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External Influences on Lenovo

Keywords: lenovo pest, lenovo swot, lenovo five forces

The main reason for this record is to show just how of Lenovo from just project to international firm and to analyze their way using such methods as Infestation and SWOT evaluation as well as Porter's Five Competitive Pushes.

Using PEST allows to determine the impact of exterior environment (politics, economics, modern culture and technology) and indirect factors on company. SWOT shows the advantages and weaknesses of given firm. Combining both of these methods makes analysis even more exact.

In its change, Porter's Five Competitive Makes helps to understand the competition within the industry.

Lenovo is a great example of a business which used invention and creativeness, obstinacy and communication with customer as an instrument to make their way to the top.

Today Lenovo is one of leading Laptop or computer vendors. They make tablets, notebooks, ultrabooks, All-in-One PCs, desktops, nettops and own accessories. Lenovo creates unique and durable products at really extreme price point. And they're here to stay.

Introduction

Lenovo. The business was founded in Beijing, China in 1984 by eleven customers of the Computer Technology Research Institute, they called it the Star Holdings. However in 2003, decision to extend outside Chinese market resulted in another one - change the name of the company. Legend evolved their name to Lenovo. Name of Lenovo is combination of "Le-" (within Story) and "novo" Latin ablative for new. In Chinese it can even be understood as linked thinking or creativity. Despite the fact that current name of the company was unveiled just in 2003, Lenovo already gained trust and commitment of an incredible number of customers.

The company has started out from budget of 200 000 yuan commissioned Liu Chuanzhi (creator of Lenovo) by Chinese language government in order to distribute computers which are created in other countries. Lenovo's first office was about 17 square meters. Mr. Chuanzhi once said: "It wasn't easy. The cheapest thing you may do in the early '80s, as a scientist, was to get into business. China possessed a strict prepared economy and there is scarcely room for a freewheeling company like ours" (Liu Chuanzhi for Asiaweek, June 13, 1997).

First major win was a circuit table which enabled IBM computer systems to process Chinese language character types - Han-card. Down the road Lenovo began to create and spread computers using its own brand.

In May 1988, Lenovo looked for employees for the very first time. They have placed advertisements on the cover of the China Junior News. Out of all respondents, 280 were preferred to remain for a written exam. About 120 of the applicants were interviewed personally. Despite interviewers acquired authority to employ only 16 people, 58 received offers. 18 people of these had graduate diplomas, 37 got undergraduate degrees, and three students did not have university-level education in any way. Their average age was 26. Future CEO of Lenovo Yang Yuanqing was among this group who presented new name and broadened company on European countries and USA.

In 1994 Lenovo became a publicly exchanged company after listing in Hong Kong.

Later in 2002 Lenovo Group made relationship with Xiahua Consumer electronics Stock Company, providing the start of Lenovo mobile phone business. In 2008 Lenovo has sold its mobile section but would pay $200 million to buy it back November of 2009. Now Lenovo Mobile ranks third in conditions of market share of cell phones market in China.

On May of 2005 Lenovo Group released the completion of the $1. 75 billion deal of acquisition of IBM's Laptop or computer unit. That made company's twelve-monthly earnings almost quadruple. Company that used to own $3 billion in total annual revenue now got nearly $13 billion. They truly became the world's third-largest Laptop or computer seller, behind Dell and Hewlett-Packard. But earnings are not really the only benefit Lenovo acquired from this deal. They have obtained the ThinkPad brand. ThinkPad is ultra-resistant anticipated to special casing, special computer keyboard structure that let normal water drain through the laptop. Furthermore it was one of first laptop computers with hard disk block system, which could turn on crisis brakes in so doing save data from being just lost because of physical damage of the disk when laptop is dropped.

Later Lenovo would face the closest rival on their way to the very best - Dell. It was a difficult competition, it was a complicated competition. The main issue of Lenovo back the times was a little more conventional way of making business. Dell used new and progressive solutions to produce, spread and promote products. They allocated to ads twice as more than Lenovo, their prices were lower and market show grew increasingly more. Dell even captured sections that used to be favorite ones of Lenovo.

