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LENOVO GOES GLOBALTHE CHALLENGE AHEAD

Company Background When it began twenty five years ago, the company now known as Lenovo Group Ltd. was little more than a glorified delivery service, a venture launched by academic researchers in Beijing who earned cash by distributing personal computers of prominent foreign brands. Lenovo Group was formerly a PC Division of its Beijing-based parent company, the Legend Holdings Ltd.. It grew fast from a humble start and has since established itself into a known brand with quality management. Legend Holdings, the parent company, has yet to complete its ongoing reform of shifting ownership from the state to private shareholders. Legend Chairman Liu, who was 40 years old when the company started and turns 65 this year, is laying the groundwork for further restructuring and optimization of the Lenovo parent. A big step came September 4, 2009, when China Oceanwide Holdings Group bought a 29 percent stake in Legend for 2.75 billion yuan, becoming its third-largest shareholder. A group of 640 company employees collectively hold 35 percent stake while CAS downsizes its control but still retains the largest share, 36 percent. Shaking off the legacy of state ownership and preparing Legend to list on the A-share market are two strategic goals of the company that appear to be reachable. Liu implemented a flexible bonus system to motivate and retain talents shortly after the company was founded. In 1994, the year Lenovo Group was listed on the Hong Kong stock market, Liu also introduced a plan to allocate 55 percent of Lenovo's shares to the state and 45 percent to employees This 55-45 plan was rejected by the Ministry of Finance (MOF). Nevertheless, CAS later decided to return 35 percent of Lenovo's shares to early employees, rewarding company pioneers. During a company restructuring in 2001, MOF approved 35 percent profit participation rights for employees. This allowed early employees to comfortably exits, leaving room for new leaders. Liu said the transfer of 35 percent to employees, at a time when his own share was less than 2 percent, was conducive to talent stability. Legend will no longer need government approvals for internal company decisions. An increased autonomy will give Legend a good opportunity to create long-term employee incentives that ensure management stability for the company and its subsidiaries, to consolidate its management philosophy and corporate culture, as well as to help pave the way in seeking for Liu's successor. Equally important

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is that the companys privatization and its eventual listing on A-share will provide a systematic and financial guarantee for Legends sustainable growth regardless of personnel changes. Oceanwide Chairman Lu Zhiqiang, 57, is an old acquaintance of Liu. In terms of economic vigor, the two men are relative equals. They also share a commitment to settling Legend's outstanding issues, even at the cost of diluting shares. Zhou Qiren, Dean of Beijing University's National School of Development, comments positively on the reform that puts Legend on the road to full privatization."This change in shareholder structure for Legend Holdings will transform the company into a normal, privatized enterprise," Zhou said. "The deal demonstrates a 'great leap' in thinking, as its implementation reflects the leadership's ability to study and weigh the whole situation." Figure1:

