Case analysis of Lenovo: Diversity, Globalization & Rapid Change

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 Case analysis of Lenovo: Diversity, Globalization & Rapid Change

1.        Introduction of Lenovo

 

Chinese largest PC maker, Lenovo only gets itself known to the consumers outside Asia since 2005 after it went into a deal with IBM to buy the IBM’s PC division for $1.75 and also with the right to continue to use the brand for a five years term (Lazonick 2009, p.185). Below we will analyze the post acquisition Lenovo in three topics: gender diversity, expatriate managers and rapid technological change supplemented by relative theories and view.

 

2.        Workforce diversity- Topic of gender diversity

 

2.1    Basic concepts

 

Diversity in the individual perspective could be defined as the differences that people have in term of age, ethnicity, gender, race, physical ability and sexual orientation. These six differences are considered as the primary dimensions[1] of diversity which constitute the core of our diverse identities (Hubbard & Edward 2004, p.30). And diversity in the work place could be referred as a workforce made up of people with different human qualities or who belong to various cultural groups (Daft & Lane 2008, p.333). Gender diversity could be simply understood as the difference in term of gender or sex, according to Wagner and Berger (1997) that in female-intensive organizations, increasing sex diversity represents males are added to female-dominated teams and in a male-intensive organizations, the reverse is true.

 

2.2    Functions and impacts of gender diversity

 

2.2.1            Gender diversity and utilization of female talents

 

Many companies have now realized that a corporate culture suited to an all-male work force or male-dominated human resource composition is not as effective in the new business environment (Ferris, Rosen & Barnum 1995, p.264). According to an early study on 241 out of the Fortune 1,000 CEOs, about 80 percent of the CEOs admitted that there were internal barriers that kept capable women from reaching the top (Fierman 1990). And it is obvious before the companies could remove such barriers or glass ceilings[2] effects as described by many researchers, the women talents would not be utilized to the full potential in the working environments.

 

2.2.2            Gender diversity as a source of conflict

 

When diversity on one hand could bring a number of benefits the firms, it could also become a source of conflict especially when it is not appropriately managed (Taylor, Doherty & McGraw 2008, p.238). As mentioned above, it is widely seen that at the top level of the management, there are internal barriers that kept capable women from rising along the hierarchy ranking, but if such glass ceiling effects could also be found in the middle or lower management level that it could make the women employees believe that some men managers are hired and promoted because of their gender (Griffin 2007, p.209) and some women employees would be fired because they are women and such evens could further make the employees stereotype that their companies have a culture that favor the male employees or management.

 

2.3    Case analysis- Manage gender diversity in the work place

 

Diversity management could be defined as the process of planning for, organizing, directing, and supporting these collective mixtures in a way that adds a measurable difference to organizational performance (Hubbard & Edward 2004, p.27). According to this definition, the final motive behind any diversity management practices is to increase the organizational performance and effectiveness by removing the diversity led conflicts. As in the case of Lenovo, it has come to know the fact that the percentage of women in the total labor is traditionally low than most other industries that it is eager to attract, retain and promote the best talents, including female talents, in each of the 160 countries where it operates by adopting a world sourcing strategy. And to increase the percentage of the women in the top management level, in year 2007 it had launch a program namely as “Women In Lenovo Leadership” (WILL) which was aiming at increasing the mentoring, networking, training, and external partnerships with other parties concentrated in women diversity (Pressebox.com 2008). And also Lenovo also positively participate a number of activities that promote sex diversity in the work place such as the “Women’s Forum for the Economy and Society”. And by active participation of those activities with the theme of gender diversity, Lenovo also shows its determination to eliminate the sex discrimination within the company. After the takeover of the PC business unit of IBM through a $1.75 billion deal (Ching 2009, p.152), a global giant that is famous for its policy to encourage a multi-pronged diversity in the workplace, it will be a good opportunity for Lenovo to maintain such good tradition and integrate it as part of the core corporate value and culture.

