Read Lenovo's Detailed SWOT Analysis for 2019
Lenovo is China's leading private pc brand that has achieved speedy progress in a limited time span. In addition to the spectacular progress in market share, Lenovo has additionally seen progress rising quicker. In 2018-19, its turnover for the primary time grew by greater than $ 50 billion in the firm's historical past. The company additionally made vital modifications to its enterprise model in 2018. Lenovo made these modifications primarily resulting from growing competitors. Info know-how has modified considerably in recent times. Then again, sales of desktop computers and laptops have decreased because of the progress of cellular communications.
The growing use of knowledge and analytics has created new customer necessities. These modifications have led Lenovo to more and more give attention to cellular products and research and improvement. The PC market has stabilized somewhat because the fall of 2018. Nevertheless, it started to fall in 2019, in response to Gartner. Lenovo had engaging sales within the latest fiscal yr. PCs and sensible units account for over 71% of their turnover. The company additionally focuses on other corporations and sources of revenue, together with the Knowledge Middle and Cellular Enterprise Group.
Learn more about Lenovo on this SWOT evaluation:
- Founded in 1984
- Lenovo Chairman and CEO: Yang Yuanqing
- Variety of Staff: 57 000
- Internet Revenue 2018/19 – $ 51 billion
- Gross Profit: $ 7.4 billion
Nice Product Range: –
Lenovo's leading power is its giant product portfolio. That is also an essential source of brand name aggressive benefit. As an alternative of a single source of revenue, the company has continued to increase its product / service portfolio. Lenovo's enterprise is split into two important working segments. Final yr, the company reorganized its business and mixed its two main working segments, including PCSD and Cellular Enterprise Group, to supply the IDG or Clever Units Group. Another Lenovo working phase is the Knowledge Middle group.
The wide selection of products manufactured and bought by Lenovo embrace laptops, desktops, tablets, workstations and a wide range of equipment. Within the sensible telephone phase, Lenovo has determined not to transfer aggressively. Nevertheless, in recent times, it has solely launched a restricted range of smartphones. Lenovo's product range consists of each low-cost and premium products. Its wide selection of laptops and laptops has been notably in style in the PC and pocket book markets. A few of Lenovo's leading notebook manufacturers embrace Yoga, Thinkcentre, Concept Middle and Legion. Over the past monetary yr, Lenovo's income from the IDG Group (Intelligent Gear Group) grew to $ 45 billion. The info middle group, however, achieved report revenues of $ 6 billion.
Model fairness: –
Lenovo's concentrate on quality has led to brand fairness progress. The company has a robust concentrate on product high quality and wonderful uncooked material use. Thanks to those things, the recognition of its products has grown quicker. Growing shopper confidence within the brand is a sign of robust and quickly rising model capital. Private info know-how has turn into hyper-competitive and model capital is likely one of the most necessary results of gross sales and income. Lenovo's growing gross sales and revenues from everywhere in the world, including China and Latin America, are also a sign of robust brand capital that reflects robust competitiveness. Otherwise, Lenovo is positioned in very robust brands, reminiscent of HP, Dell and Apple, who take pleasure in top-notch manufacturing in the business. This exhibits that, despite competitors and lots of different challenges, Lenovo has been capable of win the hearts of its clients
The quickest growing PC manufacturer: –
Lenovo is a younger firm, however it has been capable of develop rapidly as a share of the PC market. Affordability and product high quality are the primary explanation why sales of Lenovo merchandise have elevated. Despite being cheap, the corporate's merchandise aren’t of poor quality, and some of its merchandise, resembling Thinkcenter, Legion and Yoga, are very fashionable for their design and productiveness. Based mostly on business knowledge, Lenovo was one of many quickest rising PC producers in 2018-198 with a robust market share of 23.4%. (Annual Report 2018/19)
Robust financial efficiency in 2018/19: –
The results of Lenovo's most up-to-date financial yr was spectacular. For the primary time, the corporate exceeded $ 50 billion in its history. Lenovo's complete revenue rose to $ 51 billion in 2018/19 from $ 45.35 billion in 2017/18. It's a serious turning point for Lenovo. On this approach, the company has efficiently established itself as a leading challenger to HP and Apple. Although the PC market continues to be filled with challenges, the corporate is constantly benefiting from product quality in recent times.
Lenovo has divided its market into 4 geographical areas – China; Asia-Pacific; Europe Middle East and Africa; Asia and America. China is Lenovo's primary market, accounting for 25 % of the company's internet sales in 2018/19. China's income for 2018/19 increased to $ 12.4 billion from $ 11.5 billion in 2017/18.