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Lenovo Goes Global In 2004, the company captured global attention with its US$1.75 billion acquisition of International Business Machines (IBM) Corp.'s Personal Computer Business -- a deal that boosts Lenovo's plans to turn itself into a global company with a recognized brand. Yang Yuanqing Chairman and President of Lenovo Group, oversaw the closing of Lenovo-IBM deal. Lenovo's acquisition move featured a new model for a Chinese company to go global. Formerly known as Legend Computer, Lenovo Group (the PC Business) has long been at the top of the list of Chinese companies with the potential of becoming a global brand. It came to life in 1984, when China's market-embracing policies began to create new opportunities for local entrepreneurs. Enterprising Chinese academics began to engage in economic ventures (xiahai) to bring them bigger returns for their intellectual inputs by leveraging their connections to university research centers and engineering their know-how to create business opportunities. Liu Chuanzhi, founder of the company, graduated with a degree in radar communications from the Xian Military Communications Engineering College of China in 1966, just as China entered the frenetic and violent years of the Cultural Revolution. During that period of persecution, he and his classmates were sent to Guangdong to do farm work, according to Lenovo's Web site. Four years later, Liu was recalled to the world of research, securing a post at the elite China Academy of Sciences in Beijing. He remained there until the early 1980s, when the new policies of Deng Xiaoping blessed the previously heretical concept of wealth creation. Liu and 10 other researchers launched Legend Computer with US$25,000 in capital from the academy. At first, the firm simply bought and distributed IBM computers and Hewlett-Packard printers. In 1990, the company began designing and manufacturing its own line of computers under the Legend brand. Four years later, it went listed on the Hong Kong stock exchange, though the academy maintained majority control. Liu had capitalized on his former connections in the military university to secure state support on contracts & financing. Lenovos Aspiration in the Purchase The rise of Lenovo is one of the great growth stories in the world's most populous country and is touted as a sign of China's emerging economic prowess. Using the country's vast pool of cheap labor, the company pressed production costs ever lower, luring customers with no-frills home computers. By 2002, Lenovo was China's biggest computer seller for seven consecutive years, capturing more than one-fourth of the market and 12 percent of the larger Asian market excluding Japan. But despite Lenovo's leading position, earnings growth in its core computer business had been flat since 2002," said Joe Zhang, China analyst at UBS Securities Asia Ltd. in Hong Kong. "Lenovo faces competition

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on the high end from Dell and HP and on the low end from everyone else. It's squeezed in the middle. Besides, China's market is increasingly open to foreign capital. That means Lenovo's desire for a global reach is largely motivated by its realization of a vulnerable position at home. "We are losing our brand advantage in China's domestic market," Liu said in an interview, "We seek to build an internationally recognized brand, which will require plenty of courage and capital." In going after IBM's personal computer business, Lenovo would speed up its global reach in one giant leap. IBM gives it a proven distribution channel in markets around the world. By owning IBM's operation, Lenovo would possess around 7 percent of the global market for personal computers, and becomes the world's No. 3 PC maker. IBMs Position in Selling its PC Business On July 12, 2004, IBM and Lenovo announced a definitive agreement under which Lenovo Group will acquire IBM's Personal Computing Division. The combination of IBM's PC division and Lenovo will result in the world's third largest PC business, quadrupling the size of Lenovo's PC business. Lenovo was a complementary partner for IBM, in terms of products, capabilities and geographic presence. The new PC business combines IBM's strength in global enterprise and notebook segments, with Lenovo's consumer expertise, and leading market position in China. It was decided that the new global entity would be headquartered in New York, with US-based management. Yang Yuanqing, Chairman of the new group, moved physically to North America to oversee Lenovos operation. The agreement also allowed IBM to continue over the next three years in providing financing and maintenance services for their PC solutions The IT sector is one of the most dynamic in the market. To bring long-term value for clients, companies need to continually reinvent themselves. IBM has talked about bifurcation in the industry, where it identifies two main winning models in the IT sector: one is a high-value, high-innovation, solutions-led model, and another low-cost model that requires economies of scale and requires differentiation through other means. To optimize business gain, IBM preferred to develop a partner network with business partners that IBM can leverage to support its portfolio and integrated businesses. Such network extends IBM's reach and capabilities in areas where IBM clients are better served with a partner. The sales of PC Operation to Lenovo has been consistent with IBM's strategy to focus on the high value segments (such as software and services) for its corporate clientele where it can best leverage its value add, and owning those assets and capabilities where it can create significant value. Over time, this action aims to improve IBM's financial profile, with less revenue volatility and improved profit margins. To this end, IBM had taken a number of key portfolio actions. Since 2002. IBM had invested about US$9b to acquire over 30 companies, including Rational software and

