Lenovo swot analysis

Weaknesses

Poor brand perception in the developed economies. Lenovo’s primary market is Asia, where it sells most of its production. The company finds it hard to access US and Europe markets as its brand perception is low there.

Low differentiation. Apart from the low price, Lenovo products are little differentiated from competitors’ products and are in competitive disadvantage if the price offered by competitor is lower.

Commodity products. The large stream of Lenovo’s revenues comes from computer, especially laptop, sales, which is a commoditized product. Computer hardware (commodity) products are sold with a very low profit margin.

• Opportunities
• Growing India’s smartphone market. India’s smartphone market is one of the least penetrated among Asia/Pacific countries. Lenovo could easily penetrate India’s market with its already successful low price LePhone.
• Growth of tablets market. Lenovo currently ranks as 4th biggest tablets seller. The business could increase its market share by introducing better quality products.
• Obtaining patents through acquisitions. If Lenovo wants to sustain its growth, it needs to obtain more patents and the best way to do that is to acquire the firms holding them, as it did with IBM’s Compaq.
• Tablet market growth. Tablet market is expected to grow in double digits for the next few years and the company has a great opportunity to release new tablet models and benefit from the market growth.

• Threats
• Profit margin decline on hardware products. Lenovo’s main income is from selling hardware products, which prices will increase in the future due to rising raw material prices. This will add to costs for Lenovo and will further cut the profit margin.
• Slowing growth rate of the laptops market. Growth rate of the computer market is slowing down and in the near future the markets will become saturated. It will prove hard for Lenovo to compete in such market and continue to grow its market share.
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