Change Management Implications of Lenovo's Term Paper

Download this Term Paper in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Term Paper:

According to Liao (2006), "The companies have entered into significant, long-term agreements that give Lenovo customers preferred access to IBM's world-class customer service organization and global financing offerings. This will enable Lenovo to take advantage of IBM's powerful worldwide distribution and sales network. Lenovo's customers are able to count on the entire IBM team - including sales, services and financing - for access to IBM's legendary end-to-end it solutions" (p. 3). In addition, pursuant to IBM's five-year contractual commitment, it will also provide Lenovo with warranty services and provide Lenovo customers with leasing and financing arrangements. According to Liao, "Through this long-term relationship, customers will receive the best products with the lowest total-cost-of-ownership" (2006 p. 3). Among the company's initiatives in this final phase of the change management process were additional efforts to further support their new dual business model. To this end, Lenovo upgraded its technology to work with Microsoft's newly launched Windows Vista operating system; likewise, the so-called "ThinkVantage" technology innovations from IBM that include biometric fingerprint scanning and rescue and recovery features, have been redesigned to operate seamlessly with the security and backup features offered by Vista (Liao, 2006).

Identification of the Key Events and Reactions. There are two fundamental reactions involved that may affect the company's change management strategy over the long-term. The first reaction is from the Chinese stakeholders involved. In this regard, Zhijun (2006) reports that, "Perhaps one of the most interesting facts to emerge from the Lenovo Affair was the broadly nationalist sentiment that had grown amongst Chinese entrepreneurs driven, in the main, by a perception that there was a 'plot by global Western enterprises to gulp up a large share of the Chinese market'" (p. 62). Given the country's history of foreign domination, such perceptions might not be completely unfounded, but nevertheless, the implications for Lenovo's stakeholders were the same: "Whether there was a basis to this paranoia or not, China's 'underlying anxiety' only served to increase the West's distrust of China which in turn fed Chinese antagonism towards foreign players" (Zhijun, 2006 p. 62).

The second reaction involves those of Western stakeholders. For instance, according to Tucker (2006), "The largest obstacle to China's international corporate development is the nation's communist political system, in which the government serves as a major stakeholder in all Chinese companies. Investor wariness over China's chaotic banking system is also slowing the country's rate of growth, as well as frustration over its currency model" (p. 12). The country's banking system might be making foreign investors more cautious about forging joint venture relationships or other mergers, but it is the West's reaction to the Chinese government that represents the most significant concern for Lenovo in the future. According to Tucker, "Another obstacle facing Chinese firms looking to establish brand-name recognition might be negative perceptions of either Chinese products or Chinese politics. Many consumers in the West regard the Chinese government as oppressive, environmentally reckless, and an egregious violator of human rights. Concerns about outsourcing and domestic job loss also color many Western consumers' perceptions of China" (2006 p. 12). This observation is congruent with Wu's (2005) assessment that, "Recent high-profile international acquisitions and take-over bids by Chinese companies have dramatically shifted media attention from spotlighting China as a 'giant sucking vacuum cleaner' for global inward foreign direct investment to characterizing the country as a cash-rich 'predator' embarking on a global buying binge" (p. 26).

Special Features of the Change. In his essay, "Do Financing Biases Matter for the Chinese Economy?," Huang (2006) points out that a number of Western analysts have pointed to Lonovo's acquisition of IBM's PC business as a clear indication of the rising world-class domestic Chinese companies. According to Huang, "Using the success of firms like Lenovo as evidence, a McKinsey Quarterly article has gone so far as to claim that China has the 'best of all possible models.' These business analysts are unusually perceptive except in one detail: Lenovo is a foreign company" (p. 287). This means that the change involved in acquiring IBM's PC division was achieved under less stringent laws and regulations than the company's domestic competitors might have encountered in a similar move. For instance, as Huang (2006) notes, "All of the manufacturing, service, and R&D operations of Lenovo in China are legally organized as subsidiaries of its Hong Kong firm and as such they are subject to laws and regulations pertaining to FDI, rather than those far more restrictive laws pertaining to domestic private businesses. In 2003, seven of Lenovo's Hong Kong subsidiaries were among China's 500 largest foreign operations" (p. 288).

Instances of Resistance and/or Unexpected Difficulties Encountered. As noted above, Lenovo's early years were forged during a turbulent period in China's history, and it is reasonable to assert that lesser individuals might have not prevailed. In fact, the success of Lenovo today is not so much what the Chinese government has done to assist the company in crafting a business model that others now cite as an exemplar, but rather what they simply allowed the company's leaders to do: leave the country and make the critical connections with business leaders abroad that have helped fuel the company's meteoric growth every since. In this regard, Huang (2006) emphasizes that, "The story of Lenovo and its Hong Kong connections tells us about both what the Chinese policymakers have done right and what the limitations of their approach are. Amidst massive institutional inefficiencies, Chinese policymakers have done two things vitally right and important. One is that they have allowed FDI to come in; the other, which is underappreciated, is that they have allowed Chinese citizens to travel abroad since the early 1980s" (p. 287). This author makes the point that this ability to travel likely represents the single most important reason that some of the entrepreneurs.".. could at least escape from the clutches of a very bad system. Thus, China's success has less to do with creating efficient institutions but with allowing an escape valve from inefficient institutions" (Huang, 2006 p. 287).

Summary of Outcome Achieved. Today, Lenovo is poised to develop its markets around the world and the brand reached an enormous global audience as a major sponsor of the Olympic Winter Games in Torino in 2006 and will again during the 2008 summer games in Beijing (Zhijun, 2006).


