lenovo ibm acquisition case study

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The IBM/Lenovo Deal: Victory For China?

January 14, 2005 • 16 min read.

With the sale of IBM's personal computer business to Chinese company Lenovo Group Limited, two emerging trends quickly move front and center: The increasing commoditization of technology and the emergence of Chinese companies as global players. Wharton professors say both trends warrant watching and raise some key questions. Can Lenovo become a global player and integrate IBM's U.S. managers? Will IBM's PC customers defect to rivals like Dell Computer? Can state-owned Chinese companies become dominant in the international markets? Professors from Wharton and Universities in China, as well as Wall Street analysts, offer their opinions.

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Strategic Direction

ISSN : 0258-0543

Article publication date: 12 September 2016

The purpose of this paper is to analyze Lenovo’s successful acquisition of IBM’s PC division using Ghemawat’s (2001) CAGE framework. It was an acquisition that was so full of symbols that it is difficult to know where to begin. Lenovo’s purchase of IBM in 2005 was first seen as a sign of the rapid growth and expansion of the Chinese economy and its transformation away from the traditional manufacturing base to more high-tech areas. For doomsday merchants in the land of Uncle Sam, it foretold the end of the world domination of the US economy. Despite a considerable number of skeptics at the time, Lenovo was clearly up to the task. Such was the success of the acquisition that by 2015, Lenovo could claim to have grown into the world’s number 1 PC maker, number 3 smartphone manufacturer and number 3 in the production of tablet computers.

Design/methodology/approach

This paper is a case study.

Despite a considerable number of skeptics at the time, Lenovo was clearly up to the task. Such was the success of the acquisition that by 2015, Lenovo could claim to have grown into the world’s number 1 PC maker, number 3 smartphone manufacturer and number 3 in the production of tablet computers. Indeed, by 2014, the firm had enough confidence to add the IBM server business to its portfolio.

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The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

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Thomas, M. (2016), "Lenovo’s successful acquisition of the IBM PC Division", Strategic Direction , Vol. 32 No. 9, pp. 32-35. https://doi.org/10.1108/SD-06-2016-0090

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Lenovo: Building A Global Brand

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​Lenovo bought IBM's PC business 10 years ago: Jury out on broader ambitions

Lenovo on Thursday will celebrate the 10-year anniversary of its acquisition of IBM's PC business. What remains to be seen is whether Lenovo can pull off the sequel---the acquisition of IBM's server business---and become a larger smartphone-to-data center enterprise vendor.

The IBM-Lenovo deal in 2005 will go down as a win-win scenario. Lenovo bought IBM's PC business and an iconic ThinkPad brand and leveraged it to be the No. 1 PC maker. By shedding the PC business, IBM transformed into a hardware, software and services outfit. Big Blue is also looking for a sequel of its own as it sheds commodity servers to focus on analytics, mobile, security and cloud.

Lenovo, armed with IBM's PC unit, eventually pursued a strategy that revolved around defending mature markets---U.S. and Europe---and expanding share in emerging countries.

Now Lenovo is digesting the acquisitions of IBM's server business as well as the purchase of Motorola.

If successful, Lenovo can offer everything from servers to smartphones with all the devices in between.

Lenovo's master plan, however, will largely depend on those latter purchases. In other words, Lenovo can't go too crazy with its PC victory lap after a decade.

The company said that it will launch its first global tech conference where it'll outline its device strategy. More importantly, Lenovo will have to convince enterprises that they can bet on the company's roadmap, which will include wearables and connected devices too. On the consumer front, Lenovo will need to inspire Apple-like gadget lust.

Lenovo completes $2.91bn acquisition of Google's Motorola Mobility unit | Lenovo after IBM server deal: We will fight back vs. HP FUD | Lenovo finalises acquisition of IBM's x86 server business |

However, Lenovo's enterprise businesses will ultimately pay the bills.

For now, Lenovo gets a short birthday party. The acquisition of IBM's PC business kicked off a string of eight acquisitions over the last decade that paid off in the end.

Here are a few milestones of note:

• Lenovo bought IBM's PC division in 2005.
• In 2006, Lenovo rolled out its own branded PCs.
• In 2011, Lenovo formed a joint venture with NEC and Compal and later acquired Medion.
• In 2012, Lenovo formed a storage joint venture with EMC.
• The Yoga convertible launched in 2012.
• Lenovo became No. 1 in 2014 and began pushing smartphones outside of China.
• In 2014, Lenovo acquired Motorola Mobility and IBM's x86 server division.

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This secret best buy deal lets you get a new pixel 9 for around $100. here's how it works, no needles necessary: this wearable can track your cholesterol and lactate levels.

Merging Cultures in International Mergers and Acquisition - A Case Study of Lenovo’s Acquisition of IBM PC Division

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This article investigates how the leadership of Lenovo and IBM PC Division integrated their corporate cultures after Lenovo’s acquisition of IBM PC Division. The study identified some post-acquisition cultural integration challenges between Lenovo and IBM PC Division such as: Language and communication differences, power distance, different leadership and managerial styles and difficulties in socializing Lenovo’s corporate culture and IBN PC’s corporate culture into a shared corporate culture. In view of this, the authors recommended that Lenovo and IBM PC Division should build structures, procedures and working environment which promote cultural synergy and adopt a cultural relativistic policy. The authors adopted personal interview data generated by earlier researchers. The data was analysed using a hermeneutic approach of data analysis..

