Lenovo

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Strategic Direction (Part 1)

Published May 5, 2014 by Mayrbear's Lair

strategy

This week the focus of my research work takes a look at the different methods successful organizations implement to manage a firm’s strategic direction. To illustrate this concept, I have chosen a Fortune 500 company and will identify the corporation’s strategic direction, as well as provide recommendations for changes that could be valuable in future endeavors. The organization I chose to focus on was Google. The reason I chose this firm is because I use many of their products and wanted to learn more about this company I have been supporting. Plus, I was fascinated to find out more about the business strategies they incorporate which have allowed them to achieve meteoric levels of success.

google

Google was founded in 1998 and currently serves billions of consumers around the world. The firm provides a variety of services for individual people as well as for businesses. Larry Page, the organization’s co-founder and CEO, reveals that Google’s initial strategic direction was to provide the perfect search engine that understands exactly what the consumer needs and provide them exactly what they want (Google, 2013). Since that time, however, the firm has incorporated expansion tactics in the strategic direction process that has helped them grow by including other products and services that go beyond that of their search engine capabilities.

google (1)

Their expansion strategies, for example, have guided the firm to include the addition of technologies such as Gmail, Google Docs, Google Drive, and the internet browser Chrome. In addition, the firm has branched out and developed partnerships with other corporations like LEGO to create a collaboration that allows users access to 3D technology so they can develop and publish their own creations (Chrome + LEGO: You can build whatever you like, 2014).

google-lego-logo

As if that weren’t enough, the firm also expanded their efforts into the mobile phone industry. For example, in 2012, Google purchased Motorola to help promote their smartphone brand Android. However, because of the high level of competition in the smartphone industry, the firm recently adjusted their strategic direction by selling Motorola to Lenovo for $2.91 billion dollars.

GooMoto

The strategy behind this move was to provide better services to consumers. For instance, Google strategists believe that Lenovo has the ability and expertise to restore Motorola as the major industry player it once was using the Android ecosystem as a means to achieve this. This strategic decision was based on Lenovo’s impressive experience with hardware as well as their impressive level of global reach.

from-google-to-lenovo

Lenovo, in the meantime, will keep Motorola’s brand identity, while Google retains the vast majority of Motorola’s patents which they intend to use to support the Android system (Lenovo to acquire Motorola Mobility, 2014). In short, to expand the firm’s abilities and capabilities, Google’s partnering with LEGO, in addition to the sale of Motorola to Lenovo, were corporate strategic moves that were designed to move the organization forward by utilizing a horizontal integration growth strategy. In other words, rather than go up against their competitors, Google implemented a strategic direction that combined their operations with that of their competitors. This brilliant move served to help them both meet their goals and establish a competitive edge in the market place.

Wednesday’s post will take a closer look at other strategic moves that helped Google navigate their path as a leader in the global arena.

Until then … let’s continue to work on getting organized!

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“Truth is by nature self-evident. As soon as you remove the cobwebs of ignorance that surround it, it shines clear.” — Mahatma Gandhi

 

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References:

Chrome + LEGO: You can build whatever you like. (2014, January 28). Retrieved February 2, 2014, from googleblog.blogspot.com: http://googleblog.blogspot.com/2014/01/chrome-lego-you-can-build-whatever-you.html

Google. (2013). Retrieved February 1, 2014, from Google.com: http://www.google.com/about/company

Lenovo to acquire Motorola Mobility. (2014, January 29). Retrieved February 2, 2014, from googleblog.blogspot.com: http://googleblog.blogspot.com/2014/01/lenovo-to-acquire-motorola-mobility.html

 

Global Expansion

Published April 3, 2013 by Mayrbear's Lair

integrate-global-expansion

Now that entrepreneurs have engaged in partnerships with other countries, there are many important elements to consider in doing business on an international level. Problem solving strategies should include an aptitude with skills and knowledge in the economic and financial markets of operating a multinational enterprise (Shenkar & Luo, 2008). Entrepreneurial organizations that underestimate cultural influences including legal and environmental ramifications can cause serious problems and in extreme cases, can eventually lead to shutting the organization down. For example, an entrepreneur that considers working or setting up a business in a foreign country will need to know the zoning restrictions in the region and other policies or regulations required to conduct business to prevent from breaking any international laws. US Entertainers that work as a performing artists in Europe for example, must seek permission and obtain work visas from the government in each region to earn an income there. If they do not abide by certain regulations they may face extradition.

thinkpad-by-montevina-awesome-537416

Organizations also need to consider the cultural differences of people before formalizing relationships with foreign partners. Solomon and Schell (2009) point to IBM as an example, when they sold the ThinkPad computer business to the Lenovo Group, Ltd, a Chinese manufacturer of personal computers that sold products exclusively in China. When Lenovo chose to adopt English as the official company language and hired Dell CEO there were immediate clashes. The Americans were frustrated by the Chinese’s need for harmony and their inability to embrace public visibility. This was interpreted as a lack of commitment and an inability to perceive value. Furthermore, because the Chinese were silent in meetings, the Americans interpreted this as their agreement, when in fact they were disagreeing and posited the loquacious Americans spoke so much they weren’t allowed room to express themselves. In addition, IBM made managerial cuts in the company’s global workforce and shifted their marketing forces to India. This was perceived by the Asian company as a threat to their cultural pride. IBM made further adjustments and replaced a highly respected Chinese executive with an American one and as a result, other key Chinese executives quit in protest. These problems hurt them in the marketplace with shares dropping at a time the rest of the market was growing (Solomon & Schell, 2009).

F McDonalds-France

McDonalds in Paris

Organizations that prepare for expansion into the global arena must take into consideration the differences in emerging markets and economies as well. A multinational enterprise may need to conduct business differently in a foreign market because of strict regulations. Also, the gross national product will vary in each territory. Entrepreneurs will need to take this into consideration and make adjustments to prices, products, and services, that reflect the local economy (Peng, 2011). McDonalds CEO, Denis Hennequin, for instance, has mastered the concept of creating a global presence. His “we were born in the USA, but are made in France, Italy and Spain” motto has given him the edge on the international market. His respect for cultures has helped him succeed in harnessing them to a competitive advantage. While maintaining a global brand, he found a way to adapt to each territory in a respectful manner that honors local tastes and values. For example, in France he made the golden arches more discreet to blend in with neighborhoods. In addition, he eliminated the Ronald McDonald mascot and built restaurants there so that they are more in alignment with the expectations of local French diners. Some in fact, have leather upholstery, while others have incorporated fireplaces and candles as part of the dining atmosphere. Because of these sensitivities to local cultures, McDonalds’ business is thriving in Europe, Asia and the Middle East. This translates to sales that have risen 8.2 percent globally and during the middle of a recession to boot! By making changes like adapting a menu to include le petit moutarde (a small burger on a ciabatta roll with a mustard like Grey Poupon) and developing relationships with local suppliers, Hennequin has taken McDonalds to a whole new level (Solomon & Schell, 2009). In conclusion, entrepreneurs that consider expanding on a worldwide level will have trouble succeeding in business today if they don’t appreciate or know how to play by the rules and actively manage global cultural diversity.

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References:

Peng, M. (2011). Global business (2nd ed.). Mason, OH: South-Western Cengage Learning.

Shenkar, O., & Luo, Y. (2008). International business. Thousand Oaks, CA: Sage Publications, Inc.

Solomon, C., & Schell, M. (2009). Managing across cultures. New York, NY: McGraw-Hill.