Case Analysis on

“Doing” the act: Lenovo and corporate reputation

Lenovo, formerly called as New Technology Developer, Inc (NTD) originated in China in
1984 and is a leading supplier of computers and computer parts in China. Lenovo entered
India with Neeraj Sharma as head in 2005, with India as a top priority in emerging markets.
Amar Babu, who taken the responsibility of leading the Lenovo India 2008 had significantly
addressed the major concerns faced by Lenovo India and built the reputation of Lenovo in
India. The Major concerns faced by Amar Babu are:

 Perception of Lenovo in India (Building reputation of Lenovo in India)

 Recession and Attrition during 2008
 Work Place culture
 How to Increase market share of Lenovo in India?
 Competition

The Key stakeholders of the Lenovo are:

 Top Management
 Employees
 Customers
 Collaborators (IBM)

Since Lenovo being china based company the chances of it being perceived as low cost and
low quality computer supplier are high and the Lenovo doesn’t want to carry that image
while entering India. To avoid the same, it used the logo of IBM for a maximum period of
five years which was acquired by Lenovo in 2004 as a part of its global expansion, and the
deal includes the transfer of ‘Think’ brand from IBM to Lenovo. This helped Lenovo to build
its own brand with the help of IBM, as at the time IBM worldwide had the highest reputation
in the enterprise segment. In 2008, Lenovo moved out from using the logo of IBM before the
stipulated five years and made its identity.

Year 2008 is meant for recession which changed the fate of many tech giants around the
world. For Lenovo it is the end of lock in period with IBM, which resulted in series of exits
by senior executives who had earlier been with IBM and moved back to their parent
company. This left Lenovo under leadership crisis for a short period of time, which was
bridged by Amar Babu in 2008. According to Amar some of the reasons for attrition were
loss in market share, closure of a plant and cutting down of certain parts of the business
which led to insecurity. To arrest the further attrition, it was constant flow of communication
is maintained to internal customers. In 2008 at the time of recession Amar realized it was
difficult to build confidence in employees. A turn around planned in which the senior
leadership will communicate the reality to the employees and address the three important
questions what is the problem, what was Lenovo doing about it and how they planned to
bounce back. A new initiative of “Walk the Talk” in which the leaders with strong following
recognize the top performers helped in arresting the attrition. Here the formula used is the
transparency, which made the employees feel how much they are valued by the firm. The
activities like the unwritten open door policy and helping in making CVs and finding the jobs
for the employees who received pink slips are best examples. This in turn resulted in 10%
attrition rate whereas the industry attrition rate was marked at 20%.

In 2011, the three were only five to six layers within the organization. A new entrant is only
two levels below the MD who in turn was two levels below the CEO. This is to build an
“entrepreneurial culture inside a global organization”. Lenovo worked on clear “Business
Conduct Guidelines” and “Business Ethics Guidelines”. Regular and frequent trainings were
given to the employees on these guidelines to make sure that they were followed in day-to-
day transactions. This helped in building a strong culture among employees.

To increase the market-share of Lenovo in India, the initial step taken was building the brand
of Lenovo in India and changing the perception is Lenovo as a Chinese company. Moving
beyond its traditional institutional client base or enterprise segment, Lenovo began
developing products for the consumer markets, especially the retail and small and medium
businesses(SMB) sectors. These SMB sectors demanded innovative technologies and offered
optimum operational values, while being cost effective and technically simple. By 2011,
Lenovo come up with X, Y and W series of computers. All Lenovo machines are made of
magnesium alloys which made them sturdy. Some of the machines features were, roll cage,
shock absorbers, legendary keyboard and steel hinges. The sturdiness of the machine was a
major differentiating factor from other competing machines in the market. In this way the
Lenovo used innovation as a tool to build the reputation of the firm and curbed the
competition. “Protect and Attack” was one of the key strategy used by Lenovo to curb the
competition. Attempted to protect its strengths and attacked areas in which they saw
opportunities.
Addressing the seven pillars of reputation:

1. Financial Performance
2. Governance
3. Work Place Culture
4. Leadership
5. CSR
6. Products and Services
7. Innovation

Financial Performance:

To cut down the costs, Lenovo has started manufacturing in India at Pondicherry and
Himachal Pradesh (for some part of time). To emphasize on the financial performance,
Lenovo has adopted a 90 days’ rule in which “if the product is more than 90 days in
inventory, it is written off”. To farther improve the numbers Lenovo has adopted “Stock and
Sale”. These measures posed Lenovo as a strong competitor to Acer and HP.

Governance:

The Business Conduct Guidelines and Business Ethics Guidelines which were regularly
emphasized and practices in day to day transactions has helped Lenovo to build relations with
government and helped to come out of wall paper incident happened in 2009.

Workplace culture:

An open door policy and the transparency of the decisions taken during the recession kept
Lenovo as employee friendly firm which in turn reduced the attrition rate of the firm by 10%
while the industry rate was maintained at 20%. Initiative like Walk the Talk were helpful in
recognizing the top performers.

Leadership:

After 2007, the top management has seen series of exits, which left Lenovo under leadership
crisis. Later Amar Babu who has taken the responsibility and addressed the issues faced by
Lenovo.

CSR:
Lenovo is active I supporting communities and as well as the employees. During the
recession Lenovo helped pink slip employees with CV making and finding other
opportunities.

Products and Services & Innovation:

Innovation is the key of success for Lenovo in meeting the customer demands and building
the reputation in India. The sturdiness of the computers were key differentiating factors and
unmatchable 48-hour service to all locations in India, make Lenovo a preferred brand for
many in India.

Finally, Reputation is a two-way process between the employee and the firm. Employees are
the key sources of building the reputation as they are the ones interacting with the customers
directly. the reputation of the firm is equally important to make the employee feel that he/she
is working for a well reputed company, which in turn makes them to contribute more towards
the firm.