Lenovo rejigs business model in India for next phase of growth

Lenovo, the Chinese personal computer (PC) maker, has restructured its business model in India to drive growth in segments like small and medium business (SMB), government and education, which were not getting much attention earlier.

The company has separated SMB, earlier part of its consumer division, to make it an independent business. It has also created different teams to handle its government and education business, as it requires a different focus.

 Driven by strong growth in the enterprise segment and early success in the SMB space, Lenovo garnered a double-digit market share in India, for the first time, in the third quarter of 2010-111. Also for the first time, it became the number one PC vendor in the enterprise space in India, overtaking market leader Dell, with a share of 21.8 per cent during that quarter.

 It says success here won’t alone help it to improve its share in India. This is why, it says, it has made SMB a separate segment.

The consumer and SMB business was earlier headed by Alex Li, deputed from China to help it establish a good base. While splitting the consumer and SMB business, the company has appointed independent business heads for both. Rajesh Thadani, who was part of Li’s team, is now responsible for Lenovo’s consumer business. The SMB business is being headed by Rajiv Rao, an industry veteran with experience in diverse segments, including computer hardware, retail and entrepreneurship.

For the future
“The restructuring will help us to strengthen the management team. Our India business has grown quite significantly. We are growing at almost two and half times the market growth. The changes are aimed at preparing the organisation for the next phase of growth,” said Amar Babu, managing director of Lenovo India.

For the first time in India, Lenovo has also divided the market into four regions, to be headed by regional heads of the rank of general manager. “Instead of one national sales person looking after consumer and one for SMB, we have increased the management bandwidth. The heads of these sub-regions will directly report to me,” added Babu. The SMB segment contributes just about 2-2.5 per cent of Lenovo’s total India business.

“We are not very strong in the government and education space which are tender-based. We are not very strong in any tender-based business, because that is not our forte,” said Babu.

To fill the gap, the company has partnered with system integrators to jointly bid for government contracts and has seen some initial success. It has also created different teams to look after the education and government sector, which used to be handled by its enterprise business.

Under the new strategy, Lenovo India is aggressively going for a retail push in the consumer segment. Realising that a lot of consumer buying has started to happen in smaller cities and towns, the company is planning to more than double the number of its Lenovo Exclusive Stores (LES), to 1,000 from the present 400, by the end of this year. It has also created a lower-cost version of Lenovo exclusive stores called LES Lite, suited for tier IV, V and VI types of markets.

“As we go deeper into the Indian market, we need to establish our retail presence in smaller towns. We want to have 1,000 LESs by the end of this year. This will be the largest in the country compared to any other brand and we believe this is the right strategy,” said Babu.