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    LenovoLenovo: Countering the Dell Challenge: Countering the Dell Challenge

    The battle is on between the WESTERN and EASTERN

    VS

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    Developed By:

    Md. Forhad HossainMehdad Mamur MannanHimadri Sheakar HoreMd. Mahfuzur Rahman

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    Presentation Proposition

    Case at a Glance The Global PC Market Scenario

    Focusing Chinese PC Realm

    The Fate of Lenovos Business Model???

    Business Model: Lenovo Business Model: Dell

    Lenovos March in Local Market

    Lenovos Emerge in Global Arena

    Recommendation Implementations of Recommendation

    Index

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    Case at a Glance

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    Case at a Glance

    Case at a glance

    Global PC market

    scenario

    Focusing Chinese

    PC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Challenge

    DELL

    Lenovo

    PC Market

    Since the 90s, the global PC market isflourishing in a tremendous pace. Mainlythis boom is taking place in US, Europe

    and of course in Asia.

    Lenovo, an expert player especially in Chinese

    PC Market and also looking for global

    expansionDell, another US based giant is doing

    exceedingly well in the same line. Afterwinning the global share of PC market now

    they are staring at Chinese domain.

    Since Lenovo excels in Chinese market witha vision to be a global player, they now

    have the challenge to outperform their UScounterpart.

    Business Model:

    Dell

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    Global PC Market Scenario

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    Global PC Market Scenario

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    PC Market

    Desktop Notebook PC Server

    Growth Driving Factors

    Lower price

    Replacing ageing system

    Recovery of European economics

    Business Model:

    Dell

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    Global PC Market Scenario

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Fast Market

    Growth

    Chinese

    Indian

    CEMA

    European

    USThai

    Japanese

    Sluggish

    Market Growth

    Business Model:

    Dell

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    Global PC Market Scenario

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    16.50%

    14.30%

    5.90%

    3.50%

    3%

    56.70%

    Dell

    HP

    IBM

    Fujitsu

    Acer

    Others

    Position of top Global Brands in 2004:

    Business Model:

    Dell

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    Focusing Chinese PC Realm

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    Focusing Chinese PC Realm

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    A Massive Boom in PC Market

    0

    100000

    200000

    300000

    400000

    500000

    600000

    700000

    1999 2000

    Year

    Sales

    In 2010 the Chinese PC market Is about to exceedthe US PC market

    Business Model:

    Dell

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    Focusing Chinese PC Realm

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    A Massive Boom in PC Market

    Units (000)

    0

    5000

    10000

    15000

    20000

    25000

    30000

    2002 2003 2004 2005 2006 2007

    year

    Major contributors towards

    the growth:

    Domestic PC makersForeign multinationals

    Contract manufacturers

    Business Model:

    Dell

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    Focusing Chinese PC Realm

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Chinese Govt.s Policies

    Towards PC Market

    Encouraging domestic computer production and use

    Intention to achieve technological independence Use of R & D as a tool of computers market expansion Imposing high tariffs and taxes for the foreign companies Providing technology & know how to the local companies

    Business Model:

    Dell

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    Focusing Chinese PC Realm

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Distribution channel of

    Chinese PC market

    Conventional distribution channel

    Dealer Distributor Retailer

    Direct model

    Producer Customers

    Business Model:

    Dell

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    Fate of Lenovos Business Model ???

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    Business Model: LenovoSWOT Analysis

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Business Model:Dell

    Lenovos March in

    Local market

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Integration capabilities Inexpensive Easy to useTechnical sophistication Strategic allianceAcquisition & Merger Strong brand equity Customization Innovative marketing strategy Product DiversificationA Meaningful Brand Name

    Too much dependence on

    middle men

    Too much focus on end users

    Doesnt excel in inventorymanagement

    Outperformed by the

    challenger in advertisement

    Yet to expand the Laptopunit

    Internet fever among theChinese Dells shift to corporate

    segment Ever expending Chinese

    and Global market

    Extensive Govt. support

    Rapid growth of smallerfirms

    Tong Fangs low cost PCs Low priced PCs by

    Cloners Random access of foreign Companies in china Invaded corporate and

    consumer market High advertisement by

    foreign Competitors Being non responsive for

    quite a long time

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    Business Model: Lenovo

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:Dell

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Financial Performance

    Turnover ratio :Total sales

    Value of assets

    In case of Lenovo it is 77%

    which is quite goodBusiness Model:Lenovo

    Breakdown of Turnover

    House hold

    Device

    11%

    Consumer IT

    35%

    Corporate IT

    51%

    Other

    3%

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    Business Model: Lenovo

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Financial Performance

    0% 50% 100% 150% 200% 250%

    Home PC

    Cmmercial PC

    Notebook

    computer

    Unit shipment in percentage

    Business Model:Dell

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    Business Model: Lenovo

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Financial Performance

    Business Model:Dell

    4.20% 4.40% 4.60% 4.80% 5.00%

    Margin in Ratio

    2004

    2005

    2006

    Year

    Net Profit Margin

    0.00% 5.00% 10.00% 15.00%

    Margin in Ratio

    2004

    2005

    2006

    Year

    Gross Profit Margin

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    Lenovos March in Local MarketCase at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Legend permitted manufacturing in mainland china1990

