External Influences on Lenovo

External Influences on LenovoThe main purpose of this give notice (of) is to show the office of Lenovo from just project to multinational corporation and to analyze their counseling using some(prenominal)(prenominal)(prenominal)(prenominal) methods as gadfly and bone up epitome as headspring as Porters Five private-enterprise(a) Forces.Using pesterer sacrifices potential to determine the shock of extraneous environment (politics, frugals, society and applied science) and indirect factors on comp whatsoever. SWOT reveals the strengths and weaknesses of given organization. Combining these two methods makes analysis up to now more(prenominal) than precise.In its turn, Porters Five Competitive Forces helps to agnise the competition inwardly the indus supply.Lenovo is a wide example of a initiateicipation which utilise macrocosm and creativity, obstinacy and intercourse with traditioner as a joyride to make their way to the top.Today Lenovo is ane of leadin g PC vendors. They manufacture t adaptedts, laptops, ultrabooks, All-in-One PCs, desktops, nettops and bear accessories. Lenovo earns unique and durable products at re haley aggressive set point. And they atomic modus operandi 18 here to stay.IntroductionLenovo. The caller was established in Beijing, china in 1984 by el withal members of the Computer Technology Research Institute, they cal guide it the Legend Holdings. hardly in 2003, decision to expand exposeside Chinese market led to an un akin(a)(a) one budge the name of the fol gloomy. Legend swopd their name to Lenovo. nurture of Lenovo is combination of Le- (as part of Legend) and novo Latin ablative for bleak. In Chinese it toilette in like manner be understood as connected thinking or creativity. notwithstanding the fact that authoritative name of the company was introduced just in 2003, Lenovo already gained trust and loyalty of millions of nodes.The company has inducted from budget of 200000 kwai co mmissioned Liu Chuanzhi (founder of Lenovo) by Chinese government in order to mobilize computers which argon made in other countries. Lenovos first office was most 17 squ atomic number 18 meters. Mr. Chuanzhi once said It wasnt easy. The lowest thing you could do in the early 80s, as a scientist, was to go into business. chinawargon had a strict planned economy and there was b arely room for a freewheeling company like ours (Liu Chuanzhi for Asiaweek, June 13, 1997).First major win was a circuit board which enabled IBM computers to lick Chinese characters Han-card. ulterior on Lenovo started to create and distri juste computers using its feature brand.In May 1988, Lenovo looked for employees for the first time. They contribute placed ads on the cover of the chinaware Y push throughh News. Out of all respondents, 280 were selected to sit for a written exam. About 120 of the fuckingdidates were interviewed in person. Despite interviewers had authority to hire only 16 peopl e, 58 were given cracks. 18 people of these had graduate degrees, 37 had undergraduate degrees, and three students did not acquit university-level leading up at all. Their average age was 26. Future CEO of Lenovo Yang Yuanqing was among this base who introduced new name and expanded company on Europe and USA.In 1994 Lenovo became a publicly traded company after listing in Hong Kong.Later in 2002 Lenovo Group made partnership with Xiahua Electronics Stock society, giving the start of Lenovo mobile phone business. In 2008 Lenovo has sold its mobile department but then would pay $200 million to taint it back in November of 2009. Now Lenovo Mobile ranks third in terms of market sell of mobile phones market in China.On May of 2005 Lenovo Group denote the completion of the $1.75 one thousand thousand deal of acquisition of IBMs PC unit. That made companys yearbook r eventideue almost quadruple. Company which apply to fork up $3 billion in annual revenue now had nearly $13 bi llion. They became the knowledge bases third-largest PC vendor, behind Dell and Hewlett-Packard. still revenues are not the only attain Lenovo got from this deal. They watch acquired the ThinkPad brand. ThinkPad is ultra-resistant due to special casing, special keyboard structure that let piss drain through the laptop. Moreover it was one of first laptops with hard book block system, which could turn on emergency brakes thereby hand over data from organism just lost be get of physical damage of the book when laptop is dropped.Later Lenovo would face the closest rival on their way to the top Dell. It was a hard competition, it was a complex competition. The main job of Lenovo back in the days was a bit more blimpish way of making business. Dell single-valued functiond new and innovative methods to give away, spread and promote products. They spent on ads twice as more than Lenovo, their prices were glare and market share grew more and more. Dell even captured segments which used to be favorite ones of Lenovo.To overcome the enemy Lenovo started to increase place of brand. That means they started to examine name awareness among the customers, they delivered maximum possible customer satisfaction. They are lock up using those principles as core philosophy of the company.Nowadays, Lenovo has three main categories of laptops. ThinkPads are antecedented for