Internalization Theory Of Lenovo

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1.0 Introduction The main purpose of this report is to carry out a critical analysis of the internalization process of a Multinational Company (MNC). According to Welch & Luostarinen (1988), internalization can be defined as the process in which firms increase their involvements in international operations. Therefore, throughout this report, an identification of the company current internalization pattern will be identify and a critical analysis of internalization theory related to the pattern will be carry out. At the end of this report, a new relevant strategies will be propose for Lenovo Limited to attain competitive advantage. 1.1 Company background Lenovo Group Limited is one the famous multinational technology company that originated…show more content…
From the identification of the pattern, it is clearly shown that Lenovo has been adapting the simultaneous theory by internalizing in many countries at the same time in 2011 by forming a joint venture with NEC from Japan and also an acquisition with Medion in Germany. Simultaneous theory is a good approach in internalization especially for technology kind of business like Lenovo. This is because, technology product usually have shorter life cycle and in order to expand the life cycle, Lenovo has internationalized simultaneously in many countries at once through joint venture and acquisition. The succession of entering the market simultaneously has given Lenovo the chance to overcome the market barrier and giving Lenovo to make full use of its competitive advantage. The criticism of this approach is Lenovo at first has to the fully acknowledged the market they are entering to because different countries has different culture. However, as Lenovo product is mainly about technology, they has a great potential to enter all the markets with high loops to attain more customers overlooking to the cultural…show more content…
First with they acquired IBM’s PV Division in 2005, acquisition with Medion in 2011 and finally with CCE in 2012. Thus, proving that the strategy is a success for Lenovo. The foreign direct investment is also considered a successful internalization strategy for Lenovo because through this strategy, Lenovo has grown from a $3 billion company whose interests were mostly in China, to the $39 billion global technology leader that Lenovo is today when they did an acquisition with IBM’s PC division in 2005. (Lenovo Press Release 2015) In fact, the acquisition of Lenovo with IBM’s PC division has given Lenovo access to IBM’s brand notoriety and worldwide recognition, as well as an efficient marketing and promotion system with a sales and distribution network operating in 160 countries. This includes the sponsorship of the Olympic Games in Torino and Beijing which helped Lenovo to build a global brand (Chuanjiao, 2008). Besides that, Lenovo also appointed Ronaldinho as Lenovo’s global brand ambassador in 2006. (China view, 2006). This is because celebrity endorsements can help to develop a company on an international scale which gave an impact in increase of sale and market share because generally people all across the globe have passion towards football. Finally, the acquisition has made Lenovo as the third largest PC supplier in the world (Lenovo
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