SWOT Analysis of Lenovo
It has not been even 30 years since Lenovo’s incorporation (1988) and it has grown to become the largest PC maker of the world. Over time, it has acquired several businesses including IBM’s PC division and Motorola Mobility. Motorola Mobility and system X are its most recent and major acquisitions. Today, Lenovo is not just one of the most recognized brand names in the world of PC and laptops, but it has also grabbed a large market share. Apart from computers and IT solutions, it makes several other electronic products.
It makes Tablets, smartphones and smart TVs too. It has grown its product line to include storage solutions and apps. It targets to become one of the leading technological companies of the world. Lenovo has depended upon technological innovation and a smarter strategy to grow its brand. However, there are still major challenges ahead. Apart from a declining PC market, currency volatility in major economies of the world is also a major challenge. Still, the brand has grown some major strengths. Here is a SWOT analysis of Lenovo analyzing the strengths, weaknesses, opportunities and threats before it.
2015/16 revenue: $44.9 Billion
Name of CEO – Yang Yuanqing
Number of Employees: 60,000
Headquarters: Morrisville, North Carolina, United States
Lenovo competitors: HP, DELL, Acer, Apple, Huawei
Brand Recognition – Lenovo has become a well known name in the PC industry. It is considered a reliable brand and has garnered huge brand loyalty based on product quality of its products and technology. Another reason leading to surge in the popularity of Lenovo is its competitive pricing strategy. It is now known to be the largest PC maker of the world which makes great personal computing solutions at competitive prices.
Large range of products – The large product line of Lenovo is also one of its major strengths. Its business is divided into several business groups or divisions. These groups include PC and smart device business group, Mobile business group and the Data center business group. It makes a large range of products including PCs, laptops, tablets, smartphones, smart TVs and even storage solutions.
Impressive market share – Lenovo has acquired an impressive market share over time based on a smart strategy. It has been able to get ahead of others and acquire the leading position in the industry through its focus on smarter technology and competitive pricing. Its market share in 2015/16 was an impressive 21%.
Stronghold Asian markets – The Asian markets are rising fast and they are Lenovo’s stronghold. Its products are highly popular in both China and India. A very large part of its sales comes from the Asian markets.
Growing strength through mergers and acquisitions – Overtime Lenovo has also grown its strengths through mergers and acquisitions. Its rapid growth in the PC industry has been fueled by a series of aggressive acquisitions by the brand. After the acquisition of IBM’s PC division, Lenovo also integrated Motorola mobility and system X to fuel future growth.
Weaknesses:
Weak brand recognition in the developed economies – While Lenovo’s position is very strong in the Chinese and Indian markets, it is still not recognized as well in the developed economies. Its market share might have grown over time but Western markets still make a tiny contribution to its sales. After having acquired Motorola Mobility, Lenovo is now targeting maturer markets for further growth.
Weak presence in smartphones – Lenovo’s smartphone business has caught momentum but it is still behind Samsung, Apple, Huawei and Oppo.
Declining PC market – The PC market has seen a fast decline in the past few years. However, this has affected not just Lenovo but other PC makers too like Dell and HP. This decline is due to several factors including the rise of mobile technology and has affected the PC industry deeply.
Opportunities:
Growing sales of smartphones in Asian markets – Growing sales of smartphones in the Asian markets presents a major opportunity before Lenovo. Its performance in this area has remained weaker compared to the other brands. However, after the acquisition of Motorola mobility its smartphone business has caught momentum and this could help Lenovo grab the available opportunities and increase its revenue.
Cloud technology – Cloud technology is an area of significant growth opportunities. Demand has grown very fast in this area and Lenovo too could make use of these opportunities for faster growth.
Demand for low cost technologically efficient mobile devices – In the Asian markets particularly, demand for low cost but technologically efficient mobile devices is high. Smaller Chines brands have mostly been catering to this need in the past. If Lenovo introduces low cost and technologically improved products that could mean higher revenue and better profits for it.
Threats:
Currency volatility – The significant currency volatility in key emerging markets proved to be a major threat for Lenovo and it will continue to pose a challenge. It affects both profits and revenues.
Intense competition from existing players – The competition in the PC and smartphone industry is intense. In the western markets particularly, the brand faces quite stiff competition from the competing brands.
Falling laptop sales – Laptop sales have continued to fall over the recent years. It is mainly because of the increased use of mobile technology. The proliferation of mobile technology has led to increased use of smaller and more portable devices. This affects the PC makers business negatively.
Significant macroeconomic challenges for brands in personal technology industry – The brand in the personal technology industry are facing severe macroeconomic challenges. Globally, currency volatility is affecting their revenue.
Recommendations:
Lenovo is the largest PC maker of the world. However, the declining demand for PCs and laptops is a major challenge before it. Its position is still not very strong in the smartphone market. After acquiring Motorola mobility from Google, its smartphone business is catching momentum. Cloud business, smartphones and personal technology are key areas full of opportunities where Lenovo’s focus must be in near future. Its focus should also remain on making its presence felt more strongly in the western markets. In the Asian markets too the demand for low cost mobile devices brings an opportunity before Lenovo. Till now, Lenovo’s growth has been based on an aggressive strategy. However, the challenge of competition is big as the other brands are also trying to make their clout felt with full might.
Sources:
https://www.lenovo.com/ww/lenovo/pdf/report/E_099220160603a.pdf
https://www.lenovo.com/ww/lenovo/pdf/report/E_099220161114a.pdf
https://www.reuters.com/article/us-telecoms-mobileworld-lenovo-idUSKCN0VW2BU
https://fortune.com/2017/04/11/samsung-apple-market-share/