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PricewaterhouseCoopers Consulting. The acquired leading edge technologies and capabilities have been integrated into the companys business offerings and solutions. In addition, IBM has divested several businesses, generally where it lacked scale or market opportunity, such as hard disk drives and displays. The net effect of these acquisitions and divestitures is an improved profit profile for IBM. The New Lenovo Group At the time of the acquisition, Lenovo was a publicly traded company with a market cap of about US$2.5b. It was the largest PC manufacturer in China hiring over 9,000 employees. After the acquisition, Lenovo could address both the consumer and enterprise market, through the manufacture and sales of branded desktop and mobile PCs, peripherals and mobile devices. The possession of a global brand also helps Lenovo to penetrate and gain share in the premium PC market. But the technology world is littered with examples of seemingly strategic acquisitions that went awry. There is increasing volatility associated with a PC hardware business. Many were skeptical on whether a cost-conscious Chinese company would have the stomach to pump in billions of dollars in rescuing what for IBM has been a source of grief and eroding profits. Neither did Lenovo possess seasoned management or marketing know-how to compete in the international market. The new Lenovo PC business, under the name as Lenovo Group, generated a revenue of US$12b and a worldwide market share of 8% based on its 2003 results. The new business carried approximately 19,000 employees. This included approximately 10,000 IBM employees, of which more than 40% were located in China. The global headquarter was set in New York, with principal operations in Beijing and Raleigh, North Carolina. The Company leveraged sales offices in every geography, and held research centers in China, the United States and Japan. In the first two years after merger, senior management of the Lenovo Group was primarily US-sourced, with strong leadership from IBM senior executive management. Lenovos China operation managed manufacturing, which provided opportunities for substantial leverage. The merger agreement included a broad-based, multi-year business relationship, including branding, preferred provider relationships, and provision of services through the transition period. The Lenovo products could be co-branded for 60 months to leverage the power of the IBM ThinkPad brand. Through the alliance, IBM will provide marketing support and demand generation services for Lenovo products, and integrate Lenovo products in its service offerings. Lenovo could leverage IBM's sales force of approximately 30,000 professionals, as well as utilize IBM's established channels such as `ibm.com`. IBM Global Financing will be the preferred provider for leasing and financing services, and IBM Global Services will be the preferred provider of services for Lenovo PC's. IBMs Global Services will continue to provide fee-based remote customer support, maintenance, and other PC related technical support to Lenovo's clients. With these preferred

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relationships, IBM could provide an integrated PC solution to its enterprise and SMEs business clients--Lenovo's hardware, together with IBM's services and financing offerings. Leadership in Transition in the New Business Set-up In 2004, Stephen Ward, senior vice president and general manager of IBM's Personal Systems Group, became the first CEO of Lenovo Group at the close of IBM's sale. The new CEO of Lenovo indicated that he would rely on product innovation, not aggressive pricing, to capture PC market share. Ward's strategy had disappointed some solution providers who hoped the deal would make IBM more pricecompetitive against Dell and Hewlett-Packard. IBM consistently declined to create low-priced machines. Many solution providers hoped that the IBM-branded systems under Lenovo would benefit from reduced manufacturing costs that would make them a more aggressive player in the PC market. But the primary concern of many Lenovo watchers has been whether notoriously conservative enterprise IT managers would accept a change in their ThinkPad suppliers. The company also had to deal with the U.S. government's concerns that Lenovo could pass intellectual property secrets to the Chinese government, which owned a 27 percent stake in the company. Lenovo would face more scrutiny as a Chinese company. The company recorded disappointing financial performance in its Americas business, facing competition from rival computer maker Dell. At year end 2006, it reported a US sales revenue at US$1.04 billion, compared with US$1.15 billion for the same period a year earlier. This represented a loss of US$3 million compared with a US$25 million profit a year back. In January 2007, the company announced that its American president and former IBM executive, Scott Smith, left Lenovo to pursue other interests. Industry observers indicated that it was not easy to mix the Lenovo culture and IBM, as the IBM people were used to very good benefits and were relative laid back compared to their competitors. Whereas Dell management were used to being aggressive and go out to get new clients, IBM executives relied more on large corporate accounts to meet their sales quotas. These relationship-based accounts only needed to be maintained with a minimum level of work. Structural Changes Under New Management Bill Amelio, the new Chief Executive of Lenovo Group, aims to boost the company's brand in the U.S. and break into key emerging markets. In 2006, Mr. Amelio left his job as head of Dell Inc.'s Asia operations to take the top job at Lenovo Group. The 48-year-old CEO carries a mission to bring Lenovo out from under IBM's shadow and transform the company into an industry with the same brand clout as its chief competitors, Hewlett-Packard Co. and Dell, Number 1 and 2 leaders in terms of global market share.