    Developed pc on Intel 80826 microprocessors1989

    Hong Kong legend established

    Distributing foreign brand computer

    Distributing peripherals for beginning legend

    Designing and manufacturing motherboard

    System integration products and services

    1988

    Awarded and honored1988

    Manufacturing of legend Chinese insertion cardInexpensive & easy to use

    1985

    Distribution of imported pc such as IBM & HP printer1984

    ActivitiesYear

    Business Model:

    Dell

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    Lenovos March in Local MarketCase at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Developing and offering customized products

    Strategic alliances

    MOU with IBM

    System integration capabilities

    1998

    Three dimensions

    1. Distribution of imported computers

    2. Manufacturing and sale of legend brand PC

    3. Provision of system integration

    1997

    Legend brand equity reached RMB 3.574 billion

    Entitled one of the top ten most Chinese brand

    1996

    TV coverage for imaging nationalism1995

    Legend ranked third in the china pc market

    Top selling domestic pc brand

    Second generation of legend pc brand

    1994

    Setting R & D sector1993

    MOU between china and US

    Stropping producing and creating ventures

    1992

    Business Model:Dell

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    Lenovos Emerge in Global Arena

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    First introducer of dual - core ThinkPad network PC

    Acquisition of IBMs PC division2006

    Introducing Research Triangle Park

    Introduces first wide screen Thinkpad

    Introduces industrys thinest and lightest, most secure tablet PC

    2005

    Lenovo becomes Olympic worldwide partner

    Lenovo and IBM announce an agreement, Lenovo will acquire IBMsPersonal Computing Division

    2004

    Birth of its new Lenovo logo

    Data protection in case of system drop

    2003

    Introduces its visionary concepts

    First automatic data recovery technology

    2002

    First introduces Digital Home concepts2001

    Legend ranked in top 10 of worlds best managed PC vendors2000

    Business Model:Dell

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    Business Model: Lenovo

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    ImplementingRecommendation

    Index

    Lenovos March in

    Local market

    Lenovos Future Plan

    Inventory

    Management

    Alternative

    Promotional

    Schemes

    Intensive

    Target Market

    Corporate

    Selling

    Direct Selling

    Via Internet

    Future

    Plan

    Business Model:Dell

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    Business Model of DELL

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    Business Model: Dell

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Lenovos Emergein Global Arena

    Recommendation

    Implementing

    Recommendation

    Index

    Lenovos March in

    Local market

    Dells Business Method

    Operation Efficiency Through Internet

    Direct Sales

    JIT Inventory Management

    Extensive Customer Care

    Different paying options for Customers Pricing Lower (Smart PC)

    Customization

    If Lenovo can not take adequate measures against its challenger,

    it might be Dell to reap the competitive market of China.

    Business Model:Dell

    Business Model:

    Lenovo

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    Business Model: Lenovo

    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    Implementing

    Recommendation

    Index

    Lenovos March in

    Local market

    Survival of Lenovos Business model

    Lenovos business model might survive.

    BUT???

    Business Model:Dell

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    Recommendation

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    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:Dell

    Lenovos Emergein Global Arena

    Recommendation

    Implementing

    Recommendation

    Index

    Lenovos March in

    Local market

    Recommendation Pyramid

    Recommendation

    For Local Market

    For International Market

    Business Model:

    Lenovo

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    Case at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    Implementing

    Recommendation

    Index

    Lenovos March in

    Local market

    Local Market

    Outperforming Smaller Firms

    Being More Cheap

    Monitoring the Cloners

    Restricting Foreign CompaniesAdding Values

    Intensive Distribution

    Paying Attention to Laptop Unit Utilizing the Chinese Internet Fever

    Closely Monitoring the Challenger

    Being expert both in Corporate & Consumer Marke

    Recommendation

    Business Model:Dell

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    RecommendationCase at a glance

    Global PC market

    scenario

    Focusing ChinesePC Realm

    Business Model:

    Lenovo

    Lenovos Emergein Global Arena

    Recommendation

    Implementing

    Recommendation

    Index

    Lenovos March in

    Local market

    International Market

    In this case Lenovo has to take decision in TWO aspects :

    Its Product Types

    Its Distribution Network

    Business Model:Dell

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    Index

    Case at a glance

    Global PC market

    scenario

    Focusing Chinese

    PC Realm

    Business Model:

    Lenovo

    Business Model:

    Dell

    Lenovos March inLocal market

    Lenovos Emerge

    in Global Arena

    Recommendation

    Q & A

    ???

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    Thank You All