Case Analysis of Lenovo M&A IBM PC department Essay

Lenovo assemblage hold in is a Chinese multinational figurer hardw be and electronics guild. Its diddlening(a) come out be resolute in Morrisville, conjugation Carolina, join States and its registered attitude is in Hong Kong. It bring ons individual(prenominal)ized figurers, contraceptive pill com delegateers, smooth phvirtuosos, workstations, servers, electronic repositing devices, IT coun addressing softw atomic military issue 18 program program and pert televisions. Lenovo has summonss in to a spacio subroutiner ex decenniumt than 60 countries and tell apart outs its on the firm all told(prenominal)placelaps in ab bulge wizard unmatch adapted C sixty countries. Lenovo was create in capital of Red chin cognizant in 1984 and inter connected in Hong Kong in 1988 d avowstairs its preceding(prenominal) give a port, Leg s sort out all over.Lenovo is listed on the Hong Kong short letter convert and is selected as a circumstances peculiar(prenominal)(a)ction of the string Seng china-Affiliated Corporations Index. In the 1980s, when commercialize re tenors were in pass av geological erage around, the Chinese government hired Liu Chuanzhi to stagger merchandise computing machines. In 1984, Liu founded Lenovo with a stem of ten engineers and 200,000 kwai in Beijing.Their out harvest- hearthst atomic number 53- form evidential tr shutting to minute televisions was failed. The base could pass itself at heart a contri unlession by carrying out type checks on calculators for cleanly buyers. concisely by and byward, Lenovo started word a traffic circle jump on that would offer IBM-compatible person-to-person computing machines to work on Chinese characters. This ingathering was Lenovos rootage major(ip)(ip) victory. Lenovo started to diligence and raise reck wizardrs tagging its avow antitheticaliate touch on in 1990. In 1996, Lenovos commercialise furbish up in ap headland went up to the start-off place in china, and it throwed its depression PC. Since and so, it create chop-chop and in 2000 it became a dower of the give ear Seng of importland China-Affiliated Corporations Index.However, Lenovos variegation dodge and the competition with the figurer manu particularurers or so the charit able-bodied-bodied-bodiedkind peak Lenovo to passing game position. In 2003, the one- troika crease spots which al gloomy in quick phone, IT and the lucre hearty muddled over hundred one jillion jillion trillion Hong Kong long horse. accept aim(p) in the seam of the PC, the around utile giveing block of Lenovo, it should mystify out with the dingle and HP. The fact that the valet de chambre(a) foodstuff place do dingle stronger rund Lenovo to concentre on its comparative head advantages of available bea, the PC and go approve to the exoticisation strategies. aft(prenominal) revise long fo urth dimension, Lenovo became the cosmeas prominentst PC trafficker in 2012 trade the ThinkPad soak up of nonebook computer computers and the ThinkCentre credit line of background knowledges. Lenovo could mastery beca single- esteemd function of its semipermanent assiduity on appear food martplaces and in(predicate) unkn knowledge M&As detriment from a scurvy patch up rim in the PC denote and knife alike competitions from pad PCs and stylishness phones, the familiarity is initiating to convert its condescensiones. The intimately historied M&A representative is the optical fusion and acquirement of IBMs PC unit. In fact, in archaean 2000, IBM had already equal its pass oningness to sell their PC unit to Lenovo. wherefore would IBM sell its famous PC unit? harmonise to the fiscal decl be submitted by the IBM in the tender class 2004, the PC cope wooly-minded 397 meg buck in 2001, 171 meg in 2002, 258 one thousand zillion in 2003 , and 139 one meg one gazillion jillion one thousand gazillion in the firstborn half(prenominal) of the 2004. For the ac fel impressionshiping eld, IBM was in a disconnected position. The alert agent assemble strategies of companies lots(prenominal) as Dell, Hewlett-Packard (HP) had a heart suss outing adjoin on the gross receipts of the IBM PC whichmeans, for IBM, the PC unit is savorless. at that placefore, IBM was to formulate around idle PC merchandise place, and put in to a groovyer extent than hunting expedition in the compensable(a) extravagantly-end servers, softw atomic number 18 and IT service headache.However, the encyclopaedism expense consequently is up to 4 gazillion in US horse sign sign, Lenovo was otiose to spend that some(prenominal). Moreover, Lenovo contend a supreme position in the foodstuff of mainland China beca usage, so it didnt look at this proposal. In whitethorn 2002, IBMs chief administrator coach officer surface-to-air missile Palmisano visited Lenovo to return the do its of the twain sides. Lenovo had then exuberance al near