4th Sem Project Final

8/9/2019 4th Sem Project Final

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| Institute of Business management and research, Bangalore

1Calculating the Return over Investment of LAMPS project at Lenovo

Contents

Particulars Page

No.

Chapter 1 Industry overview 3

Chapter 2 Profile of the organization 23

2.1 Origin of the Organization 24

2.2 Growth and Development of organization 41

2.3 Financial Status of the organization 43

2.4 Organization Structure 45

2.4Product profile 46

Chapter 3 Discussion on Training 513.1 WorkProfile 52

3.2 Contribution to company 53

Chapter 4 Study of Selected Research problem 54

4.1 Statement of Research Objectives 55

4.2 Statement of Research problem 56

4.3 Research Design & Methodology 57

4.4 Analysis of Data 59

Chapter 5 Summary and Conclusion 87

5.1Summary and Learning Experience 88

5.2 Conclusion and Recommendation 92

Chapter 6 Bibliography 93


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Executive summery

Calculating the return over investment of newly initiated

lamps project at the Lenovo emphasizes the importance of

the calculating the return over investment of any new activity

that takes place at the company which required extra funding.

In this project we have tried to explain how we can calculate

the return of any productive investment in the percentage.

The main objective behind this project is to provide the

reader regarding how one can calculate how much we are

gaining from our new investment in terms of percentage. Also

in some case we can know where which product is selling

more and where we need to place our other product to get

better market share. Some time we also can push the high

profit margin product to be sold more to get improved profit.

For the benefit of the reader the comparison studies and

charts have given. To make analysis simpler we have given

the charts the location wise and also the product wise.


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The impact of the global economic crisis in 2008 reached far and wide.

It has significantly affected the worldwide PC market demand as many

large enterprises delayed purchase decisions and reduced IT budgets.

Even the growth of the China PC market has slowed down under the

economic challenges. At the same time, the PC industry as a whole

has shifted dramatically and rapidly to lower price points, imposing

additional pressures on industry players. During the 2008/09 fiscalyear, the year-on-year growth of worldwide PC market shipments

decelerated to approximately 4 percent mainly supported by consumer

and low-priced notebook segments. The China PC market and

worldwide commercial PC segment in which Lenovo is heavily

weighted showed significant slowdown in the second half of the fiscal

year under the economic crisis. In addition, the Group could not enjoy

the benefits of the growth in transaction space as it has not adequately

addressed the worldwide transaction segment outside China, in

particular the consumer market. Lenovo reported lower-than-market

growth in its worldwide PC shipments which only increased by

approximately 2 percent year-on-year. As a result, the Groups market

share decreased slightly to 7.6 percent, ranking number four worldwide

during the fiscal year. The Groups financial performance in the second

half of the 2008/09 fiscal year was significantly impacted by the

widespread economic slowdown. Lenovos overall sales for the fiscal

year decreased 9 percent year-on-year to approximately US$14,901

million, resulting from the slower PC shipment growth and a steeper -

than-normal decline in average selling prices exacerbated by the weak

economic backdrop. The Groups gross margin performance was

further affected by the continued shift in the market to lower price

points, aggressive pricing and currency fluctuations. The gross margin


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(excluding one-off items) for the fiscal year declined to 11.9 percent

from 15.0 percent while gross profit (excluding one -off items)

decreased 27 percent year-on-year to approximately US$1,779 million.

In anticipation of continued deterioration in the global economic

environment, Lenovo announced a global resource restructuring plan in

January 2009 to reduce costs and enhance operational efficiency.

About 2,500 employees were eliminated as a result of this action which

is expected to realize annual savings of approximately US$300 million

on a run rate basis in the coming fiscal year. Despite Lenovos efforts

to control expenses during the 2008/09 fiscal year, the decline in sales

and pressure on gross margin resulted in 95 percent year -on-year

decline in the Groups profit before taxation (excluding the cost of

restructuring actions and one-off charges) to approximately US$29

million for the year. The Group reported a loss attributable to

shareholders of approximately US$226 million, after accounting for

US$146 million of restructuring costs and US$71 million of one -off

charges. This compared to a profit attributable to shareholders

(including US$20 million net profit from discontinued operations) of

US$484 million in the previous fiscal year.

Vendorhighlights

Hewlett-Packard (HP) made further inroads into consumer portables

through the retail channel and continued to gain share overall. The

vendor's shipments grew 3.6% on year worldwide with above-market

performance in the US. The company also performed well in Europe

and Asia Pacific.

Although still heavily affected by the commercial slump, Dell saw goodgrowth from consumer-focused SKUs and reclaimed the number one

spot in the US. The company continues to restructure operations,

develop its consumer business, and should benefit from an eventual

rebound in the commercial segment.


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Acer continues to capitalize on its growing channel presence to ship

portables geared toward a wide range of cost-conscious consumers.

The company maintained its lead in mini notebook PCs while its early

entry into Atom-based netbooks should also pay dividends later in the

year. The company saw a significant gain in th e US market, likely

benefiting from the troubles of Dell and Lenovo.

Lenovo's renewed focus on notebooks and emerging regions produced

positive growth following declines in the past two quarters. Solid growth

was reported in Latin America and Asia Pacific market excluding

Japan, while yearly declines in mature regions slowed compared to the

first quarter of 2009. Its home court advantage in Asia Pacific market

excluding Japan also has led it to focus on a myriad of governmentstimulus programs, which could pay dividends while riding through the

commercial downturn.

Toshiba had a solid second quarter where it outgrew the market in

most regions and moved up to the fourth spot in the US. Toshiba's mini

notebook offering has helped it to weather the storm compar atively

better than other Japan-based OEMs and it was the only major Japan-

based OEM to have positive yearly growth in Japan.

Table - Top 6 vendors worldwide PC shipments


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matter whether companies operate production facilities or if they dobusiness with the country through exports. Many countries still haverestrictive policies which are maintained to protect domesticmanufacturers and production. Such policies often hinder foreigncompanies from entering into this market. The only possibility to dobusiness in those countries is to establish partnerships with local

companies, where they are additionally forced to accept minorityshares and to provide money and technological know-how. However,the computer industry sees great potential in those countries whichlose their restrictions. This is especially true for China which hasopened for many industries since its accession to WTO in2001. In thecourse of globalization trade barriers decline and new markets emerge,allowing free trade to expand.

2 EconomicThe computer industry expects a growth of approximately 10 percentover the next years. This growth is influenced by the economic

situation in a specific country, having an impact on the purchasingpower of potential customers. Additionally, changing inflation rates andcurrency fluctuation also determine the profitability of a company.

3SocialThe national demand for computers is dependent on the educationallevel prevailing in a specific country. The higher the educationalstandard, the higher is the demand. Furthermore, computers get moreand more involved in daily life. Today, children already get familiar withthe use of computers at a very young age, representing a generationthat will hardly live or work without a computer in future. Additionally,the brand image of a computer and lifestyle trends get more and more

decisive for the purchasing decisions. The computer industry adapts tothis trend, e.g. by offering a wide range of notebooks and by trying tocreate a strong brand name.

TechnologicalThere is hardly any industry that is characterized by a fastertechnological development than computer industry. Increased researchand development have caused permanent innovation processes whichlead to short product life cycles resulting in a faster depreciation of theproducts.

Market structureThe computer industry is characterized by a quasi -oligopolisticstructure. It is dominated by 5 major global players although there are alot of small companies which often serve only regional markets. Thefollowing graph illustrates the division of the computer market of eachindividual company.


