The case revolves around how legend, a Chinese small
scale company importing laptops went on to acquire IBM, a global giant’s laptop
division, thus propelling them into the global laptop and electronic industry,
making Lenovo a global name at par with key players.
Taking innovation and IBM branding as its major
trump card, Lenovo positioned itself as a mass market innovator which in turn
differentiated it from other mainstream competitors at one end of the segment
and other innovators priced or positioned themselves as innovation oriented
companies on the other end of the segment.
LENOVO: Building a global brand
Legend came into existence in 1984, a Chinese
distributor of imported computers who became an integral part of Chinese
technology history with their character card in 1987, something which was
sought after since it converted English characters into Chinese. Which given
the time of the century was very much in demand.
Legend never stopped their innovation and gradually
went on to become a prominent domestic player in the personal computer space in
the Chinese market, but never really had enough resources to hit it on a global
scale. Since they were the distributors for IBM in china, and their constant
strives for innovation, IBM wasn’t reluctant when Legend, a Chinese company was
to acquire their laptop division. But legend has copyright issues when going
global with that name, thus was born, Lenovo.
This marks the beginning of the case, acquisition of
IBM laptop division by Lenovo. Lenovo and IBM both seemed to benefit from the acquisition
as both got what they wanted in terms of the benefits, IBM was currently not
profitable and the customers were fragmented, whereas Lenovo which was known
for the innovation they bring in to the large audience was something that IBM
got attracted into, though it’s safe to say, Lenovo had a higher edge in this
acquisition, since they got opened to more than 100 countries in terms of
presence and a right to use IBM technology and name on their products.