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Among his first-year accomplishments: Lenovo laid off 1,000 people at the cost of USD 100 million. Such targeted layoffs pushed the former IBM computer arm toward profitability. Amelio said that the cost-cutting programs helped Lenovo respond effectively to intense pricing pressure and slow demand in the enterprise space. He intended to further slash costs while making every effort to attack the overseas markets. He aspired to expand Lenovo's reach from the business market to consumers. In his first year on the job, Mr. Amelio had poached five senior Dell executives, including Gerry Smith, an expert in supply-chain management, which had long been one of Lenovo's weak points and one of Dell's strengths. Amelio also added that Lenovo has stopped relying on IBM's sales force as a leading business driver. In early 2007, Lenovo also hunted another global senior executive of Dell, Yolanda Conyers. The former Dell executive led the supply chain team of Dell, supervise global diversification business and take charge of human resources and market diversification policies, including training, maintenance, extension and education. Lenovo expected experiences of Yolanda Conyers to help Lenovo achieve success in the global market, and promote cultural integration. This signifies that Lenovo is making personnel preparation for its global restructuring. Mr. Amelio has had a few headaches of his own at the helm of Lenovo, ranging from an anti-China sentiment in the States to a major battery recall after a Lenovo laptop caught fire at Los Angeles International airport. Earlier in 2007, members of the U.S. Congress voiced security concerns about the federal government's contracts with Lenovo, saying that they were worried about buying computers from a Chinese company. Former IBM engineers say things have changed for the better since the merger--and in ways you might not expect. Yang, Chairman of Lenovo Group, has kept research and development spending constant as a percentage of revenues. As more work is being done in China, where engineers cost onefifth what they do in the U.S., he gets more bang for the buck. He has also dedicated 20% of his R&D budget for cutting-edge ideas. Under IBM management, the unit had focused largely on cost-cutting. "It used to be, can we save a penny?' Now it's what new ideas do you have?' One novel concept already has come from the Beijing engineers: NovaCenter, a living-room-style combination of PC and TV that's now selling in China. In addition to Microsoft's Windows, it has an entertainment-oriented operating system that was created by Lenovo. In early 2007, Lenovo Group reported its third-quarter net profit in 2006 rose 23%, its best quarterly results since purchasing IBM's PC arm in 2004. Net profit grew more than expected to US$57.7 million, or 67 US cents per share, in Q4 of 2006. Sales for the Hong Kong-listed company increased 0.3% to US$4 billion while its worldwide PC shipments grew about 8%, slightly above the industry average of 7%. The company also recorded strong performance in a number of areas. In addition to its

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brisk pace of growth in China, where the company has a long history, Lenovo saw 20% growth in its core notebook business and 2.2% growth in desktops. Lenovo CEO Bill Amelio said the company has made strides in building acceptance of its Lenovo brand worldwide. New Products, New Markets Lenovo has launched "Idea", a new consumer PC brand, in India. The range includes IdeaPad notebooks and IdeaCentre desktops that combine cutting-edge and easy-to-use technologies such as face recognition, Dolby Home Theater surround sound and dedicated gaming controls. Lenovo planned to roll out its marketing campaign called "Ideas everywhere" to complement the product introduction in April 2008. "We're bringing Lenovo's expertise in design and engineering to

