Lenovo 2009 Annual Report Download - page 32

MANAGEMENT’S DISCUSSION & ANALYSIS
2008/09 Annual Report Lenovo Group Limited
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Future
Prospects
While it braces itself against the current economic challenges,
Lenovo is confident that with the successful execution of
strategic priorities based on its business strengths,
Lenovo will emerge as a stronger player in the PC market.
Lenovo system being delivered in rural China
The economic crisis is expected to drive negative
growth in the global economy in 2009. Against this
backdrop, the commercial PC market will remain weak
while consumer PC purchasing will also tighten as a
result of a decline in discretionary spending in the short
term. The worldwide PC industry is expected to see a
year-on-year decline in unit shipments for the 2009/10
fiscal year according to industry analyst forecast. The
continuous shift of product mix toward entry-level PCs
will lead to faster decrease in average selling prices and
exert greater pressure on industry players.
The Group expects the operating environment to
remain very challenging in the 2009/10 fiscal year.
Nevertheless, Lenovo has taken decisive actions to
meet these challenges. It will continue to strive to realize
its strategic aspiration of delivering profitable growth
and gaining share through consistent performance,
unmatched innovation, the capability to meet its
customer commitments and a fast, disciplined winning
culture. The Group believes its strategic priorities,
recently realigned organization and emphasis on
execution will enable it to regain growth momentum and
fuel the growth that will deliver future success.
STRATEGIC PRIORITIES
Lenovo’s strategy has not changed but evolved to take
it to the next level. The simplified strategy facilitates
execution, which is crucial to success as we hone
the art of turning the Group’s energy and resources
into tangible results. With greater clarity and focus
on accountability and efficiency, Lenovo’s strategic
priorities are aimed at stabilizing the Group’s business
and driving growth in critical market opportunities.
During the 2009/10 fiscal year, Lenovo will strive to
protect its core business in China and the worldwide
commercial market. At the same time, the Group will
attack the growth opportunities as presented in the
worldwide transaction space and emerging markets.
Expand Leadership in China
Although the growth in China’s PC market also slowed
due to the economic crisis, it is generally expected to
be relatively resilient in response to the government’s
economic stimulus package. With its leadership position
and well-defined expansion plans, Lenovo is well-
positioned to benefit from the comparatively stable PC
demand and capture the new opportunities arising in
the market, such as 3G notebook bundling projects and
the “PC to the Countryside” project that allows rural PC
buyers to claim rebates from the government. Lenovo
has built strategic relationships with telecom carriers
and, since 2004, secured first-mover advantage in rural
market development in China. The Group is confident
that in the next few years it will benefit from its strong
brand and extensive sales and services networks built
over the past years through its involvement in rural
projects. Lenovo will also continue to drive growth in