Lenovo's gross outcome additionally noticed healthy progress within the final fiscal yr, which rose by 18% to $ 7.4 billion in 2018/19 from $ 6.three billion in the final fiscal yr. America can also be a serious marketplace for Lenovo merchandise. The corporate generated $ 16.four billion a yr from 2018/19 America compared to $ 14.2 billion in 2017/18 last fiscal yr. (Lenovo Annual Report 2018/19)
Product Quality: –
Another major power of Lenovo is product quality. Lenovo's give attention to high quality in different areas isn’t just desktop computers, laptops, and smartphones. This is additionally the primary cause for the growing reputation of its merchandise around the globe. High quality Administration is Lenovo's key focus area and its high quality administration system built-in into the enterprise management system
Provide Chain Administration: –
Lenovo has also targeted on supply chain management. It had adopted a set of policies and procedures that help to acquire only high-quality uncooked supplies from its suppliers. Brand sources from hundreds of suppliers all over the world. Some element suppliers are limited. Nevertheless, the company rigorously selects the suppliers. Solely suppliers who exhibit the same dedication to safety and product quality could be a part of its supply chain. The corporate additionally encourages its suppliers to realize OHSAS 18001 certification by means of voluntary initiatives (Annual Report 2018/19).
Research and Improvement: –
Competitors in info know-how and sensible telephones has grown too excessive. There are a number of powerful manufacturers that do their greatest to take care of their market share and keep their robust place of their buyer base. Consequently, these gamers make investments rather a lot in advertising and research and improvement. Lenovo has taken the lead in personal info know-how. Its funding in research and improvement has increased as the business has grown in competition. The corporate invested $ 1.27 billion in analysis and improvement in 2018/19. Its investments in R&D within the last fiscal yr have been roughly the identical because the final.
Lenovo's market progress would not be attainable with out vital funding in research and improvement. To make sure quicker progress, the corporate must concentrate on high quality when in search of new progress areas.
Worldwide Progress: –
Lenovo has experienced impressive worldwide progress during its restricted lifecycle. The company sells its products to clients in 160 nations. China is its leading market, however other geographical areas, together with the Americas and the Asia-Pacific area, are its fundamental sources of revenue. Its reputation in Latin America has also increased rapidly, leading to greater earnings and gross revenue. Its IT merchandise and different intelligent units and knowledge middle providers are common around the globe. Its complete business is split into 4 geographical areas, together with China, Asia Pacific, Europe Middle East and Africa, and America.
Late Newcomer in Key Areas: –
Lenovo has built a number one position within the personal knowledge processing market worldwide, in different areas it’s relatively behind its rivals. Lenovo got here to late on sensible telephone know-how. Cellular computers are growing quicker and competitors on this space is gigantic. For the first time in 2018, the corporate introduced the income of its Cellular Business Group as it acquired the Motorola Mobility enterprise. Lenovo strives to deliver strategic change to its Cellular Enterprise Group. It has decreased its value to the Group and is making an attempt to simplify its product portfolio. In addition, in order for Cellular Business Group to succeed, it has shifted its focus to the primary markets, together with Latin America and North America. Extra time, regardless that Lenovo is able to achieve extra market share, competitors from main gamers resembling Samsung, Apple and different Chinese language brands will proceed to be difficult. In 2018/19 Lenovo's Cellular Enterprise Group registered a lack of $ 139 million earlier than tax. Nevertheless, this is still a big improvement from the $ 603 million loss in the earlier monetary yr (Lenovo Annual Report 2018/19).
The autumn of the PC market: –
With the growth of cellular communications in the PC market, it has hit it and confirmed some signs of stability in 2018 after falling for several years. Once more in 2019 there were indicators of a decline in the PC market. As well as, business leaders resembling Apple, HP, Dell, Acer and others on this business are in robust competition. Lenovo has maintained its main place in the PC business. Nevertheless, the sport is turning into increasingly more challenging as Apple brands, HP and Dell are aggressively investing in analysis and improvement, and are always updating their pocket book and desktop fashions for his or her clients. In the long term, Lenovo needs to focus extra on the growth of latest income sources, provided that the expansion in cellular communications has brought loads of uncertainty to the PC business
When it comes to advertising: –
 When it comes to advertising and promotion, Lenovo appears less aggressive than its strongest rivals. Its advertising strategy is much less targeted compared to leading rivals comparable to HP and Apple. Lenovo has an amazing product technique and has targeted primarily on middle-class shoppers. Nevertheless, a robust advertising strategy reduces the influence of competitors on the brand. This is not just Lenovo's weak spot. Chinese know-how manufacturers do not often work in addition to American counterparts in advertising. Lenovo's biggest reputation is product quality. Nevertheless, the Stringer model and advertising will help to take care of management in the business in the long run.