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|Institute ofBusiness management and researc) 0 Bangalore

8Calculatingt1 e 2 eturnover Invest3 entof 4 A 5 PS6

rojectat 4 enovo

Company arket share in india

HP 14.9%E 9.5%EN VO 5.5%

ACER 7.9%HCL 8.4%OTHERS 53.8%

IndustryProfile

In India, thesoft areboomstartedsomewhere in the late1990s.

ost of the Indiansoftwarecompaniesat that moment offeredonly

limitedsoftwareservicessuchas thebankingand theengineering

software. Thebusinesssoftwareboomstartedwith theemergence

ofY2K problem, whena largenumberof skilledpersonnel were

required to fulfill the mammoth database-correction demand in

ordertocopeupwith theadvent of thenewmillennium.

HP

15%

DELL

10%

LENOVO

5%

ACER

8%

HCL

8%

OTHERS

54%

Market share


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The profile of the Indian IT Services has been undergoing a

change in the last few years, partly as it moves up the value chain

and partly as a response to the market dynamics. Ten years ago,

most US companies would not even consider outsourcing some of

their IT projects to outside vendors. ow, ten years later, a vast

majority of US companies use the professional services of Indian

Software engineers in some manner, through large, medium or

small companies or through individuals recruited directly.

The market competition is forcing organizations to cut down on

costs of products. The professional IT services on the other hand

are becoming increasingly expensive. The offshore software

development model is today where onsite profes sional services

were ten years ago. There is a high chance (almost a mathematical

certainty), that in less than ten years, the vast majority of IT

services (software development being just one of them) from

developed countries, will be, one, outsourced and two, outsourced

to an offshore vendor.

Despite the global economic slowdown, the Indian IT software and

services industry is maintaining a steady pace of growth. Software

development activity is not confined to a few cities in India.

Software development centers, such as Bangalore, Hyderabad,

Mumbai, Pune, Chennai, Calcutta, Delhi- oida-Gurgaon,

Vadodara, Bhubaneswar, Ahmedabad, Goa, Chandigarh, and

Trivandrum are all developing quickly. All of these places have

state-of-the-art software facilities and the presence of a large

number of overseas vendors. Indias most prized resource is its

readily available technical work force. India has the second largest

English-speaking scientific professionals in the world, second only

to the U.S. It is estimated that India has over 4 million technical

workers, over 1,832 educational institutions and polytechnics,

which train more than 67,785 computer software professionals

every year. The enormous base of skilled manpower is a major

draw for global customers. India provides IT services at one-tenth


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the price. o wonder more and more companies are basing their

operations in India.

The industry is in an expansion mode right now, with dozens of

new offshore IT services vendors emerging every day, the industry

has a high probability of being subjected to the 80:20 rule in not too

distant a future. In perhaps another ten years, 80 percent of all

outsourced offshore development work will be done by 20 percent

of all vendors, a small number of high qualities, trusted vendors.

Only a few select countries and only the most professional

companies in those countries will emerge as winners. India will

definitely be the country of choice for offshore software

development. It has the potential to become and remain the

country of choice for all software developments and IT enabled

services, second only to the USA. The third choice could be far

distant.

India is among the three countries that have built supercomputers

on their own. The other two are USA and Japan. India is among six

countries that launch satellites and do so even for Germany and

Belgium. India's I SAT is among the world's largest domestic

satellite communication systems. India has the third largest

telecommunications network among the emerging economies, and

it is among the top ten networks of the world.

To become a global leader in the IT industry and retain that

position, India needs to constantly keep moving up the value chain,

focusing on finished products and solutions, rather than purely on

skill sets and resumes. It also needs to be able to package its

services as products, rather than offering them as raw material. It

needs to be able to recognize and build up on its strengths and

work on weaknesses.

Another extension of the IT industry is the ITES (Information

Technology Enabled Services) which is a sector dependent on IT

sector.

Information technology consulting (IT consulting or business and

technology services) is a field that focuses on advising businesses


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on how best to use information technology to meet their business

objectives. In addition to providing advice, IT consultancies often

implement, deploy, and administer IT systems on businesses'

behalf.

The PC industry is one of the strangest in the world. There is

probably no other type of product that is so technologically

sophisticated, sells for so much money, and yet is sold by so many

companies for so little profit. The severe competition in the industry

is the #1 reason why so many problems are encountered by those

who deal with PC vendors. While I consider there to be absolutely

no excuse for a company not treating its customers fairly, at the

same time I think customers should have some idea of what

vendors are up against in this demanding marketplace.

Features of the Industry

y It Is Very Price Competitive: By far, the most important

thing to remember about the PC industry is this: it is one

of the most competitive in the world. The main reason for

this is the simple fact that making a PC is just not that

difficult. Most are assembled from standardized

components and not a lot of expertise is required. There

are few barriers to entry to the market, meaning it is easy

to set up a new PC company. As a result, there are tens

of thousands of companies making PCs that perform

similar functions. This causes the market to be extremely

price-competitive. Most of the other characteristics of the

industry follow directly from this fact.

y Systems and Components Sell with Low Margins:

Since the market is so competitive, vendors often sell at

very low margins. Computers aren't like many other

products, where the company selling the device is

making upwards of 50% of the price of the product as


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gross profit (meaning, profit before overhead and general

expenses). For PCs it is more like 10% or less. Many

people buy a $1500 PC thinking the vendor is making,

say, $500-700 on the item, and they find it hard to

understand why these companies aren't getting rich. It's

more typical for the vendor to make less than $100 profit

on such a PC. Some small companies make virtually no

profit at all on straight PC sales, and survive on post-

warranty support and consulting!

y The Market Experiences Rapid Price Fluctuations:

There is probably no other industry that has prices

change as dramatically and frequently as the PC

industry. Usually, prices are decreasing. This is good for

the consumer but very bad for vendors, because it

means that their already low margins get squeezed if

prices drop between the time that they buy a product and

the time they sell it. It's not unheard of for a vendor to

buy a component wholesale at price $X and find 24

hours later that the retail price has dropped below $X!

The vendor must then try to dump the product as fast as

possible to limit his losses. You won't find many

industries where this occurs with regularity.

y Vendors Keep Low Inventories: In an environment

where margins are low and prices are generally

dropping, keeping high inventory is a death sentence--

whenever prices drop the vendor potentially loses money

on every component in inventory at the time. For this

reason, most companies try to keep as little in inventory

as they can get away with.

y Vendors Contend With High Bankruptcy Rates:

Because of all the challenges involved in running a PC

business, the bankruptcy rate is high. Many vendors

have been in business only a short time. Some open a


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store, have it fail, and then open another one with a new

name, sometimes year after year.

y The structure ofPC industry is almost unique. The

original equipment manufacturers (OEMs) that produce

and sell PCs bear most of the risk, while the downstream

suppliers of components make most of the profit. Many

analogies have been drawn with other mature -product

industries, such as automobiles, but we find such

comparisons inaccurate. The key difference is that the

suppliers of PCs are struggling to identify meaningful

differentiation vs. competitors. This leaves manufacturers

competing primarily on price, which exacerbates the

pressure on margins. The airline business presents a

more realistic comparison. Aircraft manufacturers and

airports are profitable and continue to benefit from

growth in demand, but the carriers are struggling and

further consolidation is viewed as inevitable.

Although the apparent inability to differentiate products drives the

PC industry's focus on price competition, the downward movement

of pricing is also because of oversupply. There are too manysuppliers, all struggling with similar challenges in this highly cash -

intensive business. We continue to observe fire sales resulting

from overproduction and price-led promotions by PC suppliers

looking to accelerate cash flow or boost market share. The result is

an industry which, in some market segments, seems locked into a

"race to the bottom" in the pricing of products. Clearly, this trend is

unsustainable.

