Project Management

Project Management Improves Lenovo's Strategy Execution And Core Competitiveness



Project Management Improves Lenovo's Strategy Execution And Core Competitiveness

Introduction

In recent years, the personal computer (PC) industry has been developing by leaps and bounds. Global sales of PCs totaled 230 million units in 2006, representing a 9 percent increase over the previous year. Lenovo has a product line that includes everything from servers and storage devices to printers, printer supplies, projectors, digital products, computing accessories, computing services and mobile handsets, all in addition to its primary PC business, which made up 96 percent of the company's turnover as of the second quarter of 2007. (Crawford, J.K. 2006)

Background

Since its acquisition of IBM's Personal Computing Division in May 2005, Lenovo has been accelerating its business expansion into overseas markets. The company transferred its corporate headquarters from Beijing, China to Raleigh, North Carolina, USA. Today, the group has branch offices in 66 countries around the globe. It conducts business in 166 countries and employs over 25,000 people worldwide. Lenovo is organized into four geographical units: Greater China, America, Asia-Pacific, Europe, and the Middle East and Africa (EMEA). Within each unit there are functional departments that include production, transportation, supply chain management, marketing and sales. Sales outside of Greater China compromised 59 percent of the company's total turnover in the second quarter of 2007.

(Crawford, J.K. 2006)

Challenges

Before 2004, multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo. However, their operations began to have a major impact on Lenovo market share in 2004, particularly among key accounts—mandating better execution and core competitiveness in order to increase market share and improve business performance. (Pressman, R., S. 2000)

Solutions

In order to address these challenges, Lenovo proposed substantial changes to its business model and strategy in 2004, employing a project-focused approach to develop its corporate strategy. Specific steps taken were:

Implementing project management as the tool for executing corporate strategy

1. After confirming the company's overall corporate strategy, Lenovo set about organizing priority tasks that required multi-department cooperation into projects, referred to as strategic projects. Strategic projects differ from R&D projects in that time and cost cannot be used as yardsticks for success. Such projects may be about expanding into new markets, solving underlying problems, enhancing organizational efficiency, integrating strategic resources or improving employee satisfaction or capabilities. In the past, some strategic planning had not been followed up on sufficiently but the application of strategic project management solved this problem; strategic projects began to actually be executed and generated results. (Crawford, J.K. 2006)

2. Lenovo also established a Project Management Office (PMO) to coordinate strategic projects. Beginning in 2004 and early 2005, Lenovo put in place the processes and the organizational structure for its PMO. It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office. Subsequently, all of Lenovo's other departmental regulations needed to conform to PMO regulations, with detailed regulations being outlined by specific business ...