To overcome the opponent Lenovo began to increase value of brand. That means they began to raise name awareness among the customers, they supplied maximum possible customer satisfaction. They remain using those rules as core beliefs of the business.

Nowadays, Lenovo has three main types of notebook computers. ThinkPads are powered for profitable work experience, uncompromised secured and ultra-reliable, sturdy and durable. IdeaPads are optimized for entertainment and multimedia. They have some enchantments in sound, video tutorial performance and possess both functional inside and beautiful external designs. The 3rd lineup is vital. The products have nothing pointless; they may be always up-to-date, lightweight enough and reliable.

The tablets are also divided on Idea and Think lineups as well as All-in-Ones and desktops. The main stays the same. Idea for creative imagination and entertainment, Think for business and work.

In 2012 Lenovo became the most effective growing company in the USA for 8 quarters in a row. Actually, they will be the only one who may have a rise.

In the third financial one fourth of 2012, shipments of the company expected to reach 15. 7 per cent of world-wide Computer shipments. Lenovo would exceed Dell and HP.

The Mission and Vision of Lenovo

Mission is the primary goal, values which thrust company to develop into new something more than simply business. Mission is why company does actually can be found.

Lenovo's origins are in China; their name has interpretation so their objective is strong and inspiring as well.

Lenovo has a desire to be the leading company of " new world " that is well known for break-through creativity and award-winning designs, quality, to be cherished for an ecosystem of devices, services. Become named one of the better, most trusted & most well-respected companies to improve and work with. And they're on the right way to reach the goal.

Company strives to be one that creates extraordinary, ground breaking and exceedingly great PCs because of its customers. They don't have formal restrictions and bonds which could distract or interfere from making greatest machines. Lenovo says that they design exciting and ground breaking products, services to meet customers' needs. And sometimes they even manage to exceed level of the anticipations.

Lenovo wants to conduct business off their own global point of view, own point of view and own determination to building great technology for people who view technology as a tool to accomplish exciting things.

By having few categories of products, Lenovo will not put any effort on useless departments therefore does not waste resources and time.

David Schmoock, Chief executive of UNITED STATES Lenovo department said:" What I want to do is reach number one and be sustainable as number one".

At the very basic level of the company there is one core rule that is really important:" We do what we should say and own what we do. "

So far the primary goals company desires to attain are serving customers, trust and integrity, technology and entrepreneurial heart.

Lenovo. " NEW WORLD ", New Thinking

PEST Analysis

PEST analysis generally speaking measures market, its potential, indicates growth or drop, thereby market attractiveness. Actually, PEST evaluation helps to determine SWOT factors.

PEST examination is a model that can be used for talking about the platform of macro environmental factors that a company must have in mind building its long-term tactical plans. Certainly, the exterior factors can vary greatly in value to confirmed company predicated on the products and services which it produces and also on the industry it is.

For any business which wants to win in the competitive marketing, such methods of analysis of the external factors and environment are the way to succeed.

In this statement PEST will be utilized in order to focus on analyzing external environment of the Lenovo Corporation and make an effort to foresee major impact of those external factors in their business environment.

The notice "P" means politics factors influencing company's market. Those are level of bureaucracy, laws and regulations, legalization and insurance policies, rule of legislations, liberty of press, tariff controls and trade.

Nowadays, personal computers are tightly linked with individuals' life. From the last century computers were used in business and other areas and help factories, hospitals and other set ups to increase production and interest. At exactly the same time, new technology triggered some new problems such as air pollution of the surroundings, health and energy usage. Considering these problems EU, China and other countries encourage the Green IT. Which means computer must not produce noise air pollution more than specified, energy consumption must be no more than required. In Lenovo communities, the isopsophic index is leaner than 30dB. Therefore, Lenovo has achieved in noises air pollution section. Since China has a people of one and a half billion, there may be more than enough labor and payment would not be too much. That is the reason why many of assemblage lines are Chinese language, so Lenovo located manufacturing plant in China as well. When China signed up with WTO in 2005, the export tariff for this products has lowered to 9. 1%. So these policies are motivating business organization expanding to global.