In ovember 2004, these observations, combined with our market

expectations for 2006 through 2008, led us to predict that by 2007,

three of the top 10 PC suppliers would exit the market. Within

weeks, IBM announced the sale of its PC Division to Lenovo

Group. Our market analysis was straightforward. Unit growth

between 2006 and 2008 will average about 6 percent, but revenue


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will remain flat. Key PC component suppliers, such as Intel and

Microsoft, have historically been highly adept at maintaining their

PC revenue, and their overall revenue from PCs will probably

continue to grow as the market continues to shift toward mobile

PCs. This leaves PC suppliers facing the prospect of producing

more PCs for dwindling revenue. This situation will inevitably lead

to further consolidation among the leading suppliers.

The impact of consolidation will not be limited to PC suppliers.

Intel, AMD, Microsoft and other component suppliers will also see

change as the structure of their market evolves. Although these

changes will ultimately result in a healthier PC industry that is

better able to equate innovation to sustainable business, the period

of adjustment will bring additional challenges to the buyers and

users of PCs. Choice of supplier and continuity of supply will be

less certain, while the adoption of emerging PC technologies will

present additional risk.

This collection of research further explores the analysis behind

these observations and examines the likely impact for PC

suppliers, key component suppliers and the buyers of PCs.

MajorPlayers in the PC Industry

y Hp:

y The Hewlett-Packard Company commonly referred to as HP, is

the largest PC manufacturer in the world. The company was

founded by Stanford University classmates Bill Hewlett and

David Packard in 1939.It is headquartered in Palo

Alto, California, United State and operates in more than 170

countries around the world. HP specializes in developing and

manufacturing computing, storage, and networking hardware,

software and services. HP is a Fortune 500 company and is

ranked 9 in 2009. In august 2001, HP and Compaq came

together to merge by a 25 billion$ stock deal.


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y The company employs 321,000 people as on 31st December,

2008. MarkV. Hurd chief executive officer and the chairperson

ofHP since September 22, 2006 has focused on maintaining the

companies leadership in exploring how technology and services

can help people and companies address their problem s and

challenges, and realize their possibilities, aspirations and

dreams.

y Even in the poor economic conditions of 2008, the company

had a net revenue growth of 13% from $104.2 billion in

FY07 to $118.3 billion in FY08.

y HPs Product Line:

The company HP provides a wide range of products and services to its

customers and is divided into six business segments:

y Personal Systems: Hewlett-Packard is the world's largest

manufacturer of personal computers, and its Personal Systems

Group (PSG) is responsible for the development and sale ofHP's commercial and consumer PCs, workstations, handheld

devices, digital entertainment systems, and other related

services and accessories.

y Imagingand Printing: Hewlett-Packard is the leading provider

of imaging and printing systems in the world. HP's Imaging and

Printing Group (IPG) provides consumer and commercial printer

hardware, printing supplies, printing media and accessories, and

scanning devices.

y Enterprise Storage and Servers : HP is one of the leading

providers of servers in the world, offering a wide range of

servers and storage products and solutions for small businesses

and larger corporations.


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y HP Services: This segment offers a large variety of information

technology services, including technolog y services, consulting

and integration services, and managed services.

y Software: HP's Software segment provides management

software solutions that assist large companies in managing their

operations and information technology infrastructure,

y HP Financial Services: Hewlett-Packard offers financing,

leasing, and other financial management services for its

larger enterprise customers, small businesses, and

educational and governmental customers in order to allow

its customers to purchase complete end-to-end information

technology solutions.

The company sets its corporate objectives as:

y Customer loyalty

y Profit

y Growth

y Market leadership

y Leadership

y Commitment to employees

y Leadership capability

y Global citizenship


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The SWOTanalysis of HP

STRE GTH

y Leadership position

y Consumer centric brand

y Strong after sales service

y Design strategy: looks

cost strategy

WEAK ESS

y Low flexibility: it does not

have high customization

available

y Decline in digital

entertainment market

y Software service

y Very poor HR policies

OPPORTU ITY

y PC business

y Service industry: bought

worlds o 2

Service provider EDS

THREAT

y Pricing pressure

y Component pricing

y Slow revenue growth


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as productivity software, security programs, and games. Dell

also sells a number of computer-related peripherals, including

LCD monitors, printers, input and storage devices, etc. Aside

from PC-related items, Dell sells various accessories and

electronic devices, such as LCD televisions, digital cameras,

and MP3 players.

y Servers and Storage 15% of total revenue in 2 8)

for its corporate customers, Dell provides both servers and

storage systems. Dell also sells customized servers and

enterprise systems designed to meet the specific needs of

certain customers.

y Technical Support and Services 9% of total revenue in

2 8) Dell also sells technical support services for its

products, providing customers with assistance after they

purchase their systems. In Fiscal 2008, revenue increased 6%

year-over-year to $61.1 billion, The company recorded net

income of $351 million for the fourth quarter ended Jan. 30, a 48

percent drop from the $679 million it recorded in last year's

fourth quarter. et income per share was $0 .18.


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SWOTanalysis of Dell

STRENGTH

y Inventory turnover rate is 6

days.

y Revenue growth at 100%

y Cost efficiency

y Direct to customer business

model: minimum credit risk

y Latest technology

customization

y Internet sales leadership:

$5M everyday worldwide

Weakness

y o proprietary

technology

y High dependency on

component suppliers

y Lack of software support

for customers

Opportunity

y etwork service in B2B

y Strong potential in china and

India

y Low costs and advanced

technology

y Growth in business,

education and government

markets

Threat

y Dells market share is

very less

y Price range considered

premium

y Currently fluctuation

policy instability

y Tariff trade barriers


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Acer Acer Incorporated is a Taiwan-based multinational electronics

manufacturer. Originally named Multitech, it was founded by Stan

Shih , his wife Carolyn Yeh, and a group of five others in 1976.

Multitech was eventually renamed Acer in 1987. Acer is renowned for the development and manufacture of

sophisticatedly and intuitively designed, easy to use products. Focused

on marketing its brand-name IT products around the globe, Acer ranks

as the world's o. 3 vendor for total PCs and o. 2 for not ebooks, with

the fastest growth among the top -five players.

Acers product line

y

Notebook 71% ofrevenue): otebooks are Acer's most profitableproduct, generating T$417 billion in revenue in 2008. Within the

past decade, growth in notebook sales has far outpaced growth in

desktop sales. For example, in 2007, overall notebook shipments

grew 33.8%, while desktop shipments grew only 4.8%.

y Netbook 9% of revenue): etbooks are an emerging type of

scaled-down portable computer, that are designed to be cheap, light

weight, and easy to use. Acer is the #1 producer of netbooks

worldwide by unit sales, with a 38% market share.

y Desktop 12% of revenue) : Annual revenue growth in desktop

sales has slowed from 50.2% from 2004 to 2005 to 3.8% in 2008 as

consumers demand more laptops. The company expects desktop

sales growth of 3-4% from 2009 to 2011.

y Display 5% of revenue): Acer manufactures LCD monitors,

HDTVs, and projectors. In addition to consumers, the company is

targeting businesses and governmental agencies for volume sales.

y Other 3% of revenue): Acer offers information security

management, software systems development, data center services,

and other IT support services. In addition, in 2008, Acer acquired E -

Ten, a Taiwanese manufacturer of Pocket PC phones and PDAs.


