The Globalization of Chinese Enterprise Essay example

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The Globalization of Chinese Enterprise Lenovo

College of Business

Louisiana Tech University

Globalization is the tendency of investment funds and businesses to move beyond domestic markets to other markets around the globe, thereby increasing the interconnectedness of world views, products, ideas, and other aspects of culture. (Al-Rodhan, R.F. Nayef and Gérard Stoudmann,2006) As global communication systems become more efficient and trade agreements pry open national markets to foreign competition, corporate globalization is the trend. Many entrepreneurs are focusing more on international business because going global is essential to the long-term health and performance of the company. Lenovo is a personal technology company founded by 11 scientific and technical people of the Chinese Academy of Sciences and the top Chinese IT industry, providing products including legendary Think-branded commercial PCs and Idea-branded consumer PCs and serving customers in more than 160 countries.

The forces driving global Expansion
Subjective reason Market Expanding
In 2003, Lenovo successfully strengthened its leadership position in the natural market, and it had been made market share of around 27% in China PC market. With such a high share, Lenovo realized that its opportunity for further domestic expansion was limited. Lenovo has gone through a period of adjustment and selection. The company chose globalization and began to get involved in international trade. During 2005 fiscal year, Lenovo completed the acquisition of the IBM Personal Computer. The acquisition case attracted global attention which marked the birth of the new Lenovo.

(Lenovo annual report 2003--2004)
Gaining Resources
International outsourcing such as technological innovation and human resources is crucial to the development of Lenovo. As of March 31, 2005, the Group had a total of 9,682 employees, 9,625 of whom were employed in Chinese mainland and 57 in Hong Kong and overseas. Lenovo uses overseas advanced technology and excellent human resources to achieve sales targets.
Capitalizing on Special Features of the location
Lenovo announced its decision to become a worldwide partner of the International Olympic Committee. Lenovo also has the right to use the IBM brand for five years and permanent ownership of the renowned “Think” trademark. As part of the transaction, Lenovo and IBM entered a broad-based, strategic alliance in which IBM became the preferred supplier of warranty and maintenance services and preferred supplier of customer leasing and channel financing services to Lenovo. (IBM Australia Credit Ltd. Australia - Annual Report, 2007).
Objective reason The Chinese government announced its 'go global' policy in 2002. Lenovo, as a leader in the IT sector, responded to this government initiative.

Global Strategy
Brand Strategy
As we know, attracting and keeping customers is the most important business element for every company. Customer experience-based brand strategy is a plan for the systematic development of a brand to enable it to meet its agreed objectives based on designing the customer experience (Smith and Wheeler, 2002). Based on PC sales analysis, customer experience drives customer loyalty and profits. Lenovo developed its new brand from three stages: pre-sales Thinking, purchasing process, and after-sales service. During the pre-sales thinking phase, customers collect information such as purchasing experience, personal goals and shape design from products. The purchasing process includes PC usability, PC functionality, and PC price; after-sales service means all the service after the customers have bought their PC products. Using this strategy, Lenovo gradually extended its brand to markets. Besides, Lenovo creates its sub-brand and these sub-brands improve positions in the minds of consumers. Meanwhile, Lenovo conducts or participates in a series of