 

3.        Globalization- topic of expatriate managers

 

3.1    Basic concepts and view of points regarding expatriate managers

 

An expatriate assignment is a job transfer that takes the employee to a workplace that is outside the country in which he or she is a citizen (Cooper & Argyris 1998, p.208). An expatriate assignment is different from other kinds of international such as cross border business trips, to speak from the nature of expatriate assignment which requires the involved staffs to move his or her household to the foreign location. And because of the long term nature of the expatriate assignment, there are a number of challenges and difficulties that the domestic counterparts would not face.

 

3.2    Functions and impacts of expatriate managers

 

3.2.1            The role of expatriate mangers in the localization of human resources

 

As suggested by Selmer (2004, p.1094) that effective localization commences with the incumbent expatriates. So that on the first place, the role of expatriate is significantly important in the process of the localization of human resources for the multinational companies (MNCs) in the foreign market, and view is based on the assumption of the existence of the roles of expatriate mangers to mentor and coach the host employees (Evans, Pucik & Barsoux 2002). This corresponds with the view that when a management deployment strategy is adopted in term transplanting for example, the expatriate mangers must invest their efforts and time to coach, mentor and develop the local manager as a critical step of the localization of human resources (Li 2001, p.169). On the other hand, though the expatriate managers’ support is crucial to the success of the localization of human resources, they could also be serious obstacle to such process for two reasons. Firstly, the ultimate target of expatriate assignment is to make the local mangers to take over the management position of the expatriate managers, but the before the repatriation process begins the local managers could not really learn to manage the business in a local and appropriate way that fit their situation because the expatriate assignments also involve standardization from the MNEs rather than pure skills and technology transfer; and secondly, there are a number of cases in which the expatriate managers would not be able to fulfill role of expatriate mangers in the localization of human resources which will be elaborated below.

 

Though most companies have come to realize the significance of the role of expatriate mangers in the localization of human resources, but there are a number of cases in which the expatriate managers would not be able to fulfill the expectation of the MNCs to be an effective mentor and coacher: firstly expatriates may think that they are unable to contribute to the localization process (Selmer 2004); secondly, some of the expatriate manager may not be born mentors nor will they have the required skills to develop the HCN manager (Melvin & Sylvester 1997). What’s more there is evidence suggesting that the personal interests of the expatriates will also restrain the localization initiatives (Fuller, 2005). Also there are other factors which appear in the expatriate assignments such as the most popular topic: the culture shock or difference, will also affect the effectiveness of the role of expatriate mangers in the localization of human resources. And below we will focus on the topic of culture difference and the relative issues.

 

3.2.2            Culture difference and challenge in social network building

 

One of the most famous and typical theories about culture differences is Hofstede (1980)’s five Cultural Dimensions which include Power Distance Index (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance Index (UAI) and Long-Term Orientation (LTO), this theory was developed by Hofstede who distributed surveys to the IBM employees from 72 countries during 1968 to 1972 and proposed these five basic elements on which cultures can be distinguished (Landy & Conte 2010, p.37). For example, it is well known that the US led western culture is an individualist culture which focuses on the individual needs rather than the group value. And at the same time, a collectivist culture could be found in many of the Asian countries such as China and Japan. So that when the US firms have business in the Asian countries or the Chinese firms try to set up its business networks in the US, there would be culture differences or culture shocks that the expatriates need to face.

 

As claimed by (Cooper & Argyris 1998, p.208) that one of the major difficulties in the process of removing the barriers to cross-cultural adjustment is the lack of a way for expatriates particularly those non-working spouses of employees to build up their social networking in a foreign country in which they work as expatriate managers. Such difficulties could be reinforced by the culture differences and the fact that internal grouping between the expatriate employees could be strengthened in a different social and cultural condition.

