Lenovo 2016 Annual Report Download - page 44

42 Lenovo Group Limited 2015/16 Annual Report
MANAGEMENT’S DISCUSSION & ANALYSIS
At the meantime, to maximize performance, the Group will manage different types of businesses
differently based on the varying stages of maturity as well as synergy with its core business. Each business
will have the appropriate set of performance metrics, priorities, management processes, ownership
structure and incentives. While the Group’s strategic focus remains consistent, this management system
adds an important extra dimension and better positions the Group to respond to the changing market
environment and opportunities as well as for future profit growth. For example:
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STAGE OF LENOVO
BUSINESS TODAY
PROFIT ENGINE CORE
PROFITABLE GROWTH STRATEGIC EXPANSION
INVESTMENT EXPLORATORY
SYNERGY WITH CORE
The PC business will be managed to maximize profitability and always be a core business. It is expected
the PC market consolidation will continue and that the expanded PC market, including 2-in-1/detachable
and convertibles will see potential growth as macro-economic and currency conditions continue to
stabilize. The Group will continue to leverage the consolidation trend to gain more share and drive
profitable growth. Even more, Lenovo will leverage its innovation leadership in the expanded PC market.
The Group has a full portfolio of new, innovative products in the pipeline with two dedicated business
units to address the fast growing 2-in-1/detachable and gaming markets. As a result, the Group remains
confident it will continue to expand its leadership and deliver profitable growth in PC over time.
Strategic expansion businesses like its Mobile and Data Center groups will be managed to drive both
profitability and growth.
For Mobile, the Group has solid products and technology foundation, and has built global markets and
channel coverage, while in the future, the Group will thoroughly integrate the organizations, streamline
product lines and strengthen product competitiveness. The business group now has two experienced
leaders with dedicated focus in China and Rest of World markets, respectively, to help the Group deliver
its strategy more effectively and address the unique characteristics of the two markets. In Rest of the
World, while keeping the high growth in emerging markets, the Group will invest in brand building,
channel broadening and expanding the market and improving margins with innovative products. In
China, the Group will keep driving the strategic shift from carrier to the open market, and leverage ZUK
Z2 model to rebuild the end-to-end competitiveness. The Group will continue to focus on the business
transformation to drive innovative product design and higher average selling price across its product
portfolio while also improving its earnings quality through more efficient cost structure.
For Data Center, Lenovo will attack top line growth across geographies, while focusing on operational
health. The Group has been reorganized into a dedicated business unit to sharply focus on the market,
and now has enhanced end-to-end capabilities and ownership for everything from innovation through
operations and technical support. The partnerships with leading tech companies (Nutanix, Juniper,
Redhat & SAP) has brought the Group to a stronger position to attack the fastest growing segments of
converged/hyperconverged, cloud and hyperscale markets. The Group is expanding its solution portfolio,
with its own innovation and integrating partner technologies, to compete in a larger percentage of the
total market opportunity. At the meantime, the Group has actions in place to enhance the sales team to
accelerate the business in North America, and will increase its investments in its China-specific portfolio
built upon global tech platform to win in PRC.