productive work experience, uncompromised secured and ultra-reliable, solid and durable. IdeaPads are optimized for entertainment and multimedia. They have some enchantments in audio, video performance and possess both serviceable internal and beautiful remote designs. The third lineup is Essential. These products have slide fastener unnecessary they are always up-to-date, portable enough and reliable.The tablets are to a fault divided on Idea and Think lineups as comfortably as All-in-Ones and desktops. The principal stays the same. Idea for creativity and entertainment, Think for business and work.In 2012 Lenovo became the fastest growth company in the USA for 8 billet in a row. Actually, they are the only one who has a egression.In the third financial quarter of 2012, shipments of the company expected to reach 15.7 per cent of world-wide PC shipments. Lenovo would surpass Dell and HP.The electric charge and Vision of LenovoMission is the main goal, beliefs which push company to develop into new something more than just business. Mission is the reason why company does actually exist.Lenovos origins are in China their name has meaning so their mission is strong and inspiring as rise.Lenovo has a desire to manufacture the leading company of new world that is respected for break-through innovation and award-winning designs, timbre, to be loved for an ecosystem of devices, work. Become recognised as one of the best, most trusted and most head-respected companies to work for and do business with. And they are on the right way to reach the goal.Company strives t o be one that creates extraordinary, innovative and exceptionally grand PCs for its customers. They do not have formal restrictions and bonds which could distract or interfere from manufacturing best possible machines. Lenovo claims that they design exciting and innovative products, services to meet customers needs. And sometimes they even manage to exceed level of the expectations.Lenovo wants to do business from their own spherical point of view, own perspective and own commitment to building great technology for people who view technology as a tool to accomplish fascinating things.By having few categories of products, Lenovo does not put any effort on useless departments therefore does not waste resources and time.David Schmoock, chair of North Ameri puke Lenovo department said What I want to do is get to number one and be sustainable as number one.At the very basic level of the company there is one core principle that is extremely present momentant We do what we say and own what we do.So far the main goals company wants to reach are dowery customers, trust and integrity, innovation and entrepreneurial spirit.Lenovo. New World, New ThinkingPEST AnalysisPEST analysis in general measures a market, its potential, indicates emersion or decline, thereby market attractiveness. Actually, PEST analysis helps to determine SWOT factors.PEST analysis is a form that brush aside be used for describing the modeling of macro environmental factors that a company should have in mind forming its long-term strategical plans. Of course, the external factors may vary in signifi back endce to a given company found on the products and services that it produces and withal on the industry it is in.For any company which wants to win in the competitive marketing, such(prenominal) methods of analysis of the external factors and environment are the way to succeed.In this report PEST lead be used in order to focus on analyzing external environment of the Lenovo Corporation and try to foresee major influence of those external factors in their business environment.The letter P stands for political factors influencing companys market. Those are level of bureaucracy, laws and regulations, legalization and policies, rule of law, freedom of press, tariff controls and trade.Nowadays, computers are tightly linked with peoples feeling. From the last century computers were used in business and other areas and help factories, hospitals and other structures to increase exertion and interest. At the same time, new technology caused some new problems such as pollution of the environment, health and energy consumption. Considering these problems European mating, China and other countries encourage the Green IT. That means computer must not produce affray pollution more than specified, energy consumption must be no more than required. In Lenovo groups, the isopsophic index is lower than 30dB. in that locationfore, Lenovo has achieved in noise pollution section . Since China has a people of one and a fractional billion, there is more than enough labor and payment would not be too full(prenominal). That is the reason why many of assembly lines are Chinese, so Lenovo placed factory in China as well. When China coupled WTO in 2005, the export tariff for IT products has decreased to 9.1%. So these policies are encouraging business organization evolution to global.Next one is E. It stands for sparing factors such as interest rates and inflation, usable income, labor cost and supply, usurpation of globalization.Letter S is for social culture. It is social studies and pedagogy, life style attitudes and choice, population growth rate and age profiles, etc.And the last letter is T. That is for technological factors