Internal Assessments

NAME KALEESWARAN R
REGISTER NO 225012301172
COURSE MBA (INFORMATION SYSTEMS)
SUBJECT NAME International Business Management
SUBJECT CODE MMBA22014

Program – MBA

Subject – International Business Management

Subject Code: MMBA22014

Assessment Type – Internal Assessment

Guidelines:

● The response sheet should be written in Word format and then upload in the learning

management system.

● Students should use the plagiarism checker software provided in the learning

management system to check for plagiarism.

● Permissible plagiarized limit is 10%. The response sheet will not be reviewed for the

evaluation if it contains more than 10%.

● Passing criteria is 50% for every assignment.

Case Study:
This case discusses Beijing-based multinational technology giant, Lenovo Group Limited's
(Lenovo), success story in China and its emergence as the global brand from China. In early 2013,
Lenovo emerged as the clear leader in the global Personal Computer (PC) market.

Industry experts opined that the company's success was attributable to several strategies it had
adopted in China – aggressive pricing in its home market – China — and its acquisition strategy in
mature markets such as Germany and Japan, made it a market leader in the global PC market.
Some analysts opined that much of the company's success was due to its 'Protect and Attack'
strategy started in 2009 which gave it an edge over its competitors. Using this strategy, the
company protected its China PC business and the global enterprise business while attacking
emerging markets with its PC products as well as targeting new product areas such as tablets,
smartphones, and smart televisions (TVs). The new product areas, also known as mobile Internet
devices, were part of its PC Plus strategy wherein the company innovated with the PC to develop
new products. Experts said that the company's decision to focus on these new product areas was a
bid to maintain its global sales momentum as the PC market was deteriorating due to sluggish
demand.

Going forward, the company planned to challenge Samsung's leadership position in the Chinese
Smartphone market and become a leader by including gaming software to its smart phones. In
August 2013, Lenovo rolled out several retail outlets – Lenovo Solution Center which was similar
to Apple stores with wide counters and tables where customers could sit and try out Lenovo's
tablets and phones. The retail strategy was an attempt by Lenovo to surpass Samsung in sales in
the Chinese Smartphone market. The company also had ambitious plans to launch its smart
phones in the US by 2014. Some analysts felt that the move was positive considering the decline
in the global PC industry. Others felt that Lenovo would face some challenges while trying to
make its presence felt in the US Smartphone market as it lacked the brand recognition that
established players such as Apple Inc. (Apple) and Samsung Electronics Ltd. (Samsung) enjoyed
in the country. Some experts pointed out that Lenovo could also face challenge in making its
presence felt in the US Smartphone market since it was largely dominated by Apple and Samsung.

Questions

 Understand the issues and challenges faced by a Chinese PC company in growing its
business and examine the challenges faced by Lenovo in gaining a presence in the
intensely competitive US Smartphone market.

Answers:

Issues and Challenges Faced by a Chinese PC Company in Growing its Business

Domestic Market Challenges

1. Intense Competition: The Chinese PC market is highly competitive with numerous domestic
and international players vying for market share. Lenovo's strategy of aggressive pricing is
essential but also reduces profit margins.

2. Market Saturation: As the PC market matures, demand growth slows down, leading to market
saturation. This makes it harder for companies to achieve significant growth without innovative
products or new market segments.

3. Consumer Expectations: Chinese consumers have high expectations for quality and value,
necessitating constant innovation and improvement in product offerings.

Global Market Challenges

1. Cultural Differences: Expanding into international markets requires understanding and

adapting to different consumer preferences and business cultures, which can be challenging for a
Chinese company.

2. Brand Perception: Building a global brand from China involves overcoming potential biases
and establishing trust and recognition in new markets where established competitors have strong
brand loyalty.

3. Regulatory Barriers: Different countries have varying regulatory requirements for product
standards, trade policies, and business operations, posing additional challenges for expansion.

Lenovo's Strategies and Challenges in the US Smartphone Market

Advantages of Lenovo's Approach

1. Diverse Product Portfolio: Lenovo's expansion into mobile Internet devices, including tablets,
smartphones, and smart TVs, aligns with global trends and diversifies revenue streams beyond
traditional PCs.

2. Retail Strategy: Establishing Lenovo Solution Centers mirrors successful models like Apple's
stores, providing customers with hands-on experiences that can drive engagement and sales.

Challenges in the US Smartphone Market

1. Brand Recognition: Lenovo lacks the brand recognition in the US that competitors like Apple
and Samsung enjoy. This is a significant barrier to entry as consumers tend to stick with brands
they know and trust.

2. Market Dominance of Competitors: The US smartphone market is dominated by Apple and

Samsung, which have established ecosystems and strong customer loyalty. Breaking into this
market requires significant marketing efforts and differentiation.
3. Technological Differentiation: To compete, Lenovo needs to offer smartphones with unique
features or superior technology that can attract consumers away from established brands.

4. Carrier Partnerships: Success in the US market often depends on strong partnerships with
mobile carriers. Establishing these relationships can be challenging and requires negotiating
favorable terms.

5. Consumer Trust: Gaining consumer trust in a new market is difficult, especially in technology
where reliability and after-sales service are critical.

Strategic Responses

1. Innovation and R&D: Investing in research and development to create cutting-edge products
that offer unique features or superior performance can help Lenovo stand out.

2. Marketing and Branding: Comprehensive marketing campaigns to build brand awareness and
convey the quality and value of Lenovo products are essential.

3. Strategic Acquisitions: Acquiring or partnering with US-based companies can help Lenovo
gain a foothold in the market and leverage existing brand recognition.

4. Focus on Niche Markets: Initially targeting niche markets or specific consumer segments can
help Lenovo gradually build a presence before expanding more broadly.

5. Enhancing Retail Experience: Creating a strong retail presence with a focus on customer
experience can help Lenovo attract customers who value hands-on interactions with products
before purchasing.

Conclusion

Lenovo's journey from a domestic leader in China to a global brand illustrates the complexities
of international expansion, especially in highly competitive markets like the US smartphone
sector. While the company has successfully leveraged strategies like aggressive pricing and
strategic acquisitions, entering the US smartphone market presents unique challenges.
Overcoming these requires a multifaceted approach that includes innovation, strategic
marketing, and establishing strong local partnerships to build brand recognition and trust
among US consumers.