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Lenovo sources of competitive advantage

Lenovo is the market-leading brand of PCs and laptops. Despite fierce competition from Apple, HP, and Dell, Lenovo, a Chinese brand, quickly rose to become the largest computing brand globally. 

Despite the impact of the pandemic on its business, the company registered strong growth in its net revenue and gross profits during 2020. Apart from a record number of PC shipments in the year, the company also experienced robust growth in its net revenue for the year. 

According to sources, Lenovo shipped more than 72 million PC units in 2020. The firm has a diverse product portfolio that apart from PCs and laptops also includes smartphones. However, the market share of Lenovo in smartphones is currently very small.

Lenovo has continued to rule the PC market driven by its focus on product quality, performance, and pricing. As a result apart from strong sales worldwide, the company is also enjoying higher customer loyalty. Lenovo’s leading rivals include HP and Dell. Apart from these two, Apple, Acer and Asus are also among the leading rivals of Lenovo. Despite the heavy competition in the PC industry, Lenovo has continued to find growth due to its strong focus on technological innovation and customer experience. The result is a sharp growth in demand globally and a stronger brand image.

Overall, Lenovo has maintained a very strong market position. Among the various other factors, its focus on supply chain management has also helped the company survive the intense competition in the PC industry.

Main sources of Lenovo’s competitive advantage:

Product quality:

Product quality is an important factor that drives higher sales and revenue in the PC industry and helps grow customer loyalty. It is among the most important factors that affect demand in the PC industry. Customers want good quality products at competitive prices. Lenovo has always maintained a strong focus on product quality. It makes high-performing and durable products that enjoy superior demand and popularity in the global market. 

Due to the superior quality of its products, several PC and laptop models made by the company have gained leadership positions in the global market.

Technological innovation :

Technological innovation is a key driver of growth in the PC industry. It helps drive faster growth, market expansion, and higher profitability. All the leading PC companies invest heavily in research and development to strengthen their competitive edge. Lenovo also places a heavy focus on research and development to drive faster growth. In 2020, the company spent $1.45 billion on research and development. Every year Lenovo has continued to increase its investment in research and development to achieve superior growth. In 2019, its R&D expenses remained $1.3 billion.

In the PC industry, Product innovation is key to growing sales and revenue. Each year companies spend heavily on R&D to maintain the attractiveness of their product portfolio and to gain market share.

Pricing strategy:

The pricing strategy of the company is also among the key sources of its competitive advantage. The pricing strategies of PC brands play a key role in determining the sales and popularity of their products worldwide. Customers globally, want products that are superior in terms of performance and also affordable in terms of price. 

However, that does not mean that Lenovo only sells affordable and lower-priced products. Instead, Lenovo has introduced a broad range of products that can cater to the needs of various segments of customers. Compared to most of its rivals, its products are priced competitively.

Global presence:

Lenovo is a global brand. While it is a Chinese brand, the company has grown the popularity of its products worldwide through a focus on quality and performance. It has established its global presence through a large network of sellers and distributors. Lenovo is a global business operating across more than 180 markets. The company’s leading market is China but it has also established a strong and impressive presence in the Western markets and the rest of Asia Pacific. In 2020, the company experienced strong double-digit growth across all three business segments of the company in the North American region.

Strong supplier base:

Another key driver of Lenovo’s competitive advantage is its large supplier network. Lenovo has adopted a sustainable supply chain management strategy. Superior supply chain management helps the company manage the costs of raw materials and achieve superior operational efficiency. A large part of its supplier base is located in China and other Asian countries. The company focuses on developing its supplier base and managing long-term relationships with its suppliers. In this regard, apart from the suppliers’ training and providing them the resources they need to grow and deliver according to the company’s expectations, it also provides them guidance on managing sustainable operations. The resilience of a business in the PC industry also depends on its supplier network. The supply chain of Lenovo ensures that the company has continuous access to quality raw materials.

Vast product range:

Lenovo has introduced a vast and attractive product range to cater to the varying needs of different customer segments, including individual customers and corporate buyers. The company has divided its business into three segments – the PC and smart devices group, the mobile business group, and the data center group. It makes and sells PCs, laptops, tablets, and smartphones to customers around the world. Its next-generation data center solutions in the hybrid cloud are based on the ThinkAgile platform. Through the diversification of its product portfolio, the company has successfully reduced its dependence on its core products and is trying to achieve further growth by expanding its product and services portfolio.