Redirection is a type of leadership is an attempt to redirect an organization, field, or product line from where it is headed toward a different direction (Sternberg, 2005). In this type of leadership, the organization's leader makes the decision concerning which direction the organization is currently headed is less than adaptive, and therefore redirects the organization in other directions (Sternberg, 2005). In order to be successful, though, redirective leaders need to match to environmental circumstances (Sternberg, 2005). According to this author, "If they do not have the luck of matching environmental circumstances, their best intentions may go awry. Under Louis Gerstner, IBM transformed itself from a company that specialized in making computers, especially mainframe computers, to a company that specialized in information-technology services" (Sternberg, 2005 p. 37). The company's leadership, though, determined that more changes were in order and this was the impetus behind the sale to Lenovo: "The company as it had been was dying and Gerstner redirected it. Even more recently, under Sain Palmisano, it sold its personal-computer division to a Chinese company, Lenovo. The transformation thus became complete" (Sternberg, 2005 p. 37).

The fact that a fundamental transformation took place within Lenovo as a result of the change suggests that some transformational leadership was used on the part of Lenovo, an assertion that is congruent with Bass's (1997) analysis that such leadership styles are not restricted to Western leaders, but are rather universal: "The transformational paradigm views leadership as either a matter of contingent reinforcement of followers or the moving of followers beyond their self-interests for the good of the group, organization, or society by a transformational leader. The paradigm is sufficiently broad to provide a basis for measurement and understanding that is as universal as the concept of leadership itself" (p. 130).

Finally, the change management process used can be viewed from a transactional leadership perspective on the part of Lenovo's leadership as well. In this regard, Warner (2000) reports that while transformational leadership is not unknown in China, a far more common leadership style used is transactional leadership. In his analysis of manufacturing companies and banks in China, although the most senior management did demonstrate a more transformational leadership styles, even in these cases, middle management and those in charge of personnel demonstrated the more transactional approach (Warner, 2000). Therefore, it is reasonable to assume that this type of leadership style has also been used in the Lenovo acquisition of IBM's personal computer business division.

Ethical Aspects of the Process. Notwithstanding the ethical implications of competitive edge afforded Lenovo's leadership early on in being allowed to "leave…[continue]

Cite This Term Paper:

"Change Management Implications Of Lenovo's" (2007, December 30) Retrieved October 27, 2016, from

"Change Management Implications Of Lenovo's" 30 December 2007. Web.27 October. 2016. <>

"Change Management Implications Of Lenovo's", 30 December 2007, Accessed.27 October. 2016,

Other Documents Pertaining To This Topic

  • Asian Resources and Economic Power

    Asian Resources and Economic Power Asia has always been a centre of attention in world's politics. A single decision made by one of the Asian countries has a tendency of altering the world's political and economic scenery. A change in Afghanistan changed the perception about world's security and enunciated an on-going war of peace. Similarly, China's growth has altered economic policies of many countries in the world. Hence, whatever takes place

  • Delphi Study Influence of Environmental Sustainability Initiatives...

    Delphi Study: Influence of Environmental Sustainability Initiatives on Information Systems Table of Contents (first draft) Green IT Current Methods and Solutions Green IT and energy costs Green It and Email Systems Green IT and ICT Green IT and ESS Green IT and TPS Green IT and DSS Green IT and other support systems Green IT and GHG reduction Green IT and the Government Sector Green IT and the Corporate Sector Future Prospects of Green IT in the software industry The paper focuses on how the

  • Innovations in Technology in Recent

    One such exemplary resource is Epicor's recent guide, "Managing Today's Professional Services Organization: How to Improve Efficiency and Increase Profits" (2011). Although the guide contains some self-serving information concerning Epicor's own IT product line, the bulk of the guide is devoted to timely and informative insights concerning how IT can facilitate project delivery in professional services organizations. For instance, according to Epicor's guide: Ultimately, a successful operational model demands higher-order

  • Comparing Leasing vs Purchasing Computer Equipment

    LEASING vs. PURCHASING COMPUTER EQUIPMENT? Leasing and Purchasing Computer Equipment Scope Considerations for Lease Option 7-9 Advantages of Financial Leasing 9-12 GE Transportation plans to replace their computer equipment for the Human Resources and recruitment department having roughly 100 employees. This paper is based on researching what is the most economical way for the employer, GE, to outfit its office with computer. In this paper the pros and cons both of buying new equipment

  • Apple in China in Late

    In China, that is not the case and there are tens of millions of peasants who would read such descriptions and think those workers lucky. Such context would have made for a more balanced and honest article. Indeed, the initial article is one of the more flawed in the series of reports that the Times put out on the Foxconn issue. The article begins with an anecdote about a worker

  • Global Communications as Business and

    2007). While the above refers to some essential aspects of company growth, there are many other areas that could be improved. The following is a summary of some of the areas that could be enhanced and adjusted to increase viability and consumer perception of the company. Financial streamlining in the business and service area is an important aspect that has been recognized by Dell and which is in need of improvement. Customer

  • Role of Information Systems in

    An unforeseen benefit of this online strategy Dell used to increase brand awareness and remove some of the tarnish from their brand image was Word-of-Mouth (WOM) of the brand began to grow significantly as a result (Jarvis, 2008). Dell had not experienced WOM success of its brand awareness strategies in nearly a decade prior, and what the marketing managers attributed this to was the commitment to listen and respond

Read Full Term Paper
Copyright 2016 . All Rights Reserved