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SWOTanalysis of Acer

STRE GTHS

y Operational Efficiency Tight

Control on Overhead Costs

y Improved Economies of Scale

y Fast Reactions to Market Changes

After Cautious ROI Evaluation

y Aggressive Price Strategy

Particularly Suitable to a Time of

Economic Recession

y Strong global logistics

y

Strong relationships with suppliers

WEAK ESS

y Low Profit Margins

y Multiple Brands, Which Increase

Costs and Dilute Resource

y Brand perception as Low-

Cost PC Provider

y Insufficient Attention to the

Chinese Market the Second-

Largest in the World

y Limited Product Portfolio for

Midsize Business

OPPORTU ITIES

y Economic Downturn, Which Favors

Low-Price Products

y Growth of Mobile PCs in Homes in

Emerging Markets, Where BrandPreferences Are Weaker

y Growth Into the Chinese Market

y Growth Into Midsize-Business

Markets

y Reaching Larger7

umbers of

Customers by Targeting Various

Segments Through Multiple

Brands

THREAT

y Continued Price Decline in Mobile

PCs, Due in Part to Mini-

notebooks, Which Erodes Margins

and profitabilityy Excessive Reliance on Western

Europe, Which Contributed 40% of

Acer's Total Mobile-PC Revenue in

2008

y Dell's Expansion Into Indirect

Sales

y Samsungs entering into consumer

mobile PC s.

y Profit margin squeezed by sales to

telecom service provider.


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2.1Vision and Mission

Lenovo strives to be a new world company that makes award-winning

PCs for our customers. We operate as a company uninhibited by walls

or organizational structures using world sourcing to harness the power

of innovation across our global team. We design innovative and

exciting products and services to meet our customers needs.

2.2Company History

The following is a brief history of Lenovo:

2 :Legend shares peak at HK$14.75 on March 6.

2 1:Dell takes the largest share of the worldwide PC market for the

first time. Legend sales reach a peak of HK$27.2 billion in the fiscal

year ended March 2000 and decline to HK$23.2 billion in the most

recent fiscal year ended March 2004.

2 3:The Company changes brand name to Lenovo from Legend to

avoid infringement of overseas brands. The company says it is

preparing for expansion outside China, which has overtaken Japan to

become the world's second-largest PC market. The US remains the

world's largest PC market.

2 : The Company changes its name to Lenovo Group. Time

Warner Inc, the world's largest media company, on January 7 exits a

US$50 million Internet venture in China with Lenovo. China accounts

for 99 percent of Lenovo's sales in fiscal year ended March 2004 and

98 percent in the previous 12-month period. Lenovo's first-quarter PC

shipment growth in China lags rivals such as Dell, according to market

researcher IDC Corp. Lenovo has a 10.9 percent share of the Asian

market excluding Japan, compared with 7.3 percent for Dell. Lenovo's

Asian shipments rise 19 percent, compared with 52 percent for Dell.


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Lenovo's sales of services and hand-held electronics grow the fastest

of all its products in the most recent two fiscal years, each at an

average rate that roughly quadruples. Computer sa les rise at an

average rate of 9 percent in the same period. Lenovo becomes an

Olympic worldwide partner. It is the first Chinese company to become a

computer technology equipment partner of the IOC. Lenovo decides to

develop the rural market by launching the "Yuanmeng" PC series

designed for township home users. Lenovo and IBM announce an

agreement by which Lenovo will acquire IBMs Personal Computing

Division, its global PC (desktop and notebook computer) business. The

acquisition forms a top-tier(third-largest) global PC leader.

2 5:Lenovo completes the acquisition of IBM's Personal Computing

Division, making it a new international IT competitor and the third -

largest personal computer company in the world. Lenovo announces

the closing of a US$350 million strategic investment by three leading

private equity firms: Texas Pacific Group, General Atlantic LLC and

ew bridge Capital LLC. Lenovo establishes a new Innovation Center

in Research Triangle Park, .C., to enable customers,

business partners, solution providers and independent softwarevendors to collaborate on new personal computing solutions. Lenovo

introduces the industry's thinnest, lightest and most secure Tablet PC,

the ThinkPad X41 Tablet. Lenovo introduces the first widescreen

ThinkPad with embedded wireless WA , the ThinkPad Z60,

available for the first time with a titanium cover. Lenovo becomes the

world's largest provider of biometric-enabled PCs by selling its one-

millionth PC with an integrated fingerprint reader. William J. Amelio i s

appointed as CEO and President of Lenovo.


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2 6: Lenovo introduces the first dual-core ThinkPad notebook PCs,

improving productivity and extending battery life for up to 11 hours.

Lenovo technology flawlessly supports the 2006 Olympic Winter

Games in Torino, Italy, supplying 5,000 desktop PCs, 350 servers and

1,000 notebook computers. Lenovo also hosts seven Internet i.lounges

for use by Olympic athletes and visitors. The first Lenovo -branded

products outside of China debut worldwide. Researchers, sci entists

and product design teams from around the world combine Lenovo's

heritage in enterprise and consumer PC technology to design theLenovo 3000 product line, which features new desktop and notebook

models specifically designed to provide worry-free computing to the

small business market segment.


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OBJECTIVE OF LENOVO

Lenovo nose-diving into rural market

China's top PC maker, Lenovo Group Ltd, by introducing cheaper

computers, is plunging head-on into the country's rural market, where

PC penetration is low and purchasing power is weak.

Analysts said the firm's low-price strategy will help it strengthen its

market share, which is shrinking. But they are divided about the long -

term profitability of the low-priced PCs.

Lenovo last week introduced a new consumer PC series and an e-

classroom solution aimed at users in ordinary households and the

education sector in townships.

The retail prices for the new PC models will range from 2,999 Yuan

(US$361), a record low, to 5,999 Yuan (US$723).

Lenovo previously focused on PCs that cost more than 5,000 Yuan

(US$602).

"The growth of the whole PC market is lackluster. But the township

market remains largely untapped," said Yang Yeaning, chief executive

officer of Lenovo Group Ltd.

The launch of the low-price PCs is part of Lenovo's strategic shift. He

expects shipments of the new PC series will reach 800,000-1 millionunits within a year.

Beijing-based CCW Research said tapping the low-end market will

increase Lenovo's market share. And so it did."Lenovo is delivering a

message that it intends to cover all market segments, from high-end to

low-end, "The low-price strategy puts pressure on some regional


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brands.Besides, operating systems are not pre -installed in the DIY

market.

"We have been put in an unfair position," said Lu.

"If all vendors pre-installed legitimate operating systems and pay the

VAT, our market share would be much higher."

GAO estimates gross profit margins for Lenovo's new series PCs will

be about 8 per cent.

For fiscal year 2003, Lenovo's profit margins were 14.6 per cent,

compared with 14.8 per cent in the last fiscal year.

Edward Yu, president of research house Analysis International,

predicted the profit margins will be much lower.

"The shipments of PCs priced at 2,999 Yuan are unlikely to reach

100,000 units. Otherwise, it will be unprofitable," Yu said.

"The most likely scenario is quite a few of the PCs will be available in

the marketplace.

The low-priced move is largely a promotion strategy."

Since Lenovo is not adopting a "direct -sales" strategy, the firm is

unlikely to save the "channel cost," which usually accounts for nearly

one-fifth of the price, Yu explained.

Lu reaffirmed Lenovo will not follow Dell's "direct -sales" strategy.