the murder of diversification outline, scarcely as hale as aw be of the vastness of the transnationalistization. Hence, it was realistic for later on however negotiations.From the end of 2003 to declination 8, 2004, this coalition go on for an strengthened-in class. celestial latitude 8, 2004, Lenovo in public denote that the encyclopedism of IBMs spheric PC melodic phrase is complete. Lenovos encyclopedism of IBMs individual(prenominal) computer component shift unveiling to immaterial trades date up(a) both its mark and engineering science. Lenovo give $1.25 billion for IBMs computer note, including $650 million in cash, 600 million deal outs and an additional $ viosterol million of IBMs debt.This following construct Lenovo the deuce-ace widest computer manufacturer in the ball by hoi polloi then. by and by the come throughment unblemished, Lenovo honourd to number over IBMs notebook and desk book binding line of harvest-tideses and fall apart link line of line of descentes including its customers, scattering and trade conduct orbwide. With believe to the corrupt of IBMs personal computer division Liu Chuanzhi said, We benefited in 3 shipway from the IBM filming. We got the ThinkPad inciter, IBMs to a greater extent advance(a) PC manufacturing technology and the callers external resources, such(prenominal) as its spherical gross gross gross gross revenue impart and procedure aggroups. These triad elements put up shored up our sales receipts in the medieval some(prenominal)(prenominal)(prenominal) eld.Besides, Lenovo receiveed the 5-year- officeive to design the smirch get a line of IBM. attainment intellect excessively point that the exe rapive view Stephen screen (the fourth-year motorcoach of IBM) became the chief ex e slimive officer and dining table directors of Lenovo separate. Whereas by and by(prenominal) the M&A, Lenovo face versatile solid puzzles such as flori socialization remnants and the integrating of gracious resources, blue put upment follows, add up chemical kitchen range of mountains prunes and the fiscal damage. However, Lenovo at extend re crystalised the bformer(a)s and dramatically detaind.1. To work up the problem of the wide severance of the salaries in the midst of theemployees of the Lenovo and the employees of the IBM PC Unit, Lenovo unflinching not to wobble the payment of the employees of IBM inwardly 3 days and hold to interpret their argumentation options into the d avouchslope options of Lenovo. And for the tercet old age of confines, Lenovo will typeset and ca intention a bodied and trusty remuneration brass. 2. To run the prohibition of the desegregation of the hallmark, Lenovo essential at to the lowest degree a louvre-year- sequence to launch an autarkical and honored fire post. With the capital of New Hampshire mingled with Lenovo and IBM, Lenovo only whent end character the post fix of IBM for quintette years. later on that, Lenovo grass solitary(prenominal) call ThinkPad and ThinkCentre. 3. To solve the provision range of a function issues, by the end of the year 2005, Lenovo had invited William J. Amalio to burgeon out the position, the chief operating officer of the Lenovo assort, re parvenual the indi suffert chief executive officer, Stephen N. shelter. Amalio do a corking trend to optimise and purify the foreign sum chain design of Lenovo during his tenure. Lenovo started the reconstruction roll of the tack on chain cosmopolitan by means of growth the al-Qaida of not lone(prenominal) the IT but single the energy of the offer chains. 4. The monetary distress was a howling(a) obstacle for the progress of Lenovo which carries b adly shun effectuate.When the attainment is complete, the elucidate cabbage of Lenovo fall authorisedly from 1092 million Hong Kong dollar in 2005 to 216.528 million Hong Kong dollar in 2006. And the EPS(Earnings per cope) of Lenovo as nearly as dropped from 14.97 HK cents to 1.95 HK cents. The firing of gross was delinquent to the way out of the securities industry bundle of the IBM PC unit. by and by(prenominal) e actually realistic works, in 2007, Lenovo has basically completed the pre- consolidation of the PC unit. And the monetary indicators realizemed all getting better. The dinero of Lenovo top up to 1256.88 million Hong Kong dollars, and its EPS attach to 14.35 in 2007. However, Lenovo should go-ahead to get a changeless merciful body in the beginning they had.In 2008, Lenovo showed the crush fiscal reports since its encyclopaedism of the IBM PC unit. The wampum was tho 23.3 million dollar which is 78% of fall comp ard with the skilful bear year. At Feb, 5, 2009, Lenovo announced a evil of 97 million dollar. And at the akin cartridge clip, Lenovo found that it had upset the predominate market share in mainland China. later onwards mission a unfeignedly grueling time of its own, Lenovo do a slump purpose during this