Cloud Service, AI and different fast growing areas: –
Lenovo's monetary efficiency is rapidly enhancing. It will help the model discover new sources of revenue and progress. Though brand performance is a key personal computing enterprise, it can’t depend on only one income. In addition to its cellular enterprise, it also must spend money on emerging and fast growing areas resembling 5G, Artificial Intelligence, IoT, and cloud know-how. It helps to increase Lenovo's product range and buyer base. The company can find more progress by investing in these areas
Digital advertising and customer base: –
Digital advertising is growing quicker than ever. It has grow to be crucial advertising channel for hundreds of thousands of corporations around the globe. Though Lenovo is a pacesetter in the PC business, it should also take part and retain its clients worldwide. The corporate must spend money on digital advertising and buyer engagement. With APart's on-line campaigns, e-mail advertising, social media, and video advertising, the corporate can use digital channels to draw its clients and better handle customer relationships. All main US computer systems, smartphones and cloud corporations are aggressively investing in digital advertising and buyer engagement. This also helps the company to raised manage competitive pressures.
The acquisition of Lenovo MOtorola MObility has begun to earn a revenue for the model. In 2018, the corporate despatched its income for the first time to Cellular Business Group. Acquisitions, if profitable, could be a good method to grow and broaden the market. Sooner or later, Lenovo can acquire extra corporations that improve their market share and improve their turnover. On a wholesome foundation, the company is able to grow quicker in the future. As well as, the acquisition of smaller corporations will assist Lenovo strengthen its product portfolio, making it more engaging and profitable.
Heavy Competitors: –
The most important menace before Lenovo is the competitors for private computers. The PCSD Group is the company's largest source of revenue. Nevertheless, Lenovo has been placed in a number of the largest gamers like HP, Apple and Dell. These brands are aggressively investing in product high quality, advertising, and research and improvement. With a view to keep its market share, Lenovo should also proceed to take a position aggressively in the areas talked about above. To beat competitive pressures, it wants to seek out new progress channels
Regulatory strain: –
PC regulatory strain is among the different main challenges ahead of PC brands. Personal IT corporations are dealing with heavy regulatory pressures all over the world. Then again, it has led to elevated compliance pressures and prices and in addition limits progress prospects. Along with other challenges in the PC business, the threat of brands like Lenovo is sort of high.
Business Wars: –
US Trade Wars in China affect both Chinese and American brands. The Trump Board has increased the tariffs, resulting in greater working prices. Another Chinese language brand, Huawei, was just lately on the receiving finish. Lenovo has not encountered main problems, however business wars proceed to have an effect on all main corporations. Nevertheless, in addition to Lenovo, its main rivals, reminiscent of APple and HP, have also felt the effect of a commerce warfare between two nations. China and the USA are both leading computing markets, and the worsening of relations between these nations is probably the most damaging factor for pc brands.
Financial Fluctuations: –
Lenovo is a worldwide enterprise and its profitability is affected by the market's financial performance it operates globally. Consequently, monetary modifications and change fee fluctuations might have an effect on its turnover and profitability. The influence of change price fluctuations on Lenovo's business in 2018/19 was extra severe than in the earlier yr. The web effect was a lack of $ 112 million in 2018/19 compared to a loss of $ 56 million within the previous monetary yr. (Lenovo Annual Report)
Lenovo has shortly risen to the highest of the PC business. With a high quality concentration, the corporate has shortly risen to the moveable and desktop market. One more reason for its progress is the pricing technique. The company introduced a variety of merchandise for center class consumers. These low-cost and high-quality products have helped to shortly broaden their market base. Nevertheless, the private IT market is diminishing as cellular communications improve. Consequently, the brand must also give attention to other areas to take care of its momentum. Its Cellular Business Group has began to deliver constructive outcomes, and for the primary time within the last fiscal yr, when the company acquired Motorola's mobility. Regardless of this, the smartphone and PC business are extremely difficult, and Lenovo needs to give attention to product high quality and analysis and improvement.
On the similar time, digital advertising and buyer digital engagement also needs to be the key focus of the model in a highly risky and regulated surroundings for secure performance. The American-Chinese commerce conflict deepens, and this affects Lenovo in a method or another. Its turnover has exceeded $ 50 billion for the first time in its history and is Lenovo's achievement. Nevertheless, keeping up with the tempo is a problem as it’s positioned on robust opponents akin to Apple, HP and Dell. Opportunities are rising in the 5G, AI, IoT and cloud computing areas. Lenovo has a strong foundation and could spend money on rising technologies to increase competitiveness. Focusing on advertising, branding and customer experience may even show you how to earn additional foot area, which is important to accelerate progress.
Lenovo Annual Report.