consumers with our Idea-branded PCs. Lenovo designed its Idea-branded PCs for the way people live, work and play with cutting-edge features. We are confident we will grow our consumer business by blending innovative technologies like facial recognition with stylish designs to enhance the way people use technology in their personal lives," said Liu Jun, senior vice president and president, Consumer Business Group, Lenovo. "Lenovo has a significant focus on the consumer segment in India. The new IdeaPad and IdeaCentre products will deliver to our customers, an experience and products that are inspiring, dependable, exciting and inspirational," said Anil Philip, executive director, Transaction Business, Lenovo India. Each notebook offers a number of extra features that aims to maximize the experience that they were designed for. LENOVO also introduced in the second half of 2007 its new consumer computers, the Idea Brand, into the United States market, expanding in a region it entered in 2005 with the purchase of IBMs PC business. Lenovo, which had its third-quarter revenue of US$4.43 billion in 2007, had plans to sell one of its new computers in the United States for US$799 and a second toward the end of January 2008 for US$1,199, building in the process a premium brand for its products. The third model, whose price Lenovo has not yet released, would go on sale in April 2008. Among the Lenovo computers features is software that recognizes users faces, allowing them to log in to their PC and various applications without passwords. The machines also have multimedia technology that lets users listen to music, play videos and view pictures. They come in a variety of colors including red, blue and black. The unveiling of three new notebook computers with advanced features is part of a broader expansion by Lenovo into the global consumer PC market. Starting January 2008, the company also plans to sell the new consumer computers in France, Russia, South Africa, India, Australia and Malaysia, with special emphasis to be directed towards the emerging key markets. It already has sold consumer computers in China, India and Singapore, but is hoping the new products will help boost its global

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market share and brand recognition. In the United States, its sales had formerly been limited to businesses. Lenovo introduced the new computers as it faces fierce competition from Acer Inc., which sells personal computers to consumers through Best Buy Co. and other major U.S. retailers, as well as in Asia and Europe. Acer bought U.S.-based Gateway Inc. in October, part of an effort to edge out Lenovo as the worlds third-largest PC maker. Notebook computers are typically more expensive than similarly configured desktops and carry greater profit margins. CEO Bill Amelio spearheaded Lenovos expansion outside China to target customers from Hewlett-Packard Co and Dell Inc, and pledged to extend employee cuts. Lenovo, Asia's biggest PC maker, plans to increase sales of laptops to consumers, a market that researcher IDC says is growing three times faster than the corporate segment. By then, Lenovo has manufacturing facilities in Beijing, Huiyang, Shanghai and Shenzhen, China, and Pondicherry, India, and a new fulfillment center in Whitsett, North Carolina. Lenovo is expanding its global footprint with its two more new, state-of-the-art manufacturing plants and fulfillment operations centers in Monterrey, Mexico, and Baddi, Himachal Pradesh, India. Each of these facilities will support regional customer requirements including product assembly and configuration, distribution services and logistics - and additional value-added services - to meet the need for Lenovo products in these economically vital markets. The Baddi plant became operational in the third fiscal quarter of 2007, while the Monterrey facility is scheduled to come online by mid-2008. The new plants will enable Lenovo to significantly increase global production capacity of Think-branded and Lenovo-branded PCs. The total combined economic value of these investments is estimated at more than $30 million, including the cost of construction, tooling, salaries, payroll, taxes and additional contributions to the local, regional and national economies. "These plants are an investment in Lenovo's future that leverages our world-class manufacturing base in China and extends it globally to satisfy demand for Lenovo products in vital economic opportunity areas," said Gerry P. Smith, senior vice president of Lenovo's Global Supply Chain, at the opening of the plants. "This introduction, together with the new facilities we recently announced in Shanghai, China, and North Carolina, will help us to improve our competitiveness and cost structure as well as accelerate our ability to reach new markets and buyer segments. We are also actively scouting locations in Central and Eastern Europe and anticipate shortly announcing a similar type of installation mirroring what we are reporting today," Smith said. Impact of Global Financial Crisis Lenovo's Notebook computers continued to be the largest contributor to total sales. Notebook

