Case Study Description of Lenovo: Countering the Dell Challenge
Since its inception in 1984, Lenovo Group Ltd. had grown from a company engaged primarily in the distribution of imported computers to being the largest IT corporation in the People 's Republic of China. Although Lenovo was able to hold onto its market leadership position, competitive pressure from Dell, IBM, Toshiba, and HP was increasing, with the company taking large hits, mainly at the hands of Dell. Engaging in a series of price wars to retain the low end of the consumer segment, Lenovo was also struggling to maintain its stronghold in corporate sales to Chinese government ministries and schools. With the PC market in China maturing rapidly, Lenovo's main challenge was to develop a business model that would not only combat Dell's direct selling model but would also take advantage of the group's traditional strengths. With a view to meeting the group's projected target of becoming a Fortune 500 company by 2010, Lenovo was looking toward tapping international markets as well as exploring product diversification strategies in the local market. Lenovo's predicament highlights the growing pains many Chinese companies faced in their efforts to become global players while defending their domestic market share from foreign rivals.
Swot Analysis of "Lenovo: Countering the Dell Challenge" written by Yigang Pan, Kavita Sethi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lenovo Dell facing as an external strategic factors. Some of the topics covered in Lenovo: Countering the Dell Challenge case study are - Strategic Management Strategies, International business, Pricing, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Lenovo: Countering the Dell Challenge casestudy better are - – increasing energy prices, cloud computing is disrupting traditional business models, technology disruption, increasing transportation and logistics costs, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion,
increasing commodity prices, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Lenovo: Countering the Dell Challenge
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lenovo: Countering the Dell Challenge case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lenovo Dell, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lenovo Dell operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Lenovo: Countering the Dell Challenge can be done for the following purposes –
1. Strategic planning using facts provided in Lenovo: Countering the Dell Challenge case study
2. Improving business portfolio management of Lenovo Dell
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lenovo Dell
Strengths Lenovo: Countering the Dell Challenge | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lenovo Dell in Lenovo: Countering the Dell Challenge Harvard Business Review case study are -
Learning organization
- Lenovo Dell is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Lenovo Dell is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lenovo: Countering the Dell Challenge Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Lenovo Dell digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lenovo Dell has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Training and development
– Lenovo Dell has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lenovo: Countering the Dell Challenge Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Lenovo Dell is one of the most innovative firm in sector. Manager in Lenovo: Countering the Dell Challenge Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Lenovo Dell in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Strategy & Execution industry
– Lenovo: Countering the Dell Challenge firm has clearly differentiated products in the market place. This has enabled Lenovo Dell to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Lenovo Dell to invest into research and development (R&D) and innovation.
Ability to lead change in Strategy & Execution field
– Lenovo Dell is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Lenovo Dell in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Lenovo Dell has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Lenovo: Countering the Dell Challenge HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Lenovo Dell is one of the leading recruiters in the industry. Managers in the Lenovo: Countering the Dell Challenge are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Lenovo Dell are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High brand equity
– Lenovo Dell has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lenovo Dell to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Lenovo Dell has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lenovo Dell has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Lenovo: Countering the Dell Challenge | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lenovo: Countering the Dell Challenge are -
Low market penetration in new markets
– Outside its home market of Lenovo Dell, firm in the HBR case study Lenovo: Countering the Dell Challenge needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Lenovo Dell products
– To increase the profitability and margins on the products, Lenovo Dell needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Lenovo Dell supply chain. Even after few cautionary changes mentioned in the HBR case study - Lenovo: Countering the Dell Challenge, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lenovo Dell vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Lenovo: Countering the Dell Challenge HBR case study mentions - Lenovo Dell takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Lenovo Dell is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Lenovo Dell needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lenovo Dell to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Lenovo: Countering the Dell Challenge, is just above the industry average. Lenovo Dell needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lenovo: Countering the Dell Challenge, in the dynamic environment Lenovo Dell has struggled to respond to the nimble upstart competition. Lenovo Dell has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Lenovo: Countering the Dell Challenge that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Lenovo: Countering the Dell Challenge can leverage the sales team experience to cultivate customer relationships as Lenovo Dell is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Lenovo: Countering the Dell Challenge has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Lenovo Dell 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Lenovo Dell has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Products dominated business model
– Even though Lenovo Dell has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Lenovo: Countering the Dell Challenge should strive to include more intangible value offerings along with its core products and services.
Opportunities Lenovo: Countering the Dell Challenge | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Lenovo: Countering the Dell Challenge are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lenovo Dell can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lenovo Dell in the consumer business. Now Lenovo Dell can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Lenovo Dell to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lenovo Dell is facing challenges because of the dominance of functional experts in the organization. Lenovo: Countering the Dell Challenge case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lenovo Dell can use these opportunities to build new business models that can help the communities that Lenovo Dell operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Lenovo Dell can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Lenovo Dell to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lenovo Dell can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Lenovo: Countering the Dell Challenge, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Lenovo Dell can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Developing new processes and practices
– Lenovo Dell can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Building a culture of innovation
– managers at Lenovo Dell can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Buying journey improvements
– Lenovo Dell can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lenovo: Countering the Dell Challenge suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Lenovo Dell has opened avenues for new revenue streams for the organization in the industry. This can help Lenovo Dell to build a more holistic ecosystem as suggested in the Lenovo: Countering the Dell Challenge case study. Lenovo Dell can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Lenovo: Countering the Dell Challenge External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lenovo: Countering the Dell Challenge are -
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Lenovo Dell business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Lenovo Dell in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lenovo Dell can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Lenovo: Countering the Dell Challenge .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Lenovo Dell.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lenovo Dell with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Lenovo Dell needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Lenovo Dell can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Lenovo Dell
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Lenovo Dell.
High dependence on third party suppliers
– Lenovo Dell high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lenovo: Countering the Dell Challenge, Lenovo Dell may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Environmental challenges
– Lenovo Dell needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Lenovo Dell can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Consumer confidence and its impact on Lenovo Dell demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Lenovo: Countering the Dell Challenge Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Lenovo: Countering the Dell Challenge needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Lenovo: Countering the Dell Challenge is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Lenovo: Countering the Dell Challenge is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Lenovo: Countering the Dell Challenge is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Lenovo Dell needs to make to build a sustainable competitive advantage.