such as impact of energy technologies, increase in remote working, and current level of technological development, impact of technology on the work process and productivity.For economic, influence by the 2008 economic crisis, the world economic tends to going down. But in the worst time, Chinese government published the new economic policy which was positive financial policy and loose and comfortable monetary policy. The government also offered four- coulomb million RMB stimulates economic development (The Marketing oversight Center of China, 2008). For Chinas IT industry, this is a great opportunity to develop them. Then change the focus to the economic development. In 1950, the total trades of China complicate import and export was 11.3 hundred million dollars, but in 2008, it enhanced 25616 hundred million dollars. Also at home, the GDP increased with a naughty speedSo according to this chart, it very clear that Chinas GDP has achieved tolerable level and the disposable personal income has increased also (stats, 2009). So the quest of products result increase with the economic enhancing. In the other words, the IT market becomes big and Lenovo also has strength to competitive the market share because Lenovo not only produce computers, mobile phone also produced by them.For society culture, the population growth, lifestyle choice and attitudes, population health, education, social mobility and attitudes are influence the claim of utmost technology products. 60 years ago, 80% people in China were illiteracy, but under the new government value, in 2008, the Einschulungsrate f. of dis exchangeable education level has achieved a satisfactory levelIt is clearly that the education level has increased and the demand of high technology products also enhancing (Communist fellowship Learning, 2009). This federal agency also offered a huge market for Lenovo. On the other hand, because the globalization and influenced by the developed countries lifestyle, the Chinese people also become more global which live with a high level life and influenced by the education level, the lifestyle of Chinese people become more out-going and open enough (Human Geography Research Center, 2003) . So the consumption custom of modern Chinese people also offers a good developing environment to Lenovo. Also in the succeeding(prenominal) five to ten years, this situation leave be increase. At the same time, the social culture of China has changed from traditional feudalism to modern lifestyle which is more science and high technology in life.For technological, Lenovo was set by 11 scientists who worked in Chinese Academy of Science which is a governmental organization. So this situation offered a good technology run. In 2005, Lenovo has finished the purchase IBM, so the technology transfer from IBM also helps Lenovo make the Research developing activities and produce high quality products with high technology (Lenovo, 2005). At the same time, with the technology development, the communication theory costs and increased remote work can help the disparate corporations share their techniques and also good for Research Development activities. So all of these technological f actors can help Lenovo increase their competitive ability in the next five to ten years and the marketing share of IBM also belongs to Lenovo.For the legal section, here just mention two articles which can support Lenovo. Firstly, in light of article 6, Peoples Republic of China Consumer Protection, the government encourages and supports every person and organization supervises the punishable action which damages the consumers legal forcefulness (National Peoples Congress, 1993). So this law can reduce other organizations use illegal method to competitive in the marketing and its also a surety for Lenovo. On the other hand, in light of article 6, Peoples Republic of China Law on Product Quality, the government encourages apply scientific management method, advanced science and technology, support the products achieved or beyond the industry pattern or foreign standard. And give the award to the organizations whose products achieved or beyond the international standard (National Peoples Congress, 1993). So as an international corporation, Lenovo links the technology of IBM, they result produce the high quality products and received the government supports from the legal.Finally, for the honorable, because the increased of education level, the peoples diathesis also enhanced. So protect the legal power has become usual in the modern society. Then if the organization make illegal actions, it pull up stakes be ejected from the market by customers, such as never buy their products. Also for an organization, the ethical problems are faith, fair and good service. As Lenovo, their value are serve consumers, innovation, faith and fair (Lenovo, 2005). So this entire ethical development tendency is good for Lenovos business environment in the next five to ten years.In summary, the policies which about green IT from European Union and the export tariff which from Chinese government are good for Lenovos onward motion at the same time, the economic development of China and the increased disposable personal income also offering a big market to Lenovos development in the future day as the modern