Lenovo's low-price strategy is expected to spark a round of price -

cutting in China's PC industry. China's o 2 PC maker, FounderTechnology, "will not rule out the possibility of making a similar move,"

said I Dongfeng, the company's managing president.

Qi last week said he agreed China's rural market promises much

potential.


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"I believe that combination of the charm of soccer and the sci-tech of

computer will bring more color and pleasure to people's life, noted Marc

Ingle, vice president of Barcelona FC.

The list of the commercial value of soccer stars done by Germany-

based BBDO Consulting months before shows that Ronaldinho, with

32.6 million pounds tops the rank.

How Lenovo works fortheirconsumer.

Find the Target Consumer: Innovate for Them Lenovo define

product opportunities for their consumer divisions in desktop, notebook,

and cellular so they could better compete on meaning and value. We

needed to create an approach that captured the soul of the Chinese

consumer and inspired Lenovo's design teams. We needed to create

new research tools to find out which design elements have meaning

and value for specific groups of Chinese consumers. Lenovo with a 36-

month strategic product plan for each of its three consumer technology

platforms. Because they were building a strategy, design research had

to create targets for idea generation and concept refinement.

Search for the Soul To create product experiences that connect with

China's consumers, the team needed to understand three cultures:

China, users, and products. To build these connections, the team

developed an approach called "Search for the Soul," which integrates

immersive experience (live-the-life), rapid ethnography, and method

acting to uncover latent needs and wants.

Turn Insights into Experiences By bringing together a mixed group of

social scientists, design strategists, and designers, we made sure our

insights and ideas stayed aligned. Lenovo design anthropologists

uncovered the behavioral, sensory, and reminiscent needs of Chinese

consumers. Design strategists packaged consumer insights for the

design team, stressed the need for differentiation with competing


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products, and demanded relevance to the Lenovo brand. Designers

worked closely with strategists to visualize the potential of every new

product direction and to ensure that consumer insights were captured

in exciting new designs.

Culture Starts Now Search for the Soul included jump-starting cultural

immersion even before the team left for China. They studied the

Chinese billboards and had the client send rock, pop, classical, and

traditional Chinese music, which blasted in the war room. A professorof Chinese history was brought in to lecture on key cultural differences

between the U.S and China. The team collected Chinese objects of

desire -- wallets, lighters, and cell-phone holders -- and assessed their

color, material, and finish properties. To connect with popular culture

and messaging, They hired a Chinese exchange student to help

interpret lifestyle and technology magazine articles and

advertisements.

Live the Life There is no substitute for being there. The team split into

two smaller groups, and both spent four weeks immersed in three

different regions in China. Design anthropologists, design strategists,

and industrial designers talked on cell phones as they commuted on

bicycle with Beijing workers. They ate from street carts and dined on

pig brain and pigeon in large banquet halls. They walked the ancient

Hutong alleyways and sang late at night in karaoke bars. Observati ons

and issues about use behaviors outside of the home were noted as the

team rode buses and trains, wrote text messages in nightclubs, and

used notebook PCs in Starbucks (SBUX ). Visual inspiration was

drawn from fashion boutiques and electronics stores, from traditional

gardens and modern architecture.


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Find the Target The team leveraged demographic information for

Lenovo on desktop PC, notebook, and cell -phone consumers. The

team had to target the right psychographic group as well, given that

Lenovo was looking to create platforms that would not just create buzz

and die with early adopters but would achieve mass-market adoption

and enhance brand image. The team developed psychographic

screening criteria to target the "fast followers," who are the first

consumers to buy based on benefit rather than newness.

Home Visits Rapid ethnographies were conducted in users' homes.

The team toured areas of work, relaxation, sanctuary, and socializing in

each household. They went into closets and gained an understanding

of users' fashion tastes. We hired a native interpreter. onverbal,

visually engaging tools helped users communicate more freely,

revealing thoughts and emotions.

To understand how users live and use technology, we developed an

approach that let us squeeze two days of observation into two hours.

Prior to the interviews, participants were given a camera, a glue stick,

and two poster boards. We asked them to photo-document a weekday

and weekend or leisure day, giving special attention to moments when

they integrated technology into their routine. These visual time lines let

us into their daily behaviors and emotions.

To identify opportunities for product integration (for example, a laptop

that's also a TV), we created a tool called MatchMaker. MatchMaker

puts people in a defined -use scenario and lets them explore which

products (depicted as icons) they would use in particular

circumstances. When users chose multiple devices, MatchMaker


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helped us identify opportunities for convergent devices.

We developed a concept-building tool to define and understand what

people want in terms of features and benefits. Features were grouped

into categories such as space-saving, entertainment, input, and

communication. Our goal was to uncover why users gravitate to certain

categories and features.

After each rapid ethnography, the team used a brief download session

to check their impressions against the client's understanding of

Chinese culture. This approach helped our client understand our

generative and qualitative methods, and it helped us improve our

knowledge of Chinese culture.

Cultural Immersion Through Images In China, the team collected

images of furniture, cosmetics, fashion accessories, cars, and

architecture. Back in the U.S., we launched a Web-based visual study

with 400 Chinese consumers (100 for each of four newly identified

consumer segments) to help inform the direction for the products'visual expressions. We cropped the images so users would focus on

the forms and details themselves rather than on associations with the

brand or actual use of a recognizable object. The study asked users to

match the diverse forms, details, patterns, and colors to the desired

product attributes that had been iden tified for their particular user

group. The study identified patterns in how Chinese consumers visually

interpret product attributes.

Benefits, Not Features The goal of the evaluation was to determine

how design could benefit Chinese consumers. The goal w as not to

determine a single direction but to identify which design elements are

valuable. One-on-one qualitative evaluations were conducted with 40

consumers (10 per segment). The team identified four key benefits that


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people wanted from technology produc ts. For example, we asked each

user to rank the importance of "connecting with my friends" vs. "staying

up on the latest business trends." Making reference to models and

sketches, the participants chose those concepts that best matched the

benefits they sought and the design details that were driving their

impressions.

Cultural Insight We learned that consumers in China generally do not

make impulse purchases of large items. Rather, making large

purchases (such as technology products) is a highly involved and

researched decision-making process. The team used this knowledge to

help elicit detailed feedback on product concepts. By asking

consumers which concept they would be most interested in purchasing,

then asking which design elements contributed to their positive or

negative ranking, the team got a second read on how the concepts

delivered benefits through different design configurations.

Find Visual Gaps in a Saturated Market The team first tried mapping

Lenovo's and its competitors' offerings on a two-by-two matrix, but thisapproach failed. Competitive desktops, notebooks, and cell phones, in

particular, had run the gamut of visual expressions. The team switched

lenses and instead developed a new tool for visual analysis:

MediaMapping. Research in China revealed that users see value in

convergent devices (desktop PCs, notebooks, and cell phones) for

their ability to help them perform specific media activities, such as

gaming, photography, watching videos, and reading. MediaMapping

allowed our team to identify visual cues that current Lenovo and

competitive offerings were using to communicate proficiency in a

particular media activity.

Move from Everyday People to Aspirational Tribes. Innovate for

Their Needs When the team returned to the war room, they distilled


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the visual worksheets, photographs, and observations from each

interview into a single Ethnography Inspiration Sheet. These sheets

use pictures and captions to highlight emotionally the key needs of

each user group and to expose the top observations and challenges

each user faced. The Ethnography Inspiration Sheets were bound for

the client, to give a raw, visceral view into the current market.

To connect emotionally with consumers, you can't just design to their

current baseline needs -- you also need to connect with their

aspirations. Using the Inspiration Sheets as the foundation, the team

began to identify the aspirations, behaviors, and needs of distinct

clusters. These clusters became known as "technology tribes."

