Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell

Exercise 24

Lenovo Gains a Competitive Advantage through Manufacturing
Lenovo, a Chinese computer company and one of the largest PC manufacturers in the world, has defied the state of the personal computer market by experiencing rapid growth and increase in market share. In 2013, the company completed a 240,000-square-foot manufacturing facility in Whitsett, North Carolina, where it previously had a logistics center, customer solutions center, and national returns center. This expansion will enable it to become even larger, which is necessary for its next venture.
While the company specializes in PCs, Lenovo is preparing to enter the U.S. mobile phone market. The market is highly competitive, with Apple and Samsung holding 70 percent of the market. Despite the intense competition, however, Lenovo's manufacturing plant could help it gain a competitive advantage. For instance, the manufacturing plant could be used to increase the range of Lenovo's product lines. The company also achieves efficiencies in manufacturing that may help it save costs and meet changing market conditions. Lenovo sets itself apart from others in the industry by having all parts of the production process in-house. It does not outsource any activities, unlike many other companies in the industry. This allows the firm to keep up with the changes in innovation by better understanding and controlling inventory, matching supply with demand, and handling fast inventory turnover. 16
Despite the decline in PCs, Lenovo has surpassed most of its competitors in the computer market. Do you think it can do the same in the mobile phone industry?