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shipments in the second quarter of 2007 were up 21 percent year over year, and consolidated sales grew 4 percent to US$2.6 billion, or 60 percent of total sales for the quarter. Lenovo only recently began notebook shipments of its entry-level segment in consumer markets outside of China, impacting its overall performance compared to the market. Yet, the outbreak of the global financial crisis dampened all business performance. On September 30, 2008, Lenovo Group reported its Q2 business results for the PC operation--a consolidated sales of US$4.3 billion for the quarter were flat year over year, which generated a pre-tax income of US$39 million and a basic earnings per share at 0.27 US cents, or 2.10 HK cents. Net cash reserves as of September 30, 2008, totaled US$1.5 billion. On February 5, 2009, Lenovo Group released its 08-09 fourth quarter (up to December 31, 2008) business performanceits quarterly sales reached US$3.59 bil, a drop of 20% from its US$4.49 revenue a year earlier. It also registered a loss of US$96.72mil., which contrasted sharply from its US$172mil gain a year before. This was the first loss of Lenovo in 11 quarters. Major losses were reported in Europe and in the American markets, while profits in Asia and China also eroded. Lenovos net cash reserves also dropped to US$1.0billion.

Figure 2: Lenovo's Turnover and Revenue Growth, 07-09

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Figure 3: Lenovo's Operating profit and Margin Change, 06-09

"Due to the impact of the global economic downturn, and a shortfall in the execution of our strategic plan, Lenovo's performance did not meet our expectations," said Lenovo Chairman Yang Yuanqing. "Going forward, we will address the situation by optimizing our operating structure to improve efficiency and reduce expenses, to increase our focus on execution, and to accelerate growth in emerging markets and the consumer sector." Adding Lenovos President and CEO Bill J. Amelio, "Under these adverse market conditions, balancing growth and profitability are equally critical. This means that we must respond by aggressively pursuing growth opportunities while continuing to manage our operating structure even more efficiently. It's important to remember that Lenovo has a strong, proven global engine for innovation, and a worldview that is built for exactly the kind of economic, social and political conditions we see today. We have a business strategy that is solid and fundamentally strong, and we intend to stay the course that has proven successful over the long term." Latest Reform IDC, a US research company, estimated that global PC shipments will have a 4.5% fall to 282 million in 2009. Consequently, many PC-making leaders like HP and Dell have decided to lower the cost by cutting employees and making operations more efficient. "Globally, PC shipments have dropped in recent quarters as spending by companies and consumers has decreased. But in China -- where about 40 million PCs are sold annually, making it the world's second largest PC market after the U.S. -- sales have continued to grow, albeit at slower rates." Lenovo announced further management reform in Q1 of 2009.

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Leadership Transition During the interim of economic recession, the companys founder Liu Chuanzhi was requested by the Board to return as chairman of Lenovo in February 2009 and Yang Yuanqing would replace Bill Amelio as chief executive. Amelio who finished his three year contract as CEO has agreed to stay on as an advisor to Lenovo. In the second quarter of 2011, Lenovo Group achieved its global number 2 PC maker status after its record worldwide market share. On Nov. 2, 2011, Lenovo announced that its CEO Yang Yuanqing, who previously served as Lenovo Chairman from 2005-2009, will reassume the dual role of Chairman and CEO. Company founder Liu Chuanzhi, who had successfully helped turn the company around, will become honorary chairman of Lenovo. He will focus most of his efforts on Lenovos parent company, Legend Holdings, to significantly accelerate growth, build core operating assets, and drive Legend Holdings to a targeted IPO between 2014 and 2016. Lenovo also announced today that John Zhao, CEO of Hony Capital Limited, and a director and senior vice president of Legend Holdings, is joining Lenovos board of directors as a non-executive director, effective on November 3rd. He brings world-class credentials and perspective to Lenovo. Future Vision Under the challenge of this global financial crisis, Lenovo has streamlined its production to two product groups--the Think and Idea branded products. The Think brand serves mainly the corporate customers, while the Idea brand targets mostly at individual consumers. Lenovo will further reorganize its regional operations into two business groups, focusing on the developed and emerging market respectively. Milko Van Duijl, Lenovos president in EMEA (Europe, the Middle East and Africa) region, will be in charge of the mature market group, such as United States, Japan and Australia market. Next, the emerging market which includes China, Russia, India and Africa will

