This is the detailed analysis of Lenovo by applying the Ansoff matrix framework which has been used to identify the opportunities in the industry by growing existing market share, exploiting untapped markets, develop new products/services and diversification.
The Ansoff Matrix is introduced by a German Mathematician Igor Ansoff that helps the managers to assess their business development with the help of current or fresh products and markets (Martinet, 2010).
Market Penetration
The market penetration strategy is implemented by the managers of the firms when they intend to grow their market share by concentrating on current markets and products span. Penetration is discovered as the best strategic direction if a firm finds an opportunity for more expansion in a specific market.
Since 2009, the market share of Lenovo Company is constantly increasing and due to the highest sales of PC units across the world, Lenovo had 25 percent market share of global PC shipments in the second quarter of 2019. As compared to other competitors like HP and Dell, today Lenovo has record sales of two-thirds of global PC. Selling and production of personal computers is the major business of Lenovo because 70 percent of the company’s revenue is based on sales of PCs. Lenovo is one of the largest vendors of personal computers that’s why it is very easy for the firm to launch the latest products due to having a plateau position at the PC market. With the rapid growth of the smartphone industry in 2014, Lenovo purchased Motorola from Google for around 2.9billion U.S dollars to expand its smartphone production. Since the past few years, the global market share of Lenovo’s smartphone industry has been continuously decreasing. However, the company is now focusing on the expansion of its data center segment that includes hybrid cloud, edge computing, software-defined solutions, and items.
Product Development
The firm executes product development strategy when it intends to introduce the latest or upgraded goods and services into the current market. It can be in the form of a different variety or an easy method to grab the attention of new customers. This intensive growth strategy is one of the best methods to defeat other competitors particularly through innovating something new.
Lenovo is one of the first companies in the industry of telecommunication that has moved towards 5G technology at a very earlier stage. In 2019, the company has announced with the collaboration of Qualcomm which revealed the first Global 5G prototype system. It has been anticipated that the speed of data communication would increase by three times in contrast to 4G/LTE through 5G technology. Being a forerunner Lenovo has remained at the edge to become a strong player in the PC and mobile industry. Being a predecessor of 5G technology could give Lenovo an edge to remain a powerful player within the PC and mobile markets (Holst, 2019).
Market Development
The strategy used by the companies to expand their business in other markets by focusing on its existing product range. Since Lenovo has established itself as a leader of the PC industry in China it has struggled to expand its business in developing markets of India, Russia, and Brazil. However, the implementation of this strategy was not without stipulation. Lenovo had to face a great operating loss at the time of expansions because the firm invested a large amount in the establishment of existing sales in the target market. Although, at the time of this unprofitable period, the managers of the company had set a clear goal in their mind that, once the double-digit market share is achieved it is the rule of Lenovo to change its priority towards the maintenance of constant growth and income. Lenovo has created a dominant position in the Chinese market and the long term goal of the company is to attain a dominant position in every market where it has expanded its business. Although it is very easy for Lenovo because the managers of the company are well aware of the diversified markets in which they are intending to operate the business. These markets involve America, Europe, the Middle East, and Asia and every country has its customer requirements and competitive environment (Holstien, 2014).
Diversification
The most high-risk intensive growth plan, when a firm decides to increase its market share by introducing a new product into the fresh market. Lenovo has announced to make a partnership with Fujitsu’s PC division by purchasing 51 percent of its shares. The agreement was a component joint venture among Lenovo, Fujitsu, and Development Bank of Japan. The main objective of this agreement is to bring expansion in the growth and development of Client Computing Devices (CDD) for the PC industry at an international level (Bagish, 2015).
References
Bagish, C. (2015). How Lenovo expanded its offerings and global presence — and modernized its image to match. Retrieved from https://mashable.com/2015/11/09/lenovo-cmo-david-roman/
Holst, A. (2019). Lenovo’s market share of PC unit shipments worldwide 2009-2019, by quarter. Retrieved from https://www.statista.com/statistics/255306/global-pc-market-share-held-by-lenovo-since-the-1st-quarter-2009/
Holstien, W. (2014). Lenovo Goes Global, (76). Retrieved from https://www.strategy-business.com/article/00274?gko=7fa46
Martinet, A.C. (2010). Strategic planning, strategic management, strategic foresight: The seminal work of H. Igor Ansoff, Technological Forecasting and Social Change, 77(9), 1485-148