and discusses the strategies adopted by Lenovo to bring about a
change in the existing perceptions of stakeholders. It also focusses upon increasing the market
share and their product portfolio to achieve a strong foothold in India.

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Table of Contents
Serial No. Contents Page No.
1. Situation Analysis 4
2. Problem Statement 6
3. Options 6
4. Criteria 6
5. Evaluations of options 6
6. Recommendations 7
7. Action Plan 7
8. Contingency Plan 8
9. Exhibit 8

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Situational Analysis
The case discusses the reputational and expansion challenges faced by Lenovo when they
entered into the Indian market. In 1984, Lenovo started as New Technology Developer Inc. in
China and in 1999, it became the market leader for PCs in China with a market share of more
than 20%. Lenovo leveraged upon innovation as their core value. In 2004, Lenovo acquired
IBM’s PC and notebook manufacturing division It came along with the big “Think” brand of
IBM. The move gave Lenovo a strong foothold in the Indian market and in 2008 it shot up to 2nd
position11
in terms of market share. Lenovo also ventured into consumer markets, along with the
enterprise market.
In 2005, Lenovo set up a manufacturing plant at Pondicherry with 5,00,000 units. Lenovo India’s
major challenge was that not many people knew about them, those who did, connected its
positive perception with IBM and negative perception with Chinese origin. Three phase
approach was adopted for growth. In the first phase continuity of association with IBM was
assured to the customer, product line expansion in the second phase and the third phase was on
widespread advertising and branding. Lenovo India stuck to the policy of “getting close” to
customer through technology and not price.
Lenovo India faced various challenges in the initial stages: high rate of attrition after the end of
the lock in period with IBM, post-recession effects in 2008 such as employee insecurity and
dismay and a specific issue with the Indian government over an erroneous display of the
geographical boundaries of India on the wallpapers uploaded on its ThinkPad. But, Lenovo
1
Please refer to Exhibit 1

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overcame all the challenges it came across strongly. It came up with the new vision of,
“Unstoppable Lenovo India”. Lenovo’s focus on innovation was built on a two-tier approach.
Firstly, in developing and bringing ideas to the market in 48 months and secondly, investing in
“game-changing technologies.”
Lenovo faced competitors like HP, Dell, and Acer. It introduced a “stock and sale” business
model to gain the market share in the enterprise segment which ensured availability of the
products before the orders are placed. Lenovo started various promotion techniques, including
celebrity endorsements, placement of their products in TV shows and movies, and online brand
building via blogs with their focus on youth for their retail business, high number of young
educated individuals and a relatively low PC penetration. The problem in the way of Lenovo is
to change the perception and mindsets of the stakeholders. The question is whether it could be
done following the current managing model.

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Problem Statement
Should Lenovo continue or not with its current strategy redefining its perception among its
stakeholders in India so as to capture a bigger market share.
Options
1. Continuing with their existing innovation strategy
2. Maintaining consistency in product value
3. Adopting a new marketing campaign
Criteria
The two basic criterions used to analyze the options are
 Current market position of Lenovo
 Focus on maintaining and improving the brand value of the company
Evaluation of Options
 Continuing with their existing innovation strategy
i. Lenovo’s innovation strategy proved pretty fruitful for them. The company saw a
tremendous growth in their market share due to this.
ii. Their approach to mobile internet and cloud computing helps client leverage new
computing trends to gain sustainable business edge.
iii. But as the market competition intensifies due to ultra-fast changing technology,
they should also try out new strategies apart from this.

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 Maintaining consistency in product value
i. Lenovo can improve the value of the product across all the different products that
it offers.
ii. They should focus on improving the customer perceived value of their product
iii. They can improve the customer relationships through enhanced services
 Adopting a new marketing campaign
i. Lenovo should adopt new varied marketing campaign
ii. They can also target different segments and not only the youth segment
iii. But this can backfire and affect their overall brand
Recommendations
Lenovo should continue with their current innovation strategy which has been acting as a boon
for them.
Action Plan
Following steps should be undertaken:
1. Keeping up with the latest technology: They should keep up with the latest
technology and keep ahead of their competitors.
2. Focus on new innovations: R&D should be given much preference and they should
bring out new advanced products from time to time.
3. Market the concept models: Various concept models that are yet in their vault, should
be marketed. It’s an era of innovation and new technology variants are highly
welcomed.

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Contingency Plan
Maintaining consistency in product value:
i. Lenovo should focus on improving the product value. Better services should be
provided to the customers.
ii. Customer relationship management should be given high preference and different
customer satisfaction models should be adopted to gain customer loyalty.
Exhibit
Quarterly Market Share of Lenovo India
VENDOR Q1 FY 07-08 Q2 FY 07-08 Q3 FY 07-08 Q4 FY 07-08
ACER 4.5% 6.1% 7.1% 7.4%
DELL 5.2% 5.5% 7.0% 7.4%
HP 17.6% 17.5% 17.6% 18.3%
LENOVO 8.2% 8.3% 8.9 % 7.7%
OTHERS 64.6% 62.7% 59.4% 59.2%