 

3.3    Case analysis regarding Chinese expatriate managers in the US

 

After the acquisition with the IBM PC division in 2004, while Lenovo integrated IBM’s nine thousand staffs worldwide with a US style western culture and the IBM corporate culture identity, one strategic move that the company took was to relocate its headquarter to New York to share the management with the US management team (Yeung 2007, p.458). As mentioned above and also with the figures below show, and according to the survey results carried out by Geert Hofstede (1991) that the most obvious different dimension between the Chinese culture and the United State culture is in the Individualism (IDV) in which the US was ranked as the highest[3], so such different value in term of Individualism (IDV) will certainly result in culture differences that the Chinese expatriate managers who have been sent to work in the US need to face and get adapted to the western work style in term of management and the styles of getting jobs done in the actual work environment.

 

 

 

Figure 1 Hofstede (1980)’s five Cultural Dimensions analysis on China

Source: (Geert-hofstede.com 2009)

 

Figure 2 Hofstede (1980)’s five Cultural Dimensions analysis on the United States

Source: (Geert-hofstede.com 2009)

 

After the company announced that it will change the internal official language from Chinese to English, it is reported that most Chinese employees have been struggling in getting adapted to the English working environment through training and learning by doing in the actual working practices. Though the situation for the Chinese expatriate managers in the US would be better since the selected expatriate managers would be better in English proficiency, still language caused communication obstacles still exist especially for those managers who are in the technical positions. And enhanced by the language difficulties, the Chinese expatriate managers in the US are also facing the cultural shocks which they need to work hard to resolve.

 

4.        Rapid change- technological change

 

4.1    Basic concepts

 

The rapid rate of technological change in the global scale especially in the US computer sector and the direction of the change have been key determinants of its competitive position (National Research Council 2010, p.6). And maintaining the leadership in technology change process has been widely accepted as being helpful to any PC makers to enhance their core competitiveness and lead to direct profit growth. The rapidity of the technological change could be seen from the fact that since IBM’s personal computer was introduced in 1981 the speed of the personal computers has approximately doubled in speed every two years (O’Hanlon 2000). There are two major effects caused by the rapid technological change to the large organizations: persistent dominance and organizational inertia. Firstly, the rapid technological changes frequently leads to the further concentration in the large organizations because those incumbents with greatest market power are best placed to develop and exploit new technologies and it is also one of the causes why the large IT giants and PC makers could survive in the rapid technology innovation. Secondly, the term organizational inertia describes those organizations, especially the large organizations which find the technological change disruptive if it is incompatible with widely held organizational views or visions of where the companies’ technological strategy is heading (Swann & Gill 1993, p.2).

 

4.2    Skills and techniques to manage rapid technological change

 

The first technique is the use of replacement or improvement technology. Because of the rapidity of the technological change especially in the personal computer, mobile phone and their software system industries, now it is widely accepted that the technology life cycle has been largely reduced. The traditional S- Curve of the technological progress is also changing for some industries because the progress of a particular technology could be suddenly halted by the emergence of a new version of the software or new technology developed. So that to cope with such rapid technological changes, companies need to begin the replacement or improvement technology immediately following development of the new products (Khalil, Lefebvre & Mason 2001, p.13). The second technique that companies could use to cope with the rapid technological change is the adaptation of the organizational structure. There are more and more companies under the press of the   rapid technological change which are changing the originally stable and vertical hierarchy to a more horizontal structure to create a flat organization that has fewer management layers and become more flexible. This change in the corporate structure enables organizations to meet the specific emerging needs or disbanded as the needs disappear.

 

4.3    Case analysis of Lenovo

 

The sell out of the PC division by IBM was believe to be the company’s strategic decision to shift the focus from the highly competitive PC market to concentrate its resource on the provision of the service oriented integrated solution. And this also corresponds with the internal source in Lenovo which suggests that the PC industry is a mature industry in which innovations are mainly carried out by the component suppliers such as Intel, Microsoft and for the PC assemblers, they could partially change the application and design of the products (Reddy 2011, p.163). So that technology transfer seems not be the major goal that Lenovo was eying for in the acquisition deal and rather the access to market outside China provided by IBM seems to be more attractive to Lenovo. By realizing the fact that the rapid technological change happens in the major suppliers of the inputs required by the PC industry rather than the PC assemblers including Lenovo, in order to cope with these rapid changes, the major strategy that Lenovo uses is an active collaboration strategy with other organizations. For example, strategic alliance relationship has been built up between Lenovo and China Telecom, D-Link, Motorola, IBM and other important technology developers (Reddy 2011, p.163). This active collaboration strategy is designed to ensure that under the network of strategic partnership, Lenovo could smooth the information connection with them and thus can obtain the technological innovation in a shorter period of time and achieve competitiveness because it could integrate the changes better and faster than the competitors.

