Organizational goals and strategies for achievement

Organizational Goals

What was the business strategy through which Legend came to dominate the Chinese PC industry?

The Chinese Market.' Because of its great size, the developing market of China is often spoken of as a vast, homogeneous entity. However, one of the strengths of Legend, a division of Lenovo, is that it has been able to deploy its familiarity with the regional needs of different areas of China with such great effectiveness. Greater knowledge of the needs of regional markets enables the company to segment its procurement and distribution of PCs, keep a low inventory of goods and provide quality customized company service.

Since its launch in China, Legend has seen its shares in the world's fastest-growing PC market triple, from 12% to 30%. This is testimony to the power of the Chinese market and the benefits of this company's strategy (Hung, 2001). The market for PCs is young in China, in contrast to the greater maturity of the developed world, further adding to the potential of this market to be a source of profits, and making Legend's inroads the envy of its industry competitors. "Since it was established, the company has affected the lives of millions of Chinese: It first introduced PCs to households, and then promoted PC usage in China by establishing retail shops nationwide. It also developed the pioneering Legend Chinese Character Card that translated English operating software into Chinese characters, and achieved breakthroughs like PCs with one-button access to the Internet" ("About Legend," 2007, Lenovo Official Website). Legend thus also had a first-mover advantage in China, because it was the first company to make PCs accessible to ordinary Chinese individuals who might not have any command of English, such as individuals who live in the provinces. Its retail shops give hands-on, customized and intensive customer service to individuals who might not be familiar with PCs.

The genius of the Legend computer corporation is to recognize the fact that China is actually made up of a variety of regional market segments, all of which have different technological needs. Legend has thought 'outside of the box,' or more aptly, outside of Beijing. While foreign competitors exclusively targeted the major cities in China when marketing their products, and deployed little variation in strategy in the few inroads they made into other areas of the nation, Legend instead placed thousands of distributors throughout China and used its worker's native familiarity with varying Chinese demands in different provinces. It also showed it had the confidence to manage local government bureaucracies that can often stymie foreign companies in China.

Effective, regionalized knowledge of the logistics of different provinces is also credited for the fact that the company has kept its procurement costs low by keeping inventory levels low. "According to internal data, Legend's inventory level is usually less than 20 days, compared with 30 days for Compaq Computer Corp" (Huang, 2001). One great loss of revenue to any company is the dangers created by stockpiling too many goods up in warehouses. The goods become obsolete rapidly, but on the other hand, if demand is not met, than a consumer may be lost, so there is always a trade-off between stockpiling and responding to immediate demands. Knowing the different needs of different regional market segments ensures a flexible, response and also keeps costs down because the company is able to keep 'just enough' of the product on hand to meet demand.

Thus, market segmentation or providing something that competitors do not is the key component of Legend's successful strategy along with its streamlined, specified system of procurement and logistics. Being a first mover into a market, and becoming the company that Chinese consumers associate with their PCs is an additional advantage for Legend.

What changes in corporate goals do you anticipate for Lenovo now that China has entered the WTO?

Now that China has entered the WTO there will undoubtedly be additional competition for Legend. Because of the rising competition from foreign competition, Legend has become more cautious about its outlook for growth. However, larger foreign companies may not be able to keep their fingers on the pulse of regional markets, and different segment's needs in the vast, ever-changing Chinese market in the same way as Legend has been able to, over the years. Thus, an ideal strategy for Legend would be to keep close ties to the regional demands of the Chinese market, through more intensive and specified market research. The company must make use of the advantages it has that its competitors do not, namely in-depth knowledge of the differences within the vast nation.