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Muhammed Abdulai, Department of Communication, Innovation and Technology University for Development Studies, Nyankpala Campus, Ghana

Muhammed Abdulai holds M.A (Research) in Culture, Communication and Globalization from Aalborg University, Denmark, M. A (Research) In Cultural Studies, Telemark University College, Norway, and B.A In Philosophy and the Study of Religions from University of Ghana, legon. He is currently an Assistant lecturer at University for Development Studies, Ghana, Department of Communication, Innovation and Technology, Nyankpala campus. He has a book entitled: “Managing Cultural Differences in International Organizations. An analytic study of Intercultural Encounter Among Expatriate Workers and Local Staff of Ibis West Africa, published by Lambert Academic Publishing, 2011.

Hadi Ibrahim, University for Development Studies - Ministry of Trade and Industry - Ghana

Hadi Ibrahim has a background in marketing at the bachelor’s level from Takoradi Polytechnic and GIMPA in Ghana. He currently holds MSc in International Business Economics from Aalborg University in Denmark. A pioneer in the implementation of Health Insurance Scheme in Ghana and now Assistant Commercial Officer at the Ministry of Trade and Industry in Ghana. He has a book entitled “Young Adults Bank selection and Loyalty Decisions” published by GlobeEdit Publishing, 2014, to his credit.

Copyright (c) 2016 Muhammed Abdulai, Hadi Ibrahim

This work is licensed under a Creative Commons Attribution 4.0 International License .

Copyright / Open Access Policy: This journal provides immediate free open access and is distributed under the terms and conditions of the Creative Commons Attribution License (CC BY) . This is an open-access journal, which means readers can access it freely. Readers may read, download, copy, distribute, print, search, or link to the full texts of the articles for any lawful purpose without seeking prior permission from the publisher or author. This is consistent with the Budapest Open Access Initiative's (BOAI) definition of open access.

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Lenovo: A Case Study on Strengthening the Position in the European Market Through Innovation

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Lenovo is a Chinese company operating in the computer and ICT area with great success in its domestic market. The product range is spread over computers (laptops) as well as smartphones for private and for professional users. Lenovo’s strengths are the high quality of electronic devices, ease of use, and selling the devices for an acceptable and fair price. The supply chain of Lenovo is very strong and effective as well as efficient. Lenovo and its specific product segments can become a world brand. The increase in sales and market shares was achieved by mergers and acquisitions which are limited by nature. So, it might be a challenge for Lenovo, when the time is ripe, to further develop its business with its own resources.

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Gellert, F.J. (2016). Lenovo: A Case Study on Strengthening the Position in the European Market Through Innovation. In: Segers, R. (eds) Multinational Management. Springer, Cham. https://doi.org/10.1007/978-3-319-23012-2_6

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Merging Cultures in International Mergers and Acquisitions A Case Study of Lenovo's Acquisition of IBM PC Division

This article investigates how the leadership of Lenovo and IBM PC Division integrated their corporate cultures after Lenovo's acquisition of IBM PC Division. The study identified some post-acquisition cultural integration challenges between Lenovo and IBM PC Division such as: Language and communication differences, power distance, different leadership and managerial styles and difficulties in socializing Lenovo's corporate culture and IBN PC's corporate culture into a shared corporate culture. In view of this, the authors recommended that Lenovo and IBM PC Division should build structures, procedures and working environment which promote cultural synergy and adopt a cultural relativistic policy. The authors adopted personal interview data generated by earlier researchers. The data was analysed using a hermeneutic approach of data analysis.

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Journal of Intercultural Communication

Hadi Ibrahim

This article investigates how the leadership of Lenovo and IBM PC Division integrated their corporate cultures after Lenovo’s acquisition of IBM PC Division. The study identified some post-acquisition cultural integration challenges between Lenovo and IBM PC Division such as: Language and communication differences, power distance, different leadership and managerial styles and difficulties in socializing Lenovo’s corporate culture and IBN PC’s corporate culture into a shared corporate culture. In view of this, the authors recommended that Lenovo and IBM PC Division should build structures, procedures and working environment which promote cultural synergy and adopt a cultural relativistic policy. The authors adopted personal interview data generated by earlier researchers. The data was analysed using a hermeneutic approach of data analysis..

Journal of Intercultural Management, Tom 8, Zeszyt 4, ISSN 2080-0150, ss. 47-58, De Gruyter Open, Wydawnictwo Społeczna Akademia Nauk, Clark University, Łódź 2016

Łukasz Sułkowski

Mergers are a very important aspect of corporate growth. But so many mergers fail to achieve their aim. A lot of mergers won't produce value for the acquiring firms. Evidence and surveys have shown that corporate culture is very important for the success of mergers and acquisitions. This evidence also points to the fact that cultural differences are a very important factor that could lead to failures in mergers. Currently there is not much empirical evidence or theory on the importance of cultural differences for the performance of mergers and acquisitions. Though, there is a growing rate of interest in this area.

Management Decision

Agyenim Boateng

PurposeThe cultural element in M&As' integration process has been identified as one of the key issues that may help explain the failure of many mergers and acquisitions. Yet what needs to be done to improve cultural integration in order to enhance M&As' success has received relatively little attention. This study attempts to examine the role played by culture and provide a framework for enhancing the success of mergers and acquisitions.Design/methodology/approachThis study is based on 32 interviews with senior managers of 16 merger and acquisition deals in the chemical industry.FindingsThe study finds that culture differences between the merging firms are a key element affecting effectiveness of the integration process and consequently the success of M&As. Furthermore, the study finds that, although managers agree that cultural differences create organisational challenges, yet the attention given to cultural integration issues during M&As are at best tenuous and in some case...

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