The five technology tribes identified were: Social Butterflies,

Relationship Builders, Upward Maximizers, Deep Immersers, and

Conspicuous Collectors. Each of these groups has vastly different

needs, ranging from the need to connect to a broad social network

(Social Butterflies) to the desire to seek escape through fantasy and

immersion (Deep Immersers). These profiles gave us a creative

springboard for concept generation and filters for evaluating concept

relevance. Our creative team worked with Lenovo to gauge the size of

each market segment.

To drive concept generation, the team used method -acting techniques

to understand how, for example, a Social Butterfly would use a cell

phone compared with how a Deep Immerser or a Relationship Builder

would do so. Search for the Soul led to a clear understanding of who

Lenovo's target consumers ought to be (four primary tech tribes: Social

Butterflies, Relationship Builders, Upward Maximizers, and Deep

Immersers) and laid the groundwork to create product-line strategies

for Lenovo's desktop, notebook, and cellular platforms.


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Deliver Actionable Insight The purpose of the evaluation was not to

select a single product for each platform but to build insight into how

users read benefits. The insights had to be actionable for the design

team. We emphasized the need to communicate insights in the context

of design elements. The result was a strategy that uses research-

based insight to communicate visually the desired product benefits. If

the team and the client wanted to enable Deep Immersers to escape

into immersive fantasy games on their cell phones, the del iverable

highlighted the appropriate design elements. Each concept was

evaluated for its ability to communicate benefits to the consumer.

Understand,Then Innovate Our research produced a desktop PC for

Deep Immersers, a notebook/tablet PC for Relationship Builders, and a

cell phone for Upward Maximizers. The products address the unique

needs of specialized customer tribes. The modularity of the multimedia

desktop PC enables users to easily modify and upgrade their systems.

The notebook/tablet PC makes sharing content with friends easy for

Relationship Builders. The cell phone has a PDA and camera, giving

Upward Maximizers the chance to multitask.

The definition of rich, psychographic tribes gave Lenovo's senior

management and marketing teams a common language and a

common vision of the future. Our research gave them a defined

segment map (based on behavior, attitudes, and values) to guide the

development of appropriate products for target consumers. Future

product lines are now organized around the needs of specific "tech

tribes." Our research gave Lenovo an understanding of Western

approaches to creativity and markets. Within months of the completion

of this project in 2005, Lenovo cemented its commitment to high -value

design by acquiring IBM's PC (ThinkPad) business unit


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SWOTanalysis

STRENGTH

y Lean cost structure

y Effective business model

y Innovation leadership

y Event sponsoring

y Good marketing and

distribution strategies

y Strategic alliance with

suppliers

y Quick responsiveness

y Strong R&D: taken over

from IBM

WEAKNESS

y Unable to maintain sustained

growth rate in all market

segment

y Ignoring potential market

y Retaining of largest shares

by competitors

y Poor global perception

yHigh delivery time:3 weeks

OPPORTUNITY

y Increasing global demand

for PC

y Specialty shops proving

one stop platform for

distribution

y Government organizations

increasing their spending

on IT

y Internet boom

y Increasing product

portfolios/ product lines

y et-books

y Converting manual orders

to automotive orders

THREAT

y Competition threat from

both local and international

markets

y Industry reaching maturity

y Software piracy and clone

market

y Price war

y Emerging small firms

y International competitors

forming alliances with local

competitors.


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STRENGTH

1. Lean cost structure:

The Groups distinctive capability and expertise in managing

costs and expenses allows it to achieve high efficiency and has

been one of the most important factors for its success. This has

become more critical under the current economic conditions.

2. Effective business model:

Lenovos dual business model sets its products, services and

business process around customer need and market

segmentation. This tightly integrated, end to -end model allows

the Group to quickly react to market dynamics and changes in

the back-end.

3. Innovation leadership:

Lenovo owns the greatest track record for innovation in the PC

industry and remains committed to innovation in its products and

technology. While it needs to be cost-effective, innovation can

drive business and add value for customers.

. Good marketingand distribution strategies:

Promotion and distribution at Lenovo is done through a network

of channel partners, retail stores, Teleweb, and Lenovo

authorized dealers across the globe. Lenovo also promotes

environmental friendly green produ cts- ThinkPad X300 series is

the first notebook to earn Green Guard certification

5. Strategic alliance with suppliers:

Since Lenovo is horizontally integrated, it depends on the

outsourced suppliers for in time delivery of quality products; like

many companies, keeping the customer always in mind, time

and quality.


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6. uickresponsiveness:

The company has Best-in-Class Service. It has 24/7

Technical/Sales Support centers across the globe.

7. Strong R&D: taken overfrom IBM:

Acquiring a reliable/well-known company such as IBM has

helped boost its products, especially ThinkPad and Idea Pad.

8. Event sponsoring:

Lenovo was the TOP Sponsor of the Olympic Games and

provided the technology hardware for these Games in 2008.

early every aspect of the management of the Games, from

gathering and storing participant data to displaying the scores,

was dependent on hardware provided by Lenovo. It gave

Lenovo an upper edge as compared to other competitors.

OPPORTUNITY

1. Increasing global demand for PC:

2. Signing of memorandum of understanding: The company can

develop their market in US by signing a memorandum of

understanding with the US

3. Specialty shops proving one stop platform for distribution

. Government organizations increasing their spending on IT

5. Internet boom

6. Increasing product portfolios/product Lines

7. et-books

8. Converting manual orders to automotive orders


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WEAKNESS

1. Unable to maintain sustained growth rate in all market segment:

Lenovo is heavily weighted showed significant slowdown in the

second half of the fiscal year under the economic crisis because

it has not adequately addressed the worldwide transaction

segment outside China, in particular the consumer market.

2. Ignoring potential markets: The main focus of Lenovo is on the

established markets and they lack marketing strategies to enter

into the untapped markets.

3. Retaining of largest shares by competitors: Lenovos

competitors have larger number of shares in the market. HP

(18.1%), Dell (15.6)%, Acer(9.4)% give Lenovo a tough

competition.

. Poor global perception: In China, the customers perceive

Lenovo as a premium brand, but Lenovo has to reinforce this

perception to its global brand.

5. High delivery time: The order delivery time in Lenovo is around

3 weeks. This results in customers waiting for a longer time.

THREAT

1. Competition threat from both local and international markets:

2. Industry reaching maturity:

3. Software piracy and clone market:

. Price war

5. Emerging small firms

6. International competitors forming alliances with local

competitors.


