Lenovo Group SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Growing global smart home market: According to industry research, the smart home market is expected to grow at a CAGR of 12.02% from $76.6 billion in 2018 to $151.4 billion in 2024. The growth drivers are: large number of internet users, increasing usage of smart devices, rising awareness of healthy lifestyles and fitness, rising importance given to monitoring homes from remote locations and rising need for energy efficient solutions. There are huge growth opportunities in the Asia Pacific market, especially in China, Japan and Australia. This region is predicted to have the highest growth rate during 2018-2024 due to rising population, strong economy, rapid urbanization and rapidly improving standards of living. China is expected to be the largest market in this region. Lenovo has a wide range of smart home devices like Smart Bulb, Smart Plug and Smart Camera. All the components of the Smart Home can be controlled from the customer’s phone through the Lenovo Link app. Smart Display and Smart Tab are other Smart Home solutions to enable a great customer experience.

2. Opportunities in data center market in India: Many local and global data center operators are investing heavily in India, especially in the cities of Mumbai, Bengaluru and Hyderabad. Telangana and Andhra Pradesh are two states that are likely to become major locations for mega data centers. According to a research conducted by Arizton, the data center market in India is expected to grow at a CAGR of 9% during 2018-2024 to reach $4 billion by 2024. Lenovo is taking advantage of the growing data center opportunity in India by collaborating with government partners and startups for expansion of its data center business in the country. India is one of the 10 countries identified by Lenovo for data center expansion. The company has invested $1.2 billion in artificial intelligence R&D to expand its manufacturing facility in Chennai for data center offerings too. Lenovo thus expects revenues of $5-6 billion from the Indian market by 2021.

3. Strong market potential in Internet of Things (IoT) business: According to projections by Bain, the IoT market is expected to double between 2017 and 2021, reaching $520 billion. Lenovo has announced in 2019 its plans to quadruple IoT investment. The company is developing an IoT solution bundle combining hardware, software and services. IoT is a great opportunity for diversification beyond the core PC business, leveraging existing enterprise relationships. The IoT solution bundles and Smart Vertical Group tailor IoT solutions for specific industry use cases. The company can sell these products to existing clients of the PC and data center businesses.

Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Sustainable transport and packaging: Companies can reduce carbon footprint; transportation spend and warehouse costs by avoiding conventional packaging methods and materials. Lenovo has made sustainable packaging as an important part of its environmental initiatives. Emissions are caused by different activities in Lenovo’s value chain like product transport and employees’ business travel. Lenovo works with partners in environmentally friendly product shipping and encourages employees to use technology for reducing travel. Continuous innovation to improve packaging, reduction of size and weight and usage of environmentally friendly materials is a part of Lenovo’s Environmentally Conscious Product Program.

2. Corporate initiatives to achieve the UN Sustainable Development Goals: The rising awareness of the need for sustainability has led to governments and corporates implementing sustainability initiatives. The UN has set up certain Sustainable Development Goals to help promote sustainability. Lenovo has implemented various programs that are inline to achieving the UN goals. The company focuses on initiatives to meet the following goals: quality education, gender equality, decent work and economic growth, industry innovation and infrastructure, responsible consumption and production, and climate action. Lenovo’s efforts to provide safe and healthy workspaces across the supply chain have been recognized. The company’s diversity hiring efforts have led to an increase in the female executive population of the company by 1.8% in FY 2017/18 compared to FY 2016/17. Lenovo’s sites across the world are ISO 14001:2015 certified.

3. Combating the threat of climate change: Lenovo believes in the threats posed by climate change and makes efforts to reduce greenhouse gas emissions. Through a comprehensive strategy covering all aspects of the business, setting objectives and targets, Lenovo aims to reduce greenhouse gas emissions across the supply chain. Lenovo ensures that products are disposed of in an energy efficient manner. The company also implements projects on energy efficiency and uses renewable energy sources in the daily operations. Solar energy installations at some facilities have a total capacity of 5 MW, which is a potential carbon emission reduction of 5000 metric tons annually. The target is to achieve 30 MW of renewable energy generation capacity across the world by 2020.