INTERNATIONAL STRATEGIC ALLIANCE

LENOVO AND IBM

An strategic alliance is an agreement for cooperation among two or more independent firms to work together toward common objectives.

It is a collaboration with aim of synergy where each partner hopes for greater benefit than as individual efforts.

When firms of different company alliance together it is called international strategic alliance.

STRATEGIC ALLIANCE

Enables to gain competitive advantage in new economy

Grow and expand more quickly and efficiently

Learning from partners and developing competencies that may be more widely exploited elsewhere

To get benefits from established channels of distribution , marketing, brand reputation etc

REASON BEHIND ALLIANCES

ALLIANCE BETWEEN LENOVO AND IBM

Lenovo Group Limited is a Chinese multinational technology firm with headquarters in Beijing, China

It sells personal computers, tablet computers, Smartphones, workstations, servers, electronic storage devices, IT management software and smart televisions

Lenovo has operations in more than 60 countries and sells its products in around 160 countries and has now become the 3rd pc provider in the world.

LENOVO

IBM is an American multinational  technology and consulting corporation

headquarter in New York, United States manufactures and markets

computer hardware and software, and offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology

IBM

ALLIANCE: December 8th, 2004 VISSION:  to develop and deliver industry specific,

integrated technology solutions for enterprises, small and mid-market businesses and individuals

AGREEMENT:  The agreement aligns Lenovo's expertise in building the best engineered personal computers with IBM's extensive IT services and technology capabilities

ALLIANCE

Meet the business needs of clients in industries such as healthcare, financial services, education, retail and government

IBM market and sell Lenovo PCs through IBM Global Services and its strategic outsourcing deals. 

Through this agreement, customers will now have the opportunity to include the purchase of Lenovo’s best engineered PCs within the context of their overall technology solutions.

CNTD….

Lenovo had little business outside the country

The increasing fierce competition from aggressive foreign rivals such as Dell and HP

Both the companies was financial problems

Shares of the Lenovo dropped nearly 60 per cent in the year 2004

NEED TO FORM STRATEGIC ALLIANCE

Lenovo intended to expand its business globally

Lenovo needs a well-developed worldwide distribution network

IBM’s presence in the world’s fastest growing IT market

China is a tough nut to crack especially for outsiders

MOTIVE

FINANCIAL ASPECTS-the pressure from the market leader Hewlett-Packard and Dell and low confidence of the shareholders

BRANDING-‘Lenovo’ name is almost unknown outside of China, it is hard for marketers to build an international brand from scratch

CULTURAL CLASHES- The differences can be caused from the different corporate cultures or national cultures.

PROBLEMS