In the first quarter of 2017, Lenovo has consolidated its position as number 1 in the PC market -with a 21% market share, and its position in North America as number 3, only behind Apple and Dell.
It’s indeed natural to wonder how Lenovo, a Chinese technology company selling personal computers, smartphones, servers, smart televisions and other products, has become a successful global brand.
There is who states that Lenovo success comes from its acquisition of IBM’s PC division- which was valued for 1.75 billion $- and from the ThinkPad brand launched in 2005. Doubtless these two factors have contributed to the company success, even though they are not the sole reasons.
M&A in fact do not always have a positive result: merging teams and cultures, especially the American and the Chinese one, is hard. Lenovo approach can be distinguished in two parts: first the creation of a flexible and international organizational structure, and second the development of a solution to overcome the gap between the cultural differences and the way of doing business. Regarding the company structure, Lenovo has maintained its headquarter in Beijing and on the other hand it has established new one in North Carolina (US), meanwhile it is listed in Hong Kong. In addition, the leadership team of technology executives is composed by executives from over six countries.
As Mr. Roman, the chief marketing officer, stated: “Our organizational structure is undoubtedly one of our key strengths: it allows us to effectively create
a global framework to market the Lenovo brand within the local context of the markets we operate in”.
Concerning the cultural differences, there were several issues at the beginning of the merger.
Only few people in Lenovo used to speak English and the communication among the parties was difficult: Lenovo executives decided then that English would have been the official language of the new company and started learning it.
Beyond the language, other business-related cultural aspects were creating a gap: for example the American managers used to be more direct and perhaps challenge their superiors’ decisions, meanwhile Chinese employees tend to respect their superior decisions.
The solution was to shift from the top-down management style to a more flexible process of decision-making which could be defined as “network oriented”. Adjusted the internal structure, Lenovo was ready to enter the overseas market and the attention shifted towards the marketing campaign. As for example it sponsored in 2008 the Olympic Games in Beijing, it became the official sponsor of the National Football League, it planned a short film campaign in 2011 titled The Pursuit, and it collaborated with Ashton Kutcher to promote the new Yoga Tablet.
Lenovo was one of the few Chinese companies which realized the importance of branding and brand awareness, which was one reason why it invested a high amount of capital for successful marketing campaigns. Although it is important to mention that Lenovo didn’t do “everything by itself”: it has received support from Intel and Microsoft because their products rely on Lenovo’s.
Lenovo is indeed very focused on its marketing, smartly targeting the youth consumer target (18-34 years old) which “share many similarities across cultures given their level of connectivity and openness to new experience”.
In conclusion, we can say that the keys beyond Lenovo’s success as international brand are the creation of an international organizational structure, the mind openness to solve cultural differences, and mostly the investment in marketing in order to increase the brand awareness. Regarding this last point, many companies have underestimated the importance of a well targeted marketing campaign and the importance of branding in foreign countries; even though companies invest money in it, sometimes it may be hard to have positive results without a foreign counterpart -which can be a member of the team, an overseas partner or a consultancy agency- who can help to overcame the business and cultural difference.
Lenovo has found the winning formula to distinguished itself from other Chinese companies which were trying to compete globally.
Author: Debora Tedeschi
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