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76

2008/09AnnualReportLenovoGroup

2.3 financial status of the organization

CO SOLIDATED I COME STATEME TFor the year ended March 31, 2009

Continuing operations

Sales

Cost of sales1

8

,99

1,351

@13,159 ,7

8

2)16,351,503

(13,901,523)Gross profit

Other income net

Selling and distribution expenses

Administrative expenses

Research and development expenses

Other operating expenses net

1,78

1,69

9

929

@

938 ,451)

@

627 ,99

3)

@22

9,010)

@

166 ,305)

2,449,980

17,261

(1,103,713)

(595,902)

(229,759)

(38,823)Operating (loss)/profit

Finance income

Finance costs

Share of profits of associated companies

@210,131)

59,977

@38,142)

351

499,044

52,048

(38,366)

124(Loss)/profit before taxation

Taxation

@187 ,945)

@

38,444)512,850

(47,613)(Loss)/profit from continuing operations

Discontinued operations

Profit from discontinued operations

@

226,389)

465,237

19,920(Loss)/profit for the year

@

226 ,389) 485,157

(Loss)/profit attributable to

shareholders of the

Company

@

226,392)

464,343

19,920

Minority interests

@

226,392)

3

484,263

894@

226 ,389) 485,157

dividends 35,575 186,753

Basic (loss)/earnings per share attributable

to shareholders of the Company


Discontinued operations @

US2.56 cents)

US5.29 cents

US0.22 [email protected] cents) US5.51 cents

Diluted (loss)/earnings per share attributable

to shareholders of the Company


Discontinued operations @

US2.56 cents)

US4.86 cents

US0.20 cents@

US2.56 cents) US5.06 cents

2009 2008US$000 US$000


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77

2008/09AnnualReportLenovoGroup

BALA CE SHEETSAt March 31, 2009

particular 2009 2008

US$000 US$000

Non-current assets

Property, plant and equipment

Prepaid lease payments

Construction-in-progress

Intangible assets

Investments in subsidiaries

Interests in associated companies

Deferred tax assets

Available-for-sale financial assets

Other non-current assets

1,035

7,780

12,235

1,860,176

617

13,893

8,243

1,187,893

1,881,226 1,210,646

Current assets

Inventories

Trade receivables

Aotes receivable

Derivative financial assets

Deposits, prepayments and other receivables

Amounts due from subsidiaries

Income tax recoverable

Bank deposits

Cash and cash equivalents

596

1,013,394

163,618

6,679

1,369,267

338,1221,177,608 1,714,068

Total assets 3,058,834 2,924,714

Share capital

Reserves

29,530

1,792,581

29,699

2,066,469

Shareholders fundsMinority interests

1,822,111

2,096,168

Total equity 1,822,111 2,096,168Non-current liabilities 453,356 684,399Current liabilities

Trade payables

Aotes payable

Derivative financial liabilities

Provisions, accruals and other payables

Amounts due t o subsidiaries

Income tax payable

Short-term bank loans

Current portion of non-current liabilities

383

18,945

329,039

435,000

1,991

13,955

93,201

35,000783 ,367 144,147

Total liabilities 1,236,723 828,546

Total equity and liabilities 3,058,834 2,924,714

Net currentB

liabilities)/assets 394,241 1,569,921

Total assets less current liabilities 2,275,467 2,780,567


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2.4Organizational Structure

It is the formal and informal framework of policies and rules, within

which an organization arranges its lines of authority and

communications, and allocates rights and duties. Organizational

structure determines the manner and extent to which roles, power, and

responsibilities are delegated, controlled, and coordinated, and how

information flows between levels of management. This structure

depends entirely on the organizations objective and the strategy

chosen to achieve them. In a centralized structure, the decision making

power is concentrated in the top layer of the management and tight

control is exercised over departments and divisions. In a decentralized

structure, the decision making power is distributed and the

departments and divisions have varying degree of autonomy.

There are various functional departments like-

HR Department

Relational Department

Strategic Department

Legal Department

Financial Department

Marketing Department

Transactional Department


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44CalculatingtE e F eturnover InvestG entof H A I PSP

rojectat H enovo

rgani ational Structurechart

People

Companybelieves that theirpeopleprovide them thecuttingedgeand

for the sustainable success, their performance orientation and

customer focus is imperative. Thecompanybelieves that onlywhere

peoplegrow, theorgani ationgrows. Peopleare thebiggest asset of

the company. They believe that the biggest brands they stand for

today are a consequential of our best people. The company has

measurement systems and recognition schemes to identify and

encourage individuals and teams demonstrating customer service

excellence.

Rewards, promotionsandgrowthopportunitiesat Lenovoarebasedon

performance. Thecompanyensures that all of theirpolicies, forward -

looking initiativesandgoalsare fullycommunicated toall the

employeesand that theyunderstandandrelate to these. Companys

commitment to theirpeople isreflected in thesenseofbelongingand

pride they feel towards thecompanyand thepassionandcommitment

theybring to theirwork.


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2.5Awards and Certifications:

1)"Client of the Year" in the Advertising Big Bang 08, organized by the

Ad Club, Bangalore.

2) MEDIA, the premier marketing trade publication in Asia has awarded

Lenovo the Communicator of the Year for this years Asia -Pacific PR

Awards.

In particular, Lenovos sophisticated usage of social media and

willingness to blur the lines between conventional marketing and PR

impressed the

Media editorial team this year.

3)In DIGIT's cover story

Icons of Trust 2008 which brands can you rely on?:

Lenovo/IBM beat all other brands to bag the top spot on the Trust

IndexLenovo has been voted the most trusted brand in the Laptops category

4)Lenovo India wins three awards in the DQ Channels Channel

Choice Awards 2009

a) Best Marketing Support- Silver award

b) Best Commercial Terms- Silver award

c) Best Online Support Silver award


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46CalculatingtS e T eturnover InvestU entof V A W PSX

rojectat V enovo

2.6LenovoProducts

Notebooks

Think

Pad

oteb

ooks

Track recordofsuccess,cost-savings Industry-leadingcapabilities

that dramatically increaseproductivityandreducecost.

eatures:

Businessclass technology

Thin, light widescreendesigns

E tra longbattery life

dvanced mobile orkstations

IdeaPad otebooks

Engineered for a great user experience Perfect for home/home

office, with distinctive designs and features for entertainment and

multimedia.

eatures:


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47Calculatingta e b eturnover Investc entof d A e PSf

rojectat d enovo

Home/officeversatility

. to 7 inches idescreendisplays

olbyhometheatreaudio

Touchsensitivecontrols

Veri acefacerecognitionsecurities

Lenovo3000 otebooks

Worry-freecomputingat agreat value.

A smart choice forbusinesscomputingneedsandbudgets. Plus, new

models ideal forhome/homeoffice.

Features:

oomy, idescreendisplays

Stylishsilvercoloredtopcovers

Preloadedsmall businesssoftwares

LenovoCaretools,supportandservices


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48Calculatingti e p eturnover Investq entof r A s PSt

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Desktops

ThinkCentreDesktops

wardwinning uality and innovation Industry-leading capabilities

that dramatically increaseproductivityandreducecost.

Features:

Energyefficientdesktops

Securityonacorporate level atasmall businessprice

Dual IndependenceDisplay (DID)

TheThinkCentre EnergyCalculator

IdeaCentreDesktops

New PCs for home/home office Loaded with features for everything

from family finance tomultimediaandentertainment.

Features:

VeriFacefacerecognition

utomaticbrightnessadjustment

ntibacterial keyboard

neKeyconvenience

Workstations


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49Calculatingtw e x eturnover Investy entof A PS

rojectat enovo

ThinkCentre orkstations

Features:

sercentricdesign

Cool and uiet

ISVcertificationsEnvironment-friendly

Servers

TowerServers

Features:

Singleanddual sockets

EasiercoolingExisting-networkscalability

Harddiskdriveoptimi ation

ack Servers


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50Calculatingt e eturnover Invest entof A PS

rojectat enovo

Features:

Singleanddual sockets

Space-optimi eddesign

Centrali edcable management

Centrali edservermanagement

Accessoriesand pgrades


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3.1WorkProfile

In Lenovo we were exposed to the different departments to

know how they work and also how they are interrelated and integrated

with each others.

For our project about calculating the return over investment of the

mareting activity we were exposed to the marketing activity and also

the finance activity.

In addition to that we were also part of the many events that

took place in the company we also given the crucial responsibility of

that event. For some events we were given whole end to end

responsibility for that event.

