Chinese Academy of Science
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In 1984, Liu Chuanzhi and ten scientists who worked in Chinese Academy of Science, they built the Legend Company and in 2004, Legend changed their name to Lenovo. In 2005, they finished purchase IBM. Then the head office was set in America and they have branch office in 66 countries and conduct business scope in 166 countries (Lenovo, 2005). So as a global corporation, make clear the external environment is very important to help the managers make the strategic planning, so the following will focus on Lenovos PESTLE analysis.
For the political, from the last century, computers come into peoples life, it was used in business and other industries and helps the industries increase the production and interest. But at the same time, some new problems come with computers such as energy consumption, health and pollution of the environment. So consider these problems, in 2007, the EUP instruct of The European Union which control the pollution of computer industry formal effective. Also in China, the government encourage the green IT that means lower noise pollution and lower energy consumption. So in Lenovo groups, the isopsophic index of “Kai Tian S” (a brand of Lenovo) was lower than 30 dB. So in noise pollution section, Lenovo has achieved (Lenovo, 2005). As a high quality brand, export is certain. As is known, China has a huge population, it means theres enough labor and payment should not high. So the factory of Lenovo was set in China. Since China joined WTO, the export tariff of IT industry has decrease to 9.1% in 2005 (Global M&A Research Center, 2006). So these policies are tends to encourage business organization developing to global.
For economic, influence by the 2008 economic crisis, the world economic tends to going down. But in the worst time, Chinese government published the new economic policy which was positive financial policy and loose and comfortable monetary policy. The government also offered four-hundred million RMB stimulates economic development (The Marketing Surveillance Center of China, 2008). For Chinas IT industry, this is a great opportunity to develop them. Then change the focus to the economic development. In 1950, the total trades of China include import and export was 11.3 hundred million dollars, but in 2008, it enhanced 25616 hundred million dollars. Also at home, the GDP increased with a high speed:
So according to this chart, it very clear that Chinas GDP has achieved satisfactory level and the disposable personal income has increased also (stats, 2009). So the demand of products will increase with the economic enhancing. In the other words, the IT market becomes bigger and Lenovo also has strength to competitive the market share because Lenovo not only produce computers, mobile phone also produced by them.
For society culture, the population growth, lifestyle choice and attitudes, population health, education, social mobility and attitudes are influence the demand of high technology products. 60 years ago, 80% people in China were illiteracy, but under the new government value, in 2008, the Einschulungsrate f. of different education level has achieved a satisfactory level:
It is clearly that the education level has increased and the demand of high technology products also enhancing (Communist Party Learning, 2009). This situation also offered a huge market for Lenovo. On the other hand, because the globalization and influenced by the developed countries lifestyle, the Chinese people also become more international which live with a high level life and influenced by the education level, the lifestyle of Chinese people become more out-going and open enough (Human Geography Research Center, 2003). So the consumption custom of modern Chinese people also offers a good developing environment to Lenovo. Also in the next five to ten years, this situation will be increase. At the same time, the social culture of China has changed from traditional feudalism to modern lifestyle which is more science and high technology in life.
For technological, Lenovo was set by 11 scientists who worked in Chinese Academy of Science which is a governmental organization. So this situation offered a good technology support. In 2005, Lenovo has finished the purchase IBM, so the technology transfer from IBM also helps Lenovo make the Research & Development activities and produce high quality products with high technology (Lenovo, 2005). At the same time, with the technology development, the communications costs and increased remote work can help the different corporations share their techniques and also good for Research & Development activities. So all of these technological factors can help Lenovo increase their competitive ability in the next five to ten years and the marketing share of IBM also belongs to Lenovo.
For the legal section, here just mention two articles which can support Lenovo. Firstly, in light of article 6, Peoples Republic of China Consumer Protection, the government encourages and supports every person and organization supervises the illegal action which damages the consumers legal power (National Peoples Congress, 1993). So this law can reduce other organizations use illegal method to competitive in the marketing and its also a protection for Lenovo. On the other hand, in light of article 6, Peoples Republic of China Law on Product Quality, the government encourages apply scientific management method, advanced science and technology, support the products achieved or beyond the industry standard or international standard. And give the award to the organizations whose products achieved or beyond the international standard (National Peoples Congress, 1993). So as an international corporation, Lenovo links the technology of IBM, they will produce the high quality products and received the government supports from the legal.
Finally, for the ethical, because the increased of education level, the peoples diathesis also enhanced. So protect the legal power has become normal in the modern society. Then if the organization make illegal actions, it will be ejected from the market by customers, such as never buy their products. Also for an organization, the ethical problems are faith, fair and good service. As Lenovo, their value are serve consumers, innovation, faith and fair (Lenovo, 2005). So this entire ethical development tendency is good for Lenovos business environment in the next five to ten years.