 

5.        Conclusions

 

Based on the analysis above, we can see that with the trend of globalization, fast changing business environment and workforce diversity there are advantages and disadvantages that these three issues could bring to the MNCs including Lenovo. If these issues could be resolved in an appropriate manner, they could help the companies to maintain or even create their own core competitiveness in the global environment and on the other hand they could also around conflicts and result in ineffectiveness if dealt with in an inappropriate manner or even neglected by the management. Below some recommendations are provided to Lenovo to better deal with some of the mentioned problems.

 

6.        Recommended techniques to resolve problems

 

6.1    Recommendations and techniques on gender diversity management

 

To cope with the gender diversity issues, there are two major directions that not only Lenovo could use but also other companies could also follow: women care and innovations in job design. On one hand in term of the women care, Lenovo could build up more child care centers for the working mothers and also provide better policies to support the maternity need in term of maternity leave or paternity leave and what’s more special attentions and care should also be given to the single parents (Cummings & Worley 2009, p.475). And on the other hand, the company could also try to revise the job design so that male and female employees could have more chances to work under teamwork and also the new job design should provide more chances to encourage the women to show their capabilities in the key tasks and jobs (Mirvis 1993, p.256).

 

6.2    Recommendations on expatriate manager issues

 

As mentioned above, one of the major problem that reduce the work efficiency and effectiveness is that expatriate managers are usually found having difficulties to become members of the local social network. To deal with such challenges and increase the effectiveness of the work of the expatriate managers during their expatriate assignments, the company could invest in the offering of the programs such as the company evening parties holding in the different holidays according to both the local tradition and the traditions in the home country of the expatriate managers. What’s more the cross cultural training and following up daily life care effort especially at the beginning of the expatriate period.

 

6.3    Recommendations on rapid technological change issues

 

There are two directions that Lenovo could do to maintain its competitiveness amid the rapid technological change. On one hand, faced with the increasing low profit margin in the PC market, it need to lead the trend of the service economy to focus on the provision of the quality service such as IT assist to help the customers to handle the PC problem (e.g. virus problem) to add to its core competitiveness in the hyper competition driven by the leading global competitor such as Dell. On the other hand, because of the importance of knowledge behind the supply chain strategies, driving innovations in product, distribution and marketing, Lenovo could also propose and encourage the lifetime learning among the organization to equip the employees with the needed knowledge and skills to better prepare the changes that are coming.

 

 

Reference list

 

Ching, M. K. 2009, CFO Guide to Doing Business in China. Singapore: John Wiley & Sons (Asia) Pte, Ltd. p.152

 

Cooper, C. L. & Argyris, C. 1998, The concise Blackwell encyclopedia of management. Oxford: Blackwell Publishers Ltd. p.208

 

Cummings, T. G. & Worley, C. G. 2009, Organization development & change. 9th edition, Mason: South- Western Cengage Learning. p.475

 

Daft, R. L. & Lane, P. G. 2008, The leadership experience. 4th edition, Mason: Thomson South- Western. p.333

 

Evans, P., Pucik, V. & Barsoux, J. L. 2002. The Global Challenge: Frameworks for Interntional Human Resource Management, Chicago: McGraw- Hill Irwin.

 

Ferris, G. R., Rosen, S. D. & Barnum, D. T. 1995, Handbook of human resource management. Cambridge: Blackwell Publishers Inc, p.264

 

Fierman, J. 1990. Why women still don’t hit the top. Fortune, July 30, 40-62

 

Fuller, T. 2005. Skilled help hard to find in China, International Herald Tribune, Beirut edition, 16 March.

