Lenovo Group Limited is one of the leaders in the PC manufacturing and selling segment of the market, including laptops and tablets. This Chinese company has more than thirty years of history and has experienced both growth spurts and financial setbacks. There are several specific challenges facing the tech giant in the personal computer market, and the currently shrinking PC market is a major one.
Lenovo is experiencing gradual growth in its PC market share, as are its main competitors, HP and Dell, as well as the weakening Acer Group and Asus. Leaders of various types of appliances and accessories, Samsung and Apple, hold a smaller percentage of the total PC market (Zwanenburg & Farhoomand, 2018). However, even this steady growth in Lenovo’s share does not lessen the loss of overall sales and the decline in demand in this part of the technology market. According to statistics, the market shrinkage is not due to the declining popularity of these types of technology but due to the decreased purchasing power of citizens in many countries around the world. The pandemic, partial unemployment, and another global crisis led to the number of purchased PCs decreasing annually by a severe percentage.
Unlike its main competitor in the market, Hewlett-Packard, Lenovo focused more on expanding production. At that time, HP chose to increase its share of outsourced component manufacturing and product assembly, which had an approving effect on the company’s margins and, with a shrinking market, became a vital payback factor (Zwanenburg & Farhoomand, 2018). For Lenovo, on the other hand, the problem is a decrease in overall revenue while costs are increasing. Part of this problem is the company’s active attempts to return to the smartphone market. However, competition in this segment does not leave an average chance within China or other countries.
In addition to the problems listed above, spending on innovative developments by the company is likewise serious. The annual shows presented new types of displays, bendable technical accessories, and concepts of new data storage, which are implemented in devices from the company’s portfolio after development, correspondingly increasing the production costs (Zwanenburg & Farhoomand, 2018). The cost of the final product unit likewise does not help the company’s popularity in the segment.
Competition should be noted as another considerable challenge for the manufacturer. Although the total market share of small companies has almost halved in the last few years, many of them are strong competitors in specific local markets in some countries (Nincevic & Pavic, 2021). They can afford to dump prices, which is almost impossible for a giant like Lenovo to overcome nowadays. Competition is complicated by the fact that in the wave of popularity in the field of smartphones, many younger companies, especially Chinese ones, are entering a new market (Wang & He, 2019). Among such companies is Xiaomi, which is gaining a vast spread worldwide and is a potential competitor even for the established leaders in the segment.
In addition, there is increased content in the labor market, especially for young and ingenious engineers and digital professionals. Many are predisposed to work for newer companies because they see more career opportunities and are passionate about modern brands. For all its advantages, Lenovo is still inferior in prominence among young people in some Asian labor markets (Wang & He, 2019). Potential employees in other countries are likewise more interested in jobs from Samsung or Apple.
However, it can be noted that the craving for innovation and dedication to work on par with the quality of products honors Lenovo Corporation. With all the difficulties of the modern market, there are no signs of impending bankruptcy. The attempts of the inventions in other related segments can bring income and raise the corporation to its former record levels of revenue. The essential traits that smaller companies often lack, namely confidence and tenacity, are sufficiently present in Lenovo, and their business development has no plans to discontinue.
References
Nincevic Pasalic, I., & Pavic, I. (2021). Market concentration in the personal computer industry. International Journal of Economic Sciences, X(1), 84-99. Web.
Wang, J., & He, Y. (2019). A study on the transnational performance of China’s enterprises. The Journal of Economics, Marketing and Management, 7(1), 1-14. Web.
Zwanenburg, S. P., & Farhoomand, A. (2018). Lenovo: Being on top in a declining industry. Communications of the Association for Information Systems, 42, 455–480. Web.