Next you are "E". It stands for financial factors such as interest levels and inflation, disposable income, labor cost and supply, impact of globalization.

Letter "S" is designed for social culture. It really is cultural studies and education, lifestyle behaviour and choice, inhabitants growth rate and era information, etc.

And the last notice is "T". That's for technological factors such as impact of energy technologies, increase in remote control working, and current level of technological development, impact of technology on the work process and efficiency.

For economic, influence by the 2008 financial crisis, the entire world economic has a tendency to going down. But in the worst time, Chinese government publicized the new economic policy which was positive financial insurance policy and loose and comfortable economic policy. The federal government also offered four-hundred million RMB stimulates economic development (The Marketing Surveillance Middle of China, 2008). For China's IT industry, this is a great possibility to develop them. Then change the target to the economic development. In 1950, the full total deals of China include transfer and export was 11. 3 hundred million us dollars, however in 2008, it increased 25616 hundred million dollars. Also at home, the GDP increased with a higher speed:

So according to this chart, it clear that China's GDP has achieved sufficient level and the disposable personal income has increased also (stats, 2009). So the demand of products will increase with the monetary enhancing. Within the other words, the IT market becomes bigger and Lenovo also offers strength to competitive the marketplace talk about because Lenovo not only produce pcs, cellular phone also made by them.

For modern culture culture, the population growth, lifestyle choice and attitudes, human population health, education, public mobility and behaviour are influence the demand of high technology products. 60 years back, 80% people in China were illiteracy, but under the new federal value, in 2008, the Einschulungsrate f. of different education level has achieved a reasonable level:

It is evidently that the education level has increased and the demand of high technology products also boosting (Communist Party Learning, 2009). This example also offered an enormous market for Lenovo. Alternatively, because the globalization and influenced by the developed countries' lifestyle, the Chinese people also are more international which live with a high level life and influenced by the training level, the approach to life of Chinese language people are more out-going and wide open enough (Man Geography Research Center, 2003). Therefore the utilization custom of modern Chinese people also offers a good developing environment to Lenovo. Also in the next five to ten years, this example will be increase. At the same time, the interpersonal culture of China has modified from traditional feudalism to modern lifestyle which is more research and high technology in life.

For scientific, Lenovo was establish by 11 scientists who worked in China Academy of Technology which really is a governmental organization. Which means this situation offered a good technology support. In 2005, Lenovo has done the purchase IBM, so the technology copy from IBM also helps Lenovo make the Research & Development activities and produce high quality products with high technology (Lenovo, 2005). At exactly the same time, with the technology development, the marketing communications costs and increased remote work can help different corporations promote their techniques and also best for Research & Development activities. So all of these technological factors can help Lenovo increase their competitive potential in the next five to ten years and the marketing show of IBM also belongs to Lenovo.

For the legal section, here just talk about two articles which can support Lenovo. First of all, in light of article 6, People's Republic of China Consumer Coverage, the government motivates and supports every person and organization supervises the unlawful action which damage the consumers' legal vitality (National People's Congress, 1993). Which means this legislation can reduce other organizations use against the law method to competitive in the marketing and it's also a security for Lenovo. On the other hand, in light of article 6, People's Republic of China Rules on Product Quality, the government encourages apply methodical management method, advanced knowledge and technology, support the products achieved or beyond the industry standard or international standard. And give the honor to the organizations whose products achieved or beyond the international standard (Country wide People's Congress, 1993). In order an international firm, Lenovo web links the technology of IBM, they will produce the high quality products and received the government facilitates from the legal.

