Lenova Case in the Early Case Study

Excerpt from Case Study :

The IBM logo could only be used on IBM Think-family products. For any type of advertising, the IBM logo could only be shown on the product within the ad, not as a separate logo in the ad. The use of the IBM logo on the Think-family products would change over time. In return, Lenovo promised not to compete with IBM's services and consulting groups. IBM would continue to provide global support for the computers for five years. Finally, Lenovo also had access to IBM's 30,000-member enterprise sales team and ongoing support from partner and channel management programs.

Acquisition of the IBM PC business allowed Lenovo to move quickly into the international marketplace: the expanded firm claimed customers and businesses in 138 countries. The way IBM and Lenovo sold PCs was very complementary. In China, 70% of sales were transactional (made through business partners) and 30% by relationship (through consulting). Globally, it was the opposite, with only 30% of sales made through partners.30 Further, Lenovo's focus had been on small businesses and consumers, whereas IBM had long targeted corporate and enterprise customers. On the supply chain side, significant operational benefits flowed from the fact that components for IBM PCs were sourced in China. "On paper this was pretty much a match made in heaven," Advani recalled. "We had complementary products and client bases, and practically no channel conflict. We could use the Lenovo: broad product portfolio we sell in China and use global distribution and take products around the world." Conveying the opportunity created by these complementarities was a key message to deliver to customers. The only major overlap, though a welcome one, was in company cultures. "The two companies had similar values with a focus on meritocracy," Advani said, "since Lenovo had in part modeled itself after HP and IBM. Customer focus, innovation and trustworthiness were shared values. Even so, the potential remained for cultural and operational clashes between IBM veterans and Chinese nationals. There was also uncertainty about how IBM's existing customers -- who demanded the highest quality products and services -- would react to the new ownership arrangement. During the transition, PC competitors would surely try to dislodge loyal customers. When asked about the Lenovo-IBM PC division merger, Michael Dell was categorical: "It won't work." When was the last time you saw a successful acquisition or merger in the computer industry? Having maintained Legend's PC market leadership in China for five consecutive years, Yang was promoted to Legend Group president and CEO in 2001

- (This paragraph is adapted from Company Documents) This article was taken from the book, "A Technology Legend in China," written by Michael G. Rukstad and Yigang Pan, "Lenovo: Countering the Dell Challenge," and company documents.

Question) What is the appropriate branding strategy and brand architecture for Lenovo?

Advani recalled that decisions about branding were key, in the initial months: With IBM, we did $10 billion in revenues around the world. It was clear that if we lost that business base it would make it much, much harder for us to achieve our growth aspirations. So one of the first questions I asked Yang was, 'As chief marketing officer, do you have some ideas on a preferred branding strategy or am I free to start with a clean slate and craft a new branding strategy based on market research and our best judgment?' And I will always remember this. He said, 'You are the CMO and you do the market research,

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