society, the population of the world was achieved 67-hundred million in 2007 (Unctad Report, 2008). It offers a huge number of customers also because the education increase, the lifestyle of modern customers is tend to high technology and high quality. On the other hand, the purchase of IBM also offers the technology transfer and the development mechanics of communication saved the communications costs and its good for international Research Development activities and international cooperation. At the same time, the law of Chinese government also supports and the ethical factors in the modern society are good for Lenovos improvement. So based on the analysis, in the next five to ten years, the promising major influences in Lenovos business environment are environment protection, international cooperation, the economic development, technology communi cation and Research Development, legal protection and ethical problems. But all of these tend to good for Lenovo in the future. So if the dodging department managers based on the external environment to make the strategic planning, Lenovo allow for take a great leap for their business in the next five to ten years.The PEST analysis is a model for reviewing and surveying a companys strategy or its set up in the market. It measures the market, on with its competitors from the viewpoint of a particular business. It is also used to describe the framework of macro environmental factors that a company should regard and take into good will. Of course, the external factors may vary in significance to a given company based on the products and services that it produces and also on the industry it is in. policy-making factorsEconomic factorsEconomic factor relates to the economy of the country itself, as well as market and trade cycles. Over the past years Walmart has had a horse barn ec onomic condition and had 11% growth totalling in $6.5 billion. wherefore Walmarts figure has been doing so well so far is because it takes into account not only the economy of the company, but also of the countrys economy in which they are setting up their business. Another reason for its success is that Walmart prefers to first keep in line the economical factors of the county before actually doing any business there. The main economical factors that are worth considering are economic stability and peoples purchasing power. Its pivotal to acknowledge these factors for doing business in the third world countries because any change in economy can increase the actual price of the goods and services, which the company offers to its customers and of course the demand for these products will go down. affectionate FactorsSocial factors are made up of lifestyle trends, major events and dissimilar influences, religious and pagan factors. Walmart has a tendency of evaluating and measuri ng social factors, just like economic factors, of a country they have chosen to do business in. Social values and frugality are also quite important factors. Walmart appeals to consumers with a rather low income, nevertheless, it ensures that the goods, products and services that they provide are apprised and accepted by their customers. It is a known fact that Walmart doesnt supply its stores with goods that are likely to cause various complaints from the clients and customers. The company makes good relationships with its customers in engaging and taking part in various public activities.Technological FactorsTechnological factors generally include various factors like maturity of technology, global communications and innovations, as well as technology legislation. Nowadays technology plays an immense part in the whole society. As a matter of fact, technology hugely improves quality of the products, however it tends to decrease the amount of time to promote and advertise the goods and services. Walmart was busy to accept new technology and to make effective and best use of it. It operates most of its logistics with the usage of a modern system called hub-and-spoke of its statistical distribution centres.Customers that shop at Walmart stores get the most benefits out of it. Walmart believes that by introducing ingrained products on the market, it can have a big and positive impact on the atmosphere around us and the worlds natural resources.Walmart exploits the newest technology such as brad new cash register and security system. In short, Walmart keeps up with technology innovations and adjusts very well to the changes in the world.Porters Five Competitive ForcesPorters Five Forces model is generally used in order to understand better the context of the industry in which the company is operating in and to see the attractiveness of an industry structure.By using this model we can see that Walmart is a strong independent company that has a stable growth, prof essional management and reasonably competitive prices. This model helps to look into the company more closely by assessing the potential menace of new entrants, the competitive rivalry within already existing companies, the threat of substitute products and goods, the negociate power of suppliers and finally, the bargaining power of customers.Threat of new entrants at that places always a possibility of new companies coming into existence, however in order to debate with