be led by Chen Shaopeng, President for Asia Pacific Region and Russia. Yang Yuanqing, the CEO of Lenovo, said that Lenovos most urgent task is to build a faster, more streamlined organization so that it can capture the growth opportunity as quickly as possible and pay more attention on their core business. Yang also said that though different markets have different characteristics, Lenovo will adopt similar market strategy. Earlier Liu said that Lenovo would focus on introducing netbooks--an introductory segment of PC that support the 3G telemarket, as well as on emerging markets such as China, Russia, India and Africa. This is because many large companies in mature market
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have decided to decrease their IT investments due to the financial crisis. In a recent Email to the staff in Lenovo, Liu said that Lenovo would be recovered within a year.
Sources of Information: 1. Peter S. Goodman, IBM Deal Puts Lenovo on Global Stage; Buyout of the U.S. Company's PC Division Highlights China's Emergence, The Washington Post, December 8, 2004 2. Edward F. Moltzen & Craig Zarley, Lenovo's Strategy Still A Question Mark Computer Reseller News, September 6, 2005, 3. Tom Krazit, One year later, Lenovo Looks for Second Act CNET News.com, May 1 2006 4. Jane Spencer, Chinese Computer Giant's Chief has Global Agenda --- Lenovo CEO Amelio Targets U.S. Growth, Emerging Markets, The Wall Street Journal Europe, November 17, 2006, 5. Lenovo CEO Yang Yuanqing Adds Chairman Role as Founder Liu Chuanzhi Turns Focus to New Challenges, news.lenovo.com, November 2, 2011 6. Lenovo Earnings Rise 23% China Knowledge Press, February 2, 2007, 7. Lenovo to Cut Jobs Worldwide, SinoCast China IT Watch, March 1, 2007 8. Yang Yuanqing, 2008/09 Interim Results Announcements Lenovo Group Ltd. 9. BPOVIA Lenovo begins its reform plan, May 8, 2009 Case Analysis Case Scenario: Most global financial analysts are putting up a pessimistic business forecast for 2012. Mr. Yang Yuanqing, who just reassumed his Chairman and CEO position of Lenovo, decided to call for a special board meeting to discuss about the potential threats and develop adaptive strategies to stay afloat and capture opportunities amidst uncertainties, with particular focus in the emerging markets.

Case Questions: 1. Analyze the business impact of Lenovos acquisition of IBM PC. What lessons Lenovo had learnt in attempting to capture mature markets with own brands? What competitive advantages Lenovo

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may possess in entering other emerging markets? 2. The economic regression in the US and Euro-zone will drastically affect consumption in the developed world and export manufacturing in the developing economies, which are the niche markets Lenovo should pay more attention, and how can it capture such opportunities? 3. What are the major obstacles Lenovo, as an emerging market MNC from a socialist country, faces in going global? How can it gain recognition and acceptance by the more sophisticated customers both in the personal and corporate PC markets? 4. Identify the major obstacles Lenovo may encounter in managing a team of international executives. What caused the pre-mature departure of Stephen Ward from IBM and then Bill

Amelio from Dell? What are the leadership gaps China enterprises face in their globalization move, and how can global leadership be nurtured in Chinese firms?

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