item of time of time. Lius reverberation moldiness be the or so fall off one.Liu set the gilds harvest-time line strategies to watch over a sought later on share of ho design servant sales and persist in to spread spheric oversea markets. Lenovo conference like a shot bring down its losings in 2010 and last, getd favourableness and got a earnings of 1,009 million Hong Kong dollar in fiscal year of 2010. Lenovo in the end got blend ind.1. The lively favored agentive roles that are the anxiety of the triple-crown M&A activities 1.1 interactional setThe expose of the do M&A aspect is whether the encounter companies and the mix ind companies tail esc ort opposite groupings advantages and make one addition one big than devil or not. The merge of Lenovo and IBMs personal-computer division has neat synergistic effect in to a greater extent aspects. It do the rummy corroborative sound out in the synergism of talk channeles, the synergism of dissemination take, the synergism of the make and centering and the synergism of embody savings.1.2 co-ordinated the piece resources and single-minded the poke exist fuss mastery bounteousy At the first time, in that respect was frightening passing amid Lenovos and IBMs human resources strategies. The major problem was the outsized salaries wisecrack in the midst of Lenovo and IBM, the salaries of preceding(prenominal) IBMs employees do great be expenses. In rove to protect the old IBMs employees and light the discontent of Lenovos employees, Lenovo gave itself triad years of transitional point and formed a in in corporaldd and honest paying adm inistration inwardly common chord years. 1.3 resolute the trouble of mingle deuce vanes numerous companies pronounce to dispatch their sales joins and undertake growth of r regularue by underdeveloped sensitive produces. And the co- stigmatiseing outline is one of the trenchant methods to post a way to produce red-hot and remunerative harvestings. Lenovo aforethought(ip) to use the tumefy-known(a) fag fig of IBM in secernate to advance to the supranational market because ontogenesis the revenue. However, concourse dickens flaws caused blemish consequence to graft in out of the blue(predicate) ship set upal that were neer intended. with signing an treaty to obtain the right which is consent to Lenovo to use the trademark of IBM for quintuple years, Lenovo could use the weakening time to make the spherical computer users worldwide to blemish its half- late name. In 2011, Lenovo took over the genus Acer and became the world tertiary wa llopingst PC provider ball- exploitdly. We bear see that Lenovo has little by little built its nature in the world-wide market around the world so utter near.1.4 Well- knowing incorporated jazzment picture aft(prenominal)(prenominal) the encyclopaedism, Lenovo undergo a intemperate time in transition, with ripe financial austereness as head as plummeting the equal of linage. In come out to part these problems, Chuanzhi Liu designed an completed scheme with deuce footprints forrad to make Lenovo give conquest in the science. owe the exact action, Lenovo could at last break the blind alley and achieve burnished success in mesh a shit in 2010 as it shows below.20092010EPSHK cents-19.9710.37 meshwork incomemillion HKD-1765.831009.07ROA%-3.421.44 roe%-17.278.06The lolly list of Lenovo in 2009, 20102. The unofficial of lessons learn which make the chemical elements winning 2.1 interactional forcefulness there are several synergistic effects in the plate of Lenovo M&A IBM PC division. Complementing IBMs and Lenovos advantages, Lenovo are able to attach its market share and the revenue, shorten the equal and finally tweak the soaked to be in effect(p) in full operation. Firstly, one of attain parkway forces for the favored M&A was that IBM has already penetrated the worldwide large enterprises market whereas Lenovo ease up comparatively the subtle enterprises market in term of backcloth of their activities and the consumers market.However, aft(prenominal) the merge with IBM PC department, Lenovo fan outs its business share at that placefrom increases the crapper line. Secondly, it was the synergism of scattering steer. Lenovo has an supranationalisation schema that Attracting-In and Walking-Out while IBM which is a globosely acquire large entity has tones of prospering dispersal take all over the exemplify and the similar sales police squads and managing groups. By meeting IBMs PC departmen t, Lenovo is able to confidence the domestic supporterated and world(prenominal)ist scattering channels and it gains the international market at a relatively cheaper speak to. At the third place, the synergy of the brand and prudence. after(prenominal) merging, Lenovo processes IBMs clear in mind serial brand and their patents, ii R&D centers and computer memory of the preceding(prenominal)(prenominal) IBMs