1. What national sources of competitive advantage might Lenovo draw from

its Chinese base?

Thanks to its very large but under-employed population, China enjoys the

abundance of low low-skilled and low cost labor. However, the country became the

largest manufacturing bases in the world. China has an enormous advantage in labor

cost. China has a relativity advanced science and technology infrastructure developed

during China central planning program. The former Chinese leader Deng Xiaoping

started at the late 1970s a modernization program to develop science, technology and

intellectual resources. In the future, China potential it’s enormous, the demand of IT

equipment’s increase very rapidly in the last years. In China IT industry there it is a big

domestic and international competition. There are a few local competitors and plenty

international competitors. Lenovo competes with Great Wall domestically and Dell

internationally.

The Chinese government is generally supportive of high-tech industry. Also with the

help of authorities the entire vertical chain was built in the eastern part of China which

allows Lenovo to access all the logistics and needs for the supply infrastructure.

2. In the light of the CAGE framework, comment on Lenovo’s entry into the

American market.

Basically Lenovo bought IBM PC division in order to access the markets in the

developed country (the US in particular). There are plenty differences between Chines

and US. Cultural distances are huge, China it is still a communist country, meanwhile

US is the biggest democracy in the world. Also geographic and administrative and

political distances are big. Economic and wealth distances decreased in the last years;

China rapidly became the second large economy after US. Thru IBM, Lenovo`s access

not only the logistics and know-how but also the labor advantage of very specialized

people from there.

3. What type of generic international strategy should Lenovo pursue now?

In order to adapt to India`s market, Lenovo should implement a partnership or

alliance strategy. The reason for why Lenovo should adopt this strategy, is the fact

that the Indian market is from a geographically point of view its neighbor. Therefore,

merging with a local company, like in the US case, is not advised. The logistic costs

will be low for a simple exporting, but the problem will be the market penetration of

their products due to big cultural differences. The partnership solution will integrate

both entry barrier problems and solve some regarding the cultural differences. The

only drawback to this strategy is finding a competent partner, who will dedicate

himself to the maturing of the Lenovo brand in India.