Some of the event:

PMCP: People Manager Certification Program

In this program we were responsible to rectify, modify and

rearrange the reading material of the managers for the programs

and also establishing the online examination and material

reading facility.

Also handling the all backhand process for that program.

Events:

We were part of many events like the kickoff event which is the

main new financial year stating event. we were responsible for

whole backhand operation of that event.

Other event was the kids at work event where kids of employee

come to office and we have whole day fun activity for them. In

this event we were responsible for end to end from planning for

the fun activity to its execution.

For our project we work closely with the marketing and Finance

team with a view to understand how we can calculate the return over

investment of the marketing activity which sometimes non-tangible.


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3.3Contribution to the company

While being in the company we did take some initiative like the PMCP

(people manager certification program).Which was basically for the

managers and to transform them to managers to People managers

which can be a great impact in terms of making the employee base

more empowered and more committed too organization and its goals.

About over project calculating the Return over Investment of the

marketing activity gave a good view about the how some of the

marketing activity is brining good amount of revenue and how some

helps to build strong brand image among the consumers.

It also helps to finance to check is the money invested in the

marketing activity is bring good impact or not, and also for the

marketing team to check which activity is non productive and which is

giving more productive result.


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4.2 Statement of Research problem

In the research problem we need to find out the Return

over investment of the particular LAMPS activity.

y The 18 locations marketing activities were taken into the

consideration where the company operated that particular

marketing activity.

y To get the all the data about the products was not possible

y To get information about the intangible return is not possible

it can only be shows in the charts or graphs

y To get all the information about the all items sold via that

marketing activity is not possible.


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4.3Research Design & Methodology

Research method: research method is analytical in nature

The research is based on the facts and the

information already available and analyze to make an evaluation, so

the analytical method is return over investment.

Data collection:

The source of data is from the third party vendors and also the

people of marketing team and their trackers about the cost of the

particular marketing activity.

Primary data:

Meaning- Are those data, which are originally collected for the

first time for a specific purpose by an investigator? They are collected

directly from the people to whom the enquiry is related. They are

original in character and primary to the institution, which collects them,

they are secondary to all other institution except the one, which has

collected them.

This was chosen to obtain both qualitative and quantitative

information from the despondence.

Here primary data are those data which were collected

from the third party vendors about their sales in the particular quarter.

Secondary data:

Meaning- Are those data, which are already collected,

processed and used by someone else for their own purpose. They are

either published or unpublished. They are finished products. They aresecondary to all institutions except the one, which has collected them.

Here secondary data is those data is the data or the

feedback got from the marketing manager and finance manager. Also

some details published by the some magazines or the blogs.


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4.4Analysis of Data

About the LAMPS project

LAMPS is newly initiated project of the Lenovo to sell

their product with the Operating system of the other companyto increase the market share. In the project the third partysales specialists are hired for the sales of the certainproducts with the operating system of the other company.

The hired person is paid by the both party Lenovo aswell as the Operating system vendor to make more combinesales. The other aim of this project is to provide more marketcoverage to the small and medium business (SMB) unit. ThisLAMPS Sales people reports directly to the SMB head of the

India.

For the analysis we got the all the specific informationof the payment of the LAMPS sales people as well as thedetails information about their sales for the 3 months. Thedetail contents the number of product sold by the each salesperson and also the cost incurred for that particular salesperson.


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Lamps Sales Persons Cost details:Because of the confidential reasons the product name and locationname is not given.

ote: there is only one sales person in the particular location.All the revenue and profit figures are in I R

cost to company

location basic months total basic travel incentives total

a 19000 3 57000 8550 50243 115793

b 19000 3 57000 8550 49238 114788

c 19000 3 57000 8550 30410 95960

d 19000 3 57000 8550 67272 132822

e 19000 3 57000 8550 31679 97229f 19000 3 57000 8550 51565 117115

g 19000 3 57000 8550 24910 90460

h 19000 3 57000 8550 29352 94902

i 19000 3 57000 8550 22741 88291

j 19000 3 57000 8550 23535 89085

k 19000 3 57000 8550 33477 99027

l 19000 3 57000 8550 78749 144299

m 19000 3 57000 8550 49449 114999

n 19000 3 57000 8550 50560 116110

o 19000 3 57000 8550 20890 86440

p 19000 3 57000 8550 30516 96066

q 19000 3 57000 8550 6452 72002r 19000 3 57000 8550 37021 102571

total 1026000 153900 688059 1867959

This cost details given are only those which is paid by the Lenovo tothe sales person. It includes the basic salary travel allowance and theincentives that they earn for their sales.


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Lamps Sales Persons detailed Sales report.

The data contains only those products which are being sold by themand its the region wise data as there is only one sales person for theparticular location.

Locationproduct1

product2

product3 total

A 669 151 130 950

B 600 210 121 931

C 225 100 250 575

D 850 272 150 1272

E 360 20 219 599

F 600 175 200 975

G 300 100 71 471H 400 75 80 555

I 350 40 40 430

J 350 20 75 445

K 430 28 175 633

L 768 335 386 1489

M 510 105 320 935

524 41 391 956

O 158 22 215 395

P 495 47 35 577Q 100 11 11 122

R 472 33 195 700

Total 8161 1785 3064 13010


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Calculation of the Total revenue and profit forProduct-1.

Product-1

Average Unitprice INR) 25000 profit % onsales price 5

Location quantity total revenue profit

A 669 16725000 836250

B 600 15000000 750000

C 225 5625000 281250

D 850 21250000 1062500

E 360 9000000 450000F 600 15000000 750000

G 300 7500000 375000

H 400 10000000 500000

I 350 8750000 437500

J 350 8750000 437500

K 430 10750000 537500

L 768 19200000 960000

M 510 12750000 637500524 13100000 655000

O 158 3950000 197500

P 495 12375000 618750

Q 100 2500000 125000

R 472 11800000 590000

Total 8161 204025000 10201250


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Calculation of the Total revenue and profit forProduct-2

Product-2

Average Unitprice INR) 27000 profit % onsales price 10

Location quantity total revenue profit

A 151 4077000 407700

B 210 5670000 567000

C 100 2700000 270000

D 272 7344000 734400

E 20 540000 54000F 175 4725000 472500

G 100 2700000 270000

H 75 2025000 202500

I 40 1080000 108000

J 20 540000 54000

K 28 756000 75600

L 335 9045000 904500

M 105 2835000 28350041 1107000 110700

O 22 594000 59400

P 47 1269000 126900

Q 11 297000 29700

R 33 891000 89100

Total 1785 48195000 4819500


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Calculation of the Total revenue and profit forProduct-3

Product-3

Average Unit

price INR) 32500

profit % on

sales price 5

Location quantitytotal

revenue profit

A 130 4225000 211250

B 121 3932500 196625

C 250 8125000 406250

D 150 4875000 243750

E 219 7117500 355875

F 200 6500000 325000G 71 2307500 115375

H 80 2600000 130000

I 40 1300000 65000

J 75 2437500 121875

K 175 5687500 284375

L 386 12545000 627250

M 320 10400000 520000

391 12707500 635375

O 215 6987500 349375P 35 1137500 56875

Q 11 357500 17875

R 195 6337500 316875

Total 3064 99580000 4979000


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Total revenue and profit Table

Lo ation

Total

revenue

Total

profit

CD

F

H

I

J

R


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ow we will calculate the return over the investment by the locationwise and also the graphical presentation of it.

For calculating

4th Sem Project Final

Documents