| Name | Lenovo Limited |
| Industry | Computer Hardware Electronics |
| Founded | 1984 |
| Headquarters | Beijing, China |
| CEO | Yang Yuanqing |
| Revenues | USD 60.74 Billion, 2021 |
| Profit | USD 1.12 Billion, 2021 |
| Competitors | Dell, Acer, Hp, Compaq |
Company Overview:
Headquartered in Beijing, China, Lenovo was founded by Liu Chuanzhi in 1984. Formally named Legend, Lenovo is China’s leading computer company, running operations all across the world. It is listed on the Hong Kong Stock exchange. It is involved in the developing, manufacturing, and marketing of technology-related products and services. Lenovo is operating in more than 60 countries and selling products in over 180 countries with 71,500 employees (Lenovo, 2021). Currently, Lenovo has a market capitalization of $16.8 billion (Yahoo Finance, 2021), showing a very big market share.
Table of Contents
Lenovo Strengths 2021:
- Strong Brand Equity.
Lenovo has a strong focus on getting quality raw materials and then providing superior products to its customers, leading to greater brand equity. Increasing trends in sales also reflect the strong customer confidence in the company along with higher customer satisfaction. According to Lenovo StoryHub (2019), Lenovo is ranked 212th in the USD 50 billion Fortune Global 500 Company in 2020, with a jumping-off of 28 spots above, owing to its wide presence, strong market presence, and high-technology usage. - Heavy Investment in Research and Development.
Lenovo has heavily invested in research and development, in order to enhance operational excellence and remain committed to corporate citizenship and green innovation for achieving long-term sustainable profitability growth (China Daily, 2021). According to Macrotrends (2021), Lenovo incurred $1.59 billion in research and development expenses in 2021, with an increase of 18.58% from the last financial year. This has allowed Lenovo to gain a significant market share among the giant competitors, such as Dell, Hp, and Acer. - Key Market Player.
Lenovo is considered as one of the leading players in the PC market all across the world, having a market share of 25% in 2020, in comparison to its competitors HP, Dell, and Apple, who have 21%, 17%, and 8% market shares in 2020, respectively (Gartner, 2021). Lenovo is ahead in the PC market for the last five years from its competitors, due to restructuring its business operations.
- Strong Financial Performance.
Lenovo has observed strong financial performance, due to heavy investments in high-tech innovations. In 2021, the annual revenue of Lenovo was recorded at $60.74 billion with an increase of 19.77% from 2020, showing a significant increase in sales due to server, artificial intelligence, high-performance computing (HPC), software-defined infrastructure, and storage (Haranas, 2021). Lenovo is also undertaking internal restructuring by creating new solutions and sales groups, which aims to significantly improve the company’s services and better value to the customers.
Lenovo Weaknesses 2021:
- Less Focus on Marketing.
Lenovo does not follow an aggressive marketing strategy like its competitors. It has not much focus on marketing. Lenovo has the potential to use its product quality and competitive pricing strategy as the USPs in the marketing, in order to further boost the sales, but it does not have effective strategies to properly market its products. - Single Growth Engine.
Lenovo, being a leading high-tech company is having difficulty searching for a second growth engine other than personal computers even after the fruitless efforts for getting into the smartphone market. In 2018, Lenovo recorded a loss in mobile business of around $ 189 million, showing that it is unable to get its feet on the market other than the PC segment. Moreover, management has realised its failure and decided to cut down the total expenses by 30% rather than dedicating more resources to the mobile segment to fix it (Nikki & Tabeta, 2018). - Products Recalling.
Lenovo has some past experiences of recalling the products, such as in 2015, it had to recall its products due to faulty lithium-ion batteries installed in the laptops. That situation significantly affected the reputation of the company, as the computer manufacturing companies install strict quality control checks on their products to avoid such situations.
Lenovo Opportunities 2021:
- Cloud Computing.
The financial performance of Lenovo is getting strong, and its stable cash flows will allow the brand to explore new sources of growth and revenue. Since the last few years, a tremendous increase has been observed in the IT field, such as the introduction of artificial intelligence, cloud technology, and other related areas. Moreover, according to Hiter (2021), the global cloud computing market has reached $250 billion in 2021, which is expected to further grow by 17.9% by 2028. So, Lenovo has the potential to get benefit from it for expanding into other segments. - Growing Use of Digital Marketing.
Digital marketing is rapidly growing in the current age, allowing millions of businesses to attract customers globally. Being the global leader in PC, Lenovo must focus on digital marketing for engaging customers and managing customer relationships better.
Lenovo Threats 2021:
- Hyper-Competition.
The major threat of Lenovo is the level of competition in the PC market. Although Lenovo has managed to position itself among strong players, such as Dell, Apple, and HP, there is a need to anticipate this threat for retaining its market share and keep overcoming the competitive pressure. - Declining ASPs.
Since the last few years, the Average Selling Prices (ASPs) of electronic goods, such as smartphones, are declining, and will further face pressure due to smart and cost-effect production methods. Therefore, Lenovo may come under pricing pressure and thus its profits may get affected.
Lenovo SWOT Analysis Conclusion:
In conclusion, Lenovo is a global consumer electronics brand, providing high-tech products to customers of more than 180 countries. Lenovo has managed to beat its global competitors, such as Hp, Dell, and Compaq, and become a market leader in the PC market. Lenovo has made heavy investments in research and development, in order to keep its products updated and innovative. Although the growing competitive pressure and the threat of reduced prices may pose threats to the profits of Lenovo. But it can focus on its marketing strategies to increase its appearance and for this purpose, digital marketing can prove highly beneficial.
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References:
- China Daily, 2021. Lenovo doubling R&D investments for edge in digitalization.
- Gartner, 2021. Gartner Says Worldwide PC Shipments Grew 10.7% in Fourth Quarter of 2020 and 4.8% for the Year.
Haranas, M., 2021. Lenovo PC Sales Soar 46 Percent, Annual Revenue Hits $60B. CRN.com. - Hiter, S., 2021. Cloud Computing Market 2021. Datamation.com.
- Lenovo StoryHub, 2019. Lenovo Jumps 28 Spots on 2019 ‘FORTUNE Global 500’ List.
- Lenovo, 2021. Annual Report 2021, Beijing: Lenovo Group.
- Macrotrends, 2021. Lenovo Group Research and Development Expenses 2006-2021 | LNVGY.
- Nikki, S. & Tabeta, S., 2018. Lenovo struggles to find growth engine beyond PCs. Asia.Nikkei.
- Yahoo Finance, 2021. Lenovo Group Limited (LNVGY).