Finally, for the moral, because the increased of education level, the people's diathesis also increased. So protect the legal vitality is becoming normal in the present day contemporary society. Then if the organization make illegal activities, it'll be ejected from the market by customers, such as never buy their products. Also for a business, the honest problems are faith, good and good service. As Lenovo, their value are help consumers, innovation, faith and good (Lenovo, 2005). Which means this entire honest development tendency is wonderful for Lenovo's business environment within the next five to ten years.

In summation, the procedures which about inexperienced IT from EU and the export tariff which from Chinese language government are good for Lenovo's improvement; at the same time, the economic development of China and the increased throw-away personal income also offering a large market to Lenovo's development in the future; as the present day 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 training increase, the lifestyle of modern customers is have a tendency to high technology and high quality. On the other hand, the purchase of IBM also offers the technology copy and the development mechanics of communication preserved the marketing communications costs and it's really best for international Research & Development activities and international co-operation. At the same time, regulations of Chinese administration also helps and the moral factors in the modern society are good for Lenovo's improvement. So based on the analysis, in the next five to a decade, the likely major influences in Lenovo's business environment are environment safety, international cooperation, the economic development, technology communication and Research & Development, legal security and ethical problems. But many of these tend to best for Lenovo in the future. So if the strategy team managers predicated on the exterior environment to make the proper planning, Lenovo will need a great jump for his or her business in the next five to a decade.

The PEST research is a model for looking at and surveying a company's strategy or its position on the market. It measures the marketplace, along with its rivals from the point of view of a particular business. Additionally it is used to describe the construction of macro environmental factors a company should consider and consider. Certainly, the exterior factors can vary greatly in significance to confirmed company based on the merchandise and services so it produces and also on the industry it is at.

Political factors

Economic factors

Economic factor relates to the overall economy of the country itself, as well as market and trade cycles. Over the past years Walmart has already established a stable financial condition and got 11% progress totalling in $6. 5 billion.

Why Walmart's physique is doing so well so far is because it takes into account not only the current economic climate of the business, but also of the country's market in which they are simply setting up their business. Another reason behind its success is that Walmart prefers to first check the economical factors of the state before actually doing any business there. The main inexpensive factors that are worth taking into consideration are economic stability and people's purchasing ability. It's imperative to recognize these factors for conducting business in the third world countries because any change in current economic climate can raise the real price of the products and services, that your company offers to its customers and undoubtedly the demand for the products will decrease.

Social Factors

Social factors are made up of lifestyle fads, major events and different influences, spiritual and cultural factors. Walmart tends of assessing and measuring communal factors, just like economic factors, of your country they have got chosen to conduct business in. Social beliefs and frugality are also quite important factors. Walmart attracts consumers with a rather low income, nevertheless, it means that the goods, products and services that they offer are apprised and accepted by their customers. It is a known fact that Walmart doesn't supply its stores with goods that will probably cause various issues from the clients and customers. The company makes good relationships with its customers in interesting and getting involved in various public activities.

Technological Factors

Technological factors generally include various factors like maturity of technology, global communications and enhancements, as well as technology legislation. Nowadays technology takes on an tremendous part in the whole society. As a matter of fact, technology hugely boosts quality of the products, however it tends to decrease the timeframe to promote and advertise the products and services. Walmart was quick to simply accept new technology and also to make effective and best use from it. It operates almost all of its logistics with the usage of a modern system called hub-and-spoke of its syndication centres.

Customers that shop at Walmart stores get the most benefits from it. Walmart believes that by launching natural basic products on the market, it can have a large and positive effect on the atmosphere around us and the world's natural resources.

Walmart exploits the hottest technology such as brad new check out and security system. In short, Walmart helps to keep up with technology inventions and adjusts very well to the changes in the world.

Porter's Five Competitive Forces

Porter's Five Makes model is normally found in order to comprehend better the framework of the industry where the company is functioning in and see the elegance of an industry structure.

By by using this model we can easily see that Walmart is a solid independent company that has a stable expansion, professional management and realistically competitive prices. This model helps to check out the company more carefully by assessing the potential threat of new entrants, the competitive rivalry within already existing companies, the risk of substitute products and goods, the bargaining power of suppliers and finally, the bargaining electric power of customers.