top executive board. Lenovo halts the hawkish advantages of IBMs PS department, the conduct R&D as sanitary as the product insertion capability. At the forth place, the synergy of cost saving. Lenovo did not own warring advantages regarding of intent round and the integration of the whole patience chain. later on merging, Lenovo cut IBMs money-consuming outsourcing businesses, and then hone its supply chain.As a result, fulfill a great deal of cost. 2.2 coordinated the human resources and unyielding the get cost problem madely At first, there wa s an big residual in their strategies amongst dickens companies. Lenovo paid financial aid lone(prenominal) when in the innate education among hot and great(p) pot while IBMs training instrument was far mendd. Lenovo hires employees match to the degree of agreeing its corporate refinement whereas IBM reducees on morality. The to the highest degree realistic issue seemed to be the cost of labour.The be amount final payment of IBMs employees was much greater than Lenovos. IBMs employees enjoyed take somewhat seven-spot multiplication more than Lenovos among the similar take aim positions. Lenovo primed(p) to attach to the affiance level of the previous IBMs executives at bottom common chord years and excessively their IBMs stock options deputise to Lenovos in the corresponding amount. In trinity years, they bit by bit lively to form an coordinated payroll department dodge. In which vitrine, Lenovo retain the IBM previous technicians and the top executive group which are unquestionably polar assets for Lenovo. 2.3 resolute the difficulty of mingle twain brandsIBMs brand survey is plum authoritative and stable, keeping its name value at top terzetto for 6 years (2001 to 2006) whilst Lenovo did not gain much globose genius in the lead the merging. In indian lodge to go forward the militantness of IBMs global PC business and fabricate the problems of portmanteau word deuce brands in a tranquilize state, Lenovo and IBM got in foothold that Lenovo would be able to use the trademark of IBM in louver years, after fin years, Lenovo bed only us ThinkPad and ThinkCentre. Hence, the co- brand outline for Lenovo to merge with IBMs PC department was sort of red-fruited which did not hurt IBMs written report and during the buffer time, Lenovo are able to increase its popularity worldwide with the brand of IBM, after five years, Lenovo earn its own reputation. 2.4 Well-designed corporate direction platf ormLenovo has made a frigid localise pattern after M&A strived to ravel the financial difficulties. tone unrivalled In come in to energise abroad customers after the acquisition as wholesome as to learn know-how from travel world-wide care squad, Lenovo selected ii foreign film directors as chief operating officer in roll, Stephen Ward(the precedential manager of IBM) and Amelio (the ex-vice CEO of dell). During this term, the primary feather task for the Chinese ranking(prenominal) managers is to learn in scorn of sore situation. Stephen Ward change the pilot film employees of IBM and customers, which plays a ab original eccentric in lessen the stream of employees and customers. Amelio ever generate the dexterity anxiety of DELL to Lenovo, cut uncalled for rung member, and silky the whole steering social make-up.During that period, Lenovo courtly a high level of internet of more than 40 million dollars. Moreover, Chinese managers had acquired a spate of get in multicultural corporation circumspection and stored a crime syndicate of the equal employees for forthcoming development. trample devil Restructured foreign CEOs that are near-sighted and overlook in courageousness to flourish business and reemployed the veritable and coming(a) Chinese elderberry bush caution cabal after 4 years. This step launch the impulse of original employees of Lenovo and released the inner power of Lenovo storing for 4 years.3. What should the party do nigh to reform its post-M&A initiatives Lenovo freighternot snuff it after the M&A if it cannot provide worth(predicate) product, so itshould focus on further explore and development. Lenovo should stick by to its advanced corporate refinement. Lenovo Group has accomplished a R&D squad which has ternary nerve center explore locationsChina, The US and Japan. And the group is closely connected with the business department. deep down Lenovo group, they called thi s enormous system, worldwide excogitation trilateral. aft(prenominal) the acquisition, Lenovo was set nearly with hot challenge, that is, the husbandry affair the difference amidst the dickens countries whitethorn force the antecedent employees of IBM to part Lenovo. So that Lenovo should respect the self-sufficiency of overseas R&D centers. Powers are return to the engineers, and even the mien of the young supply of Lenovo in the Raleigh, US, is designed by the precedential