NOTE: Free essay sample provided on this page should be used for references or sample purposes only. The sample essay is available to anyone, so any direct quoting without mentioning the source will be considered plagiarism by schools, colleges and universities that use plagiarism detection software. To get a completely brand-new, plagiarism-free essay, please use our essay writing service.
One click instant price quote
IBM/Lenovo The merger IBM/Lenovo has a serious influence on IT market: the purchase creates the third largest PC vendor in the world with $ 13 billion in revenue and 14 million units shipped trailing Dell Inc. and Hewlett-Packard Co. , and gives IBM greater access to the emerging Chinese market (Burt 2005). The matter is not only in the very fact of restructure of quite strong and influential business-direction of IBM but in possible changes in the structure of supply channels. Lenovo was a strategic partner of IBM. The company manufactured personal computers according to OEM agreements (notebooks and workstations ThinkPad and Think Center). In such a way, the merger of businesses was examined as a quite logical continuation of partnership between two companies.
IBM will be the preferred services and customer financing provider to Lenovo, while the Chinese company will be the preferred supplier of PCs to IBM (Zia Askari 2005). The customers also will have no objections as in fact they get used to computers under IBM logotype with the mark made in China. Lenovo Lenovo's history of success is one of the most popular legends in China. It is actively being spoken about as the sound example of Chinese economical miracle.
Lenovo uses cheap labor force, decrease in cost of production and simple construction of their PC and proposes cheap computers. As far as we know, Lenovo Group was founded more than 20 years ago and was known as Legend Computer trademark. Lenovo enjoys a leading position at Chinese IT market with the market share of 27 %. Lenovo also enjoys the first place at the Asian-Pacific Ocean region and is highly competitive to Japan. In such a way, so-called alliance between IBM and Lenovo will help to increase the volume of sales at those markets because IBM Company is known mostly as supplier of corporate solutions. IBM/Lenovo's Merger IBM company plans increase Lenovo's working staff by approximately 9, 000 of workers specialized in marketing, promotion, support manning and everything not related to manufacture.
As will readily be observed, all IBM laboratories responsible for development of configurations, design, PC testing will belong to IBM/Lenovo alliance. In such a way, the management of companies will not be afraid of the fact that share of business will affect legendary reliability of IBM corporation. How will computers be positioned? Shop floor productivity scheme is made up for 18 months. It means that during the period of adaptation product line will remain unchangeable and production of IBM/Lenovo will be mutually complementary and will be sold under the united brands IBM ThinkPad and IBM Think Center. IBM was mostly oriented at upper-class consumers including corporate customers, whereas Lenovo's production is mainly oriented at average customers and SMB segment.
Both companies have similar production at several price segments, however, they will undertake certain measures to avoid such dub in order to be competitive with HP and Dell. As far as we know, Lenovo received the right to use ThinkPad and Think Center brands during the 5 -year period. After this period the logotypes will remain unchangeable and will be actively promoted. However, IBM will focus attention that these brands are made by Lenovo.
The main goal of IBM will be to make Lenovo easily recognized company at the world IT market. By extension, Lenovo will become known as the company that makes ThinkPad (Spooner 2005) and the customers will associate Lenovo with brands ThinkPad and Think Center. Will the companies change their channels of sale and supply? IBM and Lenovo claim that IBM partners will remain with no changes.
The only change will consist of new contracts for supply of personal computers: they will be concluded with Lenovo. All marketing programs will remain the same. Speaking about new partners, the IBM/Lenovo alliance will allow them joining the business. The companies are guided by the main principle: differentiation of sale channels valid for prices and production line. What are the strategies the companies use? Lenovo's business is based on two-vector model.
The first direction is known as relationship model. Relationship model means that the company communicates with its customers directly. The relationship model is quite popular in IBM and Lenovo continues to use it working at the corporate market. According to it, Lenovo's employees work with the customers directly and propose them special configurations of products. The second vector is known as transaction model that was specially created for more massive market of end users and small-scale business. This model is mostly based on channel sales.
The partners are responsible for work with the customers. What are the motives of the merger? Although IBM will continue to sell, service, support and develop the products (Burt 2004), the company will derive lesser income, but will receive more qualitative financial profile. IBM will get more opportunities to sell its production and services in China. In such a way, the company will continue to develop its direction of sale of services, software and high-powered computers. Despite the fact that IBM contributed to transformation of PC into global phenomenon, the company receives low income and often suffers losses.
Besides, IBM will continue to have major research facilities in Raleigh, US, and Yahoo, Japan, while Lenovo will add to their R&D teams at three sites in China. This combination could result in some innovative products aimed at both the business and consumer markets (Bajarin 2005) Lenovo, in its turn, will get the opportunity to widen its sphere of influence. Lenovo tried to enter Spanish and other regional European markets in 2002 but in vain. The IBM/Lenovo merger will be a good opportunity to repeat the attempt. Bibliography Askari, Zia. (Wednesday, June 08, 2005). IBM-Lenovo: Merged To Succeed.
Retrieved July 19, 2006. web Bajarin, Tim. (05 / 16 / 2005). IBM-Lenovo: Marriage of conviction - Asia Computer Weekly. Retrieved July 19, 2006. web Burt, Jeffrey. (December 8, 2004).
IBM Customers Wary of Change in Wake of Lenovo Deal. Retrieved July 20, 2006. web Burt, Jeffrey. (May 2, 2005). Lenovo Completes Purchase of IBM's PC Business. Retrieved July 20, 2006.
web Spooner, John G. (May 11, 2005). Lenovo Thinks Hard About the Future. Retrieved July 20, 2006. web
Free research essays on topics related to: merger, personal computers, ibm, july 20, 2006
Research essay sample on Personal Computers July 20