Threat of new entrants

There's always a possibility of new companies getting into existence, yet, in order to compete with such strong company as Walmart they will desire a relatively large capital. Walmart is broadening alternatively fast and it virtually leaves neither chance nor room for other new companies to get into the competitive market. Above other things, Walmart has excellent distribution systems, for example hub-and-spoke system that we discussed earlier, as well as good locations and an enormous capital to be actually in a position to contend with new entrants.

Competitive rivalry

Walmart is a much larger plus more profitable company than its competition, therefore the competition inside the retail industry poses no danger whatsoever to it. However, there are a few other strong competitors such as Target, which can bring out some good competition to Walmart. Last but not least, Walmart is generally ahead of its rivals; it is a global innovator in the retail industry and has a firm position in the competitive market.

Threat of substitute products

There aren't a lot of direct substitutes to Walmart, because stores in the retail industry sell products for day-to-day use mainly. However, there are a few substitute products that can be a danger to the sales of top quality products. Another threat can be placed from specialized retail stores like electronics and different garments.

There are stores such as Carrefour and Concentrate on, which may offer same goods at a similar price or even lower. Still, when it comes to Walmart, there aren't many other stores that can in fact replace its convenience and attractively low prices.

Bargaining vitality of suppliers

Walmart is a huge customer to its suppliers and, thus, it has a lot of vitality, because in case it decides to switch to a new supplier, this would create an extremely scary tactic because of its suppliers. In addition, it comes with an option to buy goods from many various suppliers so if indeed they opt to drop out some, this won't make a significant difference.

Walmart definitely needs benefit of being one of the most significant customers to such international companies as Kraft Foods and Gillette. Due to its strong position on the market, suppliers are willing to meet Walmart's 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 electric power of buyers

The customers will surely continually be a risk to Walmart mainly because there are so many rivals. The buyer's decision is commonly based on the purchase price and quality of the product, and also on the convenience. Usually consumers are price hypersensitive and their decisions are established mainly on the purchase price itself. In case products are similar this will improve the rivalry on the market, which will lead to lower prices and thus, lower profit.

Also, Walmart is not in a monopolistic market, but a competitive one, therefore the goods it includes can be substituted or substituted by its competitors. However, the business aims to please its clients by making the prices with their products and services very much like those of their opponents. Its profitability has turned out that individuals are pleased with the chain's fairly low prices and its very convenient locations.

Conclusion

The reason for this survey was to investigate the external factors that have a certain impact and effect on Walmart. There are a few significant factors that became clear after the PEST evaluation and Porter's Five Competitive Makes evaluation have been made. I found out that Walmart is one of the global leaders in the retail industry, that includes a great effect on various sectors. Walmart is still expanding to new locations which is a growing strong company that has a firm position in the home market in the US and overseas as well.

Unfortunately, Walmart, just like any other firm, isn't protected resistant to the negative impact from various environmental factors, which might reduce the company's total income or even weaken the recognition of the whole company. However, despite every one of the negative factors mentioned above, the positive impact of the exterior factors is much greater. Walmart's purpose "to help people spend less to allow them to live better" moves the company at the top position in the retail industry and makes it more appealing and appealing to existing and future consumers.

Recommendations

In my own opinion the future success and success of Walmart will rely upon changing its frame of mind and becoming even more customer concentrated, as well as building even closer relationships that could broaden the merchandise range and competitive prices. The business should take into consideration that the market is still alternatively new to overseas companies which other shops are also likely to appear in the nearest future, that may probably lead to reduced amount of clients

Walmart is considered as one of the international market leaders in the retail industry and I think it will keep its position for a certain period of time. However, I must make a spot that the business should also consider its campaign and shouldn't count in the actual fact that they are among the best in the market.

What's more Walmart should take into consideration that the market is still somewhat new to overseas companies and this other retail stores are also expected to appear in the near future, that will probably result in reduced amount of clients.

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