such strong company as Walmart they will need a relatively large capital. Walmart is expanding rather fast and it practically leaves neither pass off nor room for other new companies to enter the competitive market. Above anything else, Walmart has first-class distribution systems, for example hub-and-spoke system that I mentioned before, as well as good locations and an enormous capital to be actually able to compete with new entrants.Competitive rivalryWalmart is a much bigger and more profitable company than its competitors, so the competition inside the sell industry poses no threat whatsoever to it. However, there are a few other strong competitors such as Target, which can bring out some fair competition to Walmart. To sum up, Walmart is generally onward of its competitors it is a global leader in the retail industry and has a firm position in the competitive market.Threat of substitute productsThere arent a lot of direct substitutes to Walmart, because stores in the retail industry sell products for everyday use mostly. However, there are some substitute products that can be a threat to the sales of branded products. Another threat can be put from specialized retail stores like electronics and various garments.There are stores such as Carrefour and Target, which can offer same goods at a similar price or even lower. Still, when it comes to Walmart, there arent many other stores that can actually replace its gismo and attractively low prices.Bargaining power of suppliersWalmart i s a huge customer to its suppliers and, thus, it has a lot of power, because in case it decides to switch to a different supplier, this would create a very scary tactic for its suppliers. It also has an preference to purchase goods from many various suppliers so if they decide to drop out some, this wont make a significant difference.Walmart definitely takes advantage of being one of the largest customers to such international companies as Kraft Foods and Gillette. Because of its strong position in the market, suppliers are more than willing to satisfy Walmarts requirements, as well as provide them with favourable terms of payment and various discounts. We can see this good relationship between Walmart and its suppliers through its enhancing success.Bargaining power of buyersThe customers will surely always be a threat to Walmart in the first place because there are so many competitors. The buyers decision tends to be based on the price and quality of the product, and also on the convenience. Usually consumers are price sensitive and their decisions are based mainly on the price itself. And if products are similar this will increase the rivalry in the industry, which will lead to lower prices and thus, lower profit.Also, Walmart is not in a noncompetitive market, but a competitive one, so the goods it offers can be replaced or substituted by its rivals. However, the company strives to please its clients by making the prices of their products and services similar to those of their competitors. Its profitability has proved that consumers are pleased with the chains reasonably low prices and its very convenient locations.ConclusionThe purpose of this report was to analyze the external factors that have a certain impact and influence on Walmart. There are some significant factors that became clear after the PEST analysis and Porters Five Competitive Forces analysis have been made. I found out that Walmart is one of the global leaders in the retail industry, whi ch has a great influence on various sectors. Walmart is still expanding to new locations and it is a growing strong company that has a firm position in the domestic market in the US and abroad as well.Unfortunately, Walmart, just like any other organization, isnt protected against the negative influence from various environmental factors, which may decrease the companys total revenues or even weaken the popularity of the whole company. However, despite all of the negative factors mentioned above, the positive impact of the external factors is much greater. Walmarts intention to help people save money so they can live better moves the company on the top position in the retail industry and makes it more attractive and appealing to existing and future consumers.RecommendationsIn my personal opinion the future success and survival of Walmart will depend on changing its attitude and becoming even more customer focused, as well as building even adpressed relationships that would broaden the product range and competitive prices. The company should take into consideration that the market is still rather new to foreign companies and that other retail stores are also expected to see in the nearest future, which will probably result in decrement of clientsWalmart is considered as one of the international leaders in the retail industry and I think it will keep its position for a certain period of time. However, I have to make a point that the company should also consider its forward motion and shouldnt rely in the fact that they are one of the best in the market.Whats more Walmart should take into consideration that the market is still rather new to foreign companies and that other retail stores are also expected to appear in the near future, which will probably result in reduction of clients.