The SWOT Analysis of Lenovo-IBM Acquisition
Case study: The acquisition case of American IBM Personal Computer by the Chinese computer company Lenovo. This article uses SWOT matrix to analysis the post-merger situation of Lenovo’s PC business and try to demonstrate a possible roadmap for future business.
On December 8th of 2004, Lenovo announced its merging of IBM’s world personal computer (PC) business which included the ThinkPad line of PCs. This deal costing Lenovo $1.25 billion, including $650 million in cash, 600 million shares and an additional $500 million of IBM's debt.
The merger makes two companies formed a complex joint venture. For Lenovo, even the cost is relatively high for it to purchase IBM PC at 2004, it benefits a lot…show more content… Another reason for IBM to sell its PC division is due to its strategy aims. IBM have shifted its major business from traditional PC productions to its software innovations. For IBM, their strategic intension to sell its PC business was obey its overall strategy of developing software and reinforing its service businesses (Deng, 2009). According to Steve Mills, Senior Vice President and Group Executive, “(Lenovo-IBM’s acquisition) allows IBM to focus on system and software innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, Big Data and cloud” (Deng, 2009:81). Therefore, when Lenovo decided to set its globalization expansion through merger as a strategy, there were no doubt for IBM to act repeatedly on selling its world PC business. Overall, under the more fierce competition in the domestic marketplace, Lenovo's international expansion is an “essential stepping-stone for company’s growth” (Deng, 2009:82). The acquisition of the two corporates also serves as a push for Lenovo to expand its business worldwide. The merger provides a possibility for Lenovo to be part of the world-class company. However, Lenovo and its decision makers as well as the CEO Mr. Liu Chuanzhi have to face a post-merger integration problem of IBM’s former business. In order to analysis the possible integration strategies for two corporates after merger, the feasible theoretical SWOT framework will be illustrated in detail.
SWOT analysis is