Company Background
Lenovo Group Limited is one of the largest brands involved in designing, manufacturing, and retailing personal computers and laptops. The company’s competitive landscape includes giant tech corporations like HP, Dell, Samsung, and Apple. The enterprise grows in popularity against the backdrop of digitalization, and this process increases the demands on the competitiveness of each manufacturer by a multitude of factors (Williamson & Wan, 2018). As a leading manufacturer of desktops and compact computers, Lenovo has most of these advantages, underscoring its competitive edge.
The detailed process of development and implementation of innovative technologies in its products with a relatively soft pricing strategy is a rare and impressive plus for the organization. Moreover, a broad presence in the global market, maintaining a decent quality of production, and a confident chain of established suppliers are not unique features of such a business, but they clearly confirm its ability to compete at the proper level.
Competitive Strategies
The primary strategy that sets Lenovo Group Limited apart from its competitors is to maximize research, development, and improvement in technological science. According to one of the top company managers, innovation in the industry is much more important than simply earning capital (Guo, 2018). The company confirms this position with its actions, striving to acquire leadership in the development and thus continue to lead the market. The annual allocation for technological research increases yearly, and even the troubled pandemic period was no exception, despite the company’s negative profitability in 2020 (Hu, 2020). Through development and invention, this strategy is designed for the long term and brings reputational and financial benefits, increases brand popularity, and reduces the cost of production with a minimal drop in market prices.
Information Systems and Competitive Business Strategies
Given the main field of activity of the company, the connection with information systems is extremely paramount and two-way. Production and development by the company itself of hardware and partial writing of software, including for internal use, allows the use of optimal systems for the analysis of the market, its requirements, and the current situation (Li et al., 2019). Moreover, a considerable part of funds is saved by the absence of unnecessary information contractors and has the possibility to be distributed to other directions.
The company has its own divisions of developers, designers, analysts, and programmers, who, together with engineers, not only use information systems to improve the competitiveness of the business but are likewise able to monetize such services. Evidence of this is the 3S innovative strategy (Lenovo official website, n.d.). Operations management, interaction with suppliers, contractors, and customers are managed through such information systems, strengthening the company’s position.
Analysis of Competitors
According to Porter’s theory, it is necessary to pay attention to five main forces when analyzing organizations’ competitiveness and corporate strategies. The first is the current level of competition in the industry, which is quite acute in this case. The main competitors are HP and Dell, and due to the minimal differentiation of product types, it is possible to divert customers’ attention and purchases by rivals (Guo, 2018). Lenovo’s innovation policy and investments in research are more active than those of these competitors, which increases the possibility of developing new technologies ahead of the current supply.
The second force is the threat of new entrants in the market segment, including the growth and entry into the leading positions of existing small brands. However, despite the attractiveness and size of the industry, the difficulty of operating in it and the decline in sales in recent years pose less than the average threat of new strong competitors for Lenovo, Dell, and HP (Guo, 2018). A third force is the comparison of vendor capabilities. Given the quality and cost requirements, the power of suppliers over the market in this context is weak.
The fourth force is one of the major ones: customer bargaining power. Its importance in the industry is great because it drives progress and business development for companies. Lenovo’s advantage over HP and Dell in this indicator is provided by its more affordable cost and constant innovation.
The fifth force is the threat of product substitutes. Its importance is gradually leveled, as computer tasks cannot be done with tablets or phones. However, the main disadvantage of the PC in the form of inconvenience and weight with the development of technology is a thing of the past. This factor is the same for Lenovo and the primary competitors within the industry.
Analysis of Competitors
Company Comparison
Based on the above analyses, the SWOT tool can be called the most effective since a clear difference in similar areas is most apparent in its context. Thus, there is a likelihood of observing more potential and pace of development in Lenovo in the long term. HP’s distraction to other markets and other products is not conducive to its stable position in the PC segment. Dell’s and HP’s preference to acquire patents instead of doing their development does not allow them to be the first to market with an innovative product.
The SWOT method helps divide generalized business factors with an overview of the perspective of the situation. Through this tool, it is evident that the main competitors are not interested in the active development of the segment. However, HP has a significant advantage over Dell and Lenovo due to the high diversification of products in the event of an even more significant drop in demand in the PC industry.
Competitive Posture
Thus, Lenovo’s current position is quite competitive and allows it to contend with the major parties in the sector while having a slight lead. However, like in similar companies, profitability has fallen after the crisis and the pandemic, and it will take time to recover. With the current levels of development and implementation of new technologies, Lenovo has all the chances to successfully achieve this due to the uniqueness of its products, affordable prices, and stable supplier chains.
References
Guo, Y. (2018). Business Strategy Analysis—Lenovo. Journal of Business Theory and Practice, 6(3), 245. Web.
Hu, C. (2020). Strategic asset seeking: A motivation of Chinese business groups’ international operation. Journal of Finance Research, 4(1), 17. Web.
Lenovo official website. (n.d.). Lenovo.com. Web.
Li, W., Chen, J., & Chen, B. (2019). Sourcing strategy of original equipment manufacturer with quality competition: Sourcing strategy of original equipment manufacturer with quality competition. Decision Sciences. Web.
Williamson, P., & Wan, F. (2018). Emerging market multinationals and the concept of ownership advantages. International Journal of Emerging Markets, 13(3), 557–567. Web.