 

Geert-hofstede.com 2009. Geert Hofstede™ Cultural Dimensions. Accessed on 7th May 2011 [online] available: http://www.geert-hofstede.com/hofstede_china.shtml

 

Geert-hofstede.com 2009. Geert Hofstede™ Cultural Dimensions. Accessed on 7th May 2011 [online] available: http://www.geert-hofstede.com/hofstede_united_states.shtml

 

Griffin, R. W. 2007, Principles of Management. Boston, MA: Houghton Mifflin Company, p.209

 

Hatch, S. E. 2008, Diversity by design: guide to fostering diversity in the civil engineering workforce. Reston: American Society of Civil Engineers, p.22

 

Hofstede, G. 1980. Culture’s Consequences. Beverly Hills, CA: Sage Publications.

 

Hofstede, G. 1991. Cultures and Organizations, UK: McGraw- Hill

 

Hubbard, E. & Edward, H. 2004, The Managers Pocket Guide to Diversity Management. MA: HRD Press. p.27

 

Khalil, T., Lefebvre, L. A. & Mason, R. M. 2001, Management of technology: the key to prosperity in the third millennium. Oxford: Elsevier Science Ltd. p.13

 

Lazonick, W. 2009, Sustainable prosperity in the new economy?: business organization and high-tech employment in the United States. Michigan: W.E. Upjohn Institute for Employment Research. p.185

 

Landy, F. J. & Conte, J. M. 2010, Work in the 21st Century: An Introduction to Industrial and Organizational Psychology, 3rd edition, California: Wiley- Blackwell, p.37

 

Li, J. T. 2001, Managing international business ventures in China. Oxford: Elsevier Science Ltd. p.169

 

Melvin, S. & Sylvester, K. 1997. Shipping out, China Business Review, May-June: 30- 4.

 

Mirvis, P. H. 1993, Building the competitive workforce: investing in human capital for corporate success. New Jersey: Wiley. p.256

 

National Research Council 2010, Keeping the U.S. computer industry competitive : defining the agenda. Washington, DC: National Academy Press, p.6

 

O’Hanlon, M. E. 2000, Technological change and the future of warfare. Washington, D. C.: Oakland Street Publishing.

 

Pressebox.com 2008. Lenovo supports the 4th edition of Women’s Forum for the Economy and Society. Accessed on 7th May 2011 [online] available: http://www.pressebox.com/pressemeldungen/lenovo-deutschland-gmbh/boxid/211574

 

Reddy, P. 2011, Global Innovation in Emerging Economies. New York: Routledge. p.163

 

Selmer, J. 2004, Expatriates hesitation and the localization of western business operations in China, International Journal of Human Resource management, 15(6): p.1094

 

Swann, P. & Gill, J. 1993, Corporate vision and rapid technological change: the evolution of market structure. London: Routledge. p.2

 

Taylor, T., Doherty, A. & McGraw, P. 2008, Managing people in sport organizations: a strategic human resource management perspective. Burlington, MA: Elsevier Ltd, p.238

 

Yeung, H. W. C. 2007, Handbook of research on Asian business. Cheltenham: Edward Elgar Publishing Limited, p.458

 

Wagner, D. G. & Berger, J. 1997, Gender and interpersonal task behaviors: status expectation accounts, Sociological Perspectives, 40, 1-32

 



[1] Beyond the six primary dimensions, there are several secondary dimensions: communication style, education, family status, military experience, organizational role and level, religion, first language, geographic location and so on.

[2] Glass ceiling refers to situations where the advancement of a person within the hierarchy of an organization is limited in form of discrimination usually in term of sex and race (Hatch 2008, p.22).

[3] There are 7 countries in the Geert Hofstede research that have Individualism (IDV) as their highest Dimension: USA (91), Australia (90), United Kingdom (89), Netherlands and Canada (80), and Italy (76).

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