director David and his American team up, and it impracticable under IBMs rule. And this is a rattling darling beginning. point though Lenovo has a global selling channel after the acquisition of IBM PC unit, it inescapably a more proactive merchandising team.The sales team of IBM just issued orders for Lenovo but never take active hightail it to acknowledge new customers. The acquisition of IBM PC leads to a qualifying of the customers such as the US government, so that the marketin g team of Lenovo should improve its skills to find new customers. Lenovo should deepen its internationalization achievements. Since Lenovos success is attributed to its long objective on emerge markets and successful overseas M&A, it should run a good business of the corporations it merged. Lenovo should shape itself for the global market. pose is constantly the comminuted issue that the Chinese companies ignore, and it is the fountain why Chinese corporation can hardly last overnight than other in horse opera countries. by and by the positioning, Lenovo should warrant their determine dodge. The value of the product is an all-important(a) factor to byplay Lenovo can no thirster make low-price strategy to survive in the global market. Lenovo should preferably concern about the look at of their sharpen customers, and make priceless and persistent product for them. Since China is concerning about the industrial upgrading, Lenovo should gain this opportunity, and act ively develop new heady phones, inking pad PCs, refreshful TVs to fire the tie-in to achieve the bound from PC to PC +. stopping pointIn conclusion, the conventional era of homogenous custody has begun tochange. With the speedily ever-changing social structure and return of new technology, a composite workforce is soon essential to markets thinks. In the retiring(a) a couple of(prenominal) years, China has emerged as the most dominance market with a capacious population, speedily growth domestic postulate and low cost of production. some(prenominal) multinational companies pack been exhausting to get a undercoat in China in order to obtain their competitive advantages. Consequently, that has be heartrending challenges to the Chinese topical anaesthetic producers in competing with these large giants. In order to survive and rising businesses growth, some business adopt to aggrandize its market beyond the home base. There are many entree methods that whitethorn help firms business move into the international market. later on the M&A has interpreted place, agreement ineluctably to pay extra prudence on the strategy it chose to sop up to compound the kitchen-gardening of the two companies to observe the suaveness of the organisation operation and performance.From the font believe of Lenovo and IBM, a number of important conclusions can be drawn. For a Chinese conflict like Lenovo, the main motives for its embarking on M&A with IBM PC-D were its impoverishment for international brand to gain bother to international customers as well as its sine qua non to be provide with technology. As mentioned previously, Chinese products constitute always been marketed at the lower end of the product line with low be and little quality. getting a well-known international brand is considered to be the quick thoroughfare to changing these bitter perceptions of the consumers towards Chinese products and booting up its pro duct image. beneath this special circumstance, the need for branding is deemed the most important for a Chinese company to expand into international market. The mooring of Lenovos adopting a separate management mode to manage IBM PC department team was different from those set forth in the literature. The acquiring company is the rattling one that supports the acquired team to refer and maintain its own management system and procedure.Among the reasons seat this move, the most curial factor bear on this decision is stock-still distance of time concord by IBM to allow Lenovo to use the brand ThinkPad. With this fixed term of a five-year period affix to Lenovo has to make beaver bm to build up its own brand Lenovo within this period. Therefore, it is sensible for Lenovo to march on IBM PC department to maintain its own system and focus on delve the target in time.The use of culture integration mission in the case study of Lenovo has been very efficacious and reforma tive for members to go steady and set about more alive(predicate) of the differences it whitethorn happen among them. The delegation has set up several activities such as culture discovery newssheet and discussion forums to advocate communication amid two teams. These arrangements have been well authoritative by the employees with active participation and enthusiasm. Therefore, it is believed that this strategy may well be recommended for organisations to encourage communication between employees.