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Why Lenovo's Adaptability Fuels Its Global Competitive Edge
Why Lenovo's Adaptability Fuels Its Global Competitive Edge

Forbes

time28-05-2025

  • Business
  • Forbes

Why Lenovo's Adaptability Fuels Its Global Competitive Edge

Lenovo's global footprint shows why adaptability is the new competitive advantage. I wrote about Lenovo's 20th anniversary of buying IBM's PC business a few weeks back. I shared the history of the deal and how surprised I and many others were about how successful Lenovo has integrated IBM's PC operation into its own and helped it become the #1 PC vendor today. It has become an important global tech supplier of not only PCs but also servers and a broad range of enterprise services. However, as I reflect on Lenovo's stellar performance, I believe there is an even bigger story behind the company's success. When I first joined Creative Strategies in 1981, some of my early projects for PC vendors focused on sourcing components and outsourcing some aspects of manufacturing. At that time, both tasks were pretty straightforward. PC manufacturing volumes were small, and most could be done in the U.S., even if many components came from other parts of the world. But today, manufacturing revolves around a worldwide supply chain and factories on most all continents. Today, as geopolitical tensions rapidly reshape global supply chains, Lenovo has quietly demonstrated what strategic foresight looks like in a turbulent era. While the PC market grapples with declining indices and unpredictable tariffs, Lenovo is charting a different course—one built not on retreat but on reach. CEO Yuanqing Yang's comments this quarter reflect a core belief in Lenovo's DNA: adaptability. In the past, I have personally spoken with Mr. Yang about his strategy for the company. Early on, he stressed to me that Lenovo needed to be agile and able to adapt. This philosophy has served them well and shows how his and his team's foresight has helped them grow into a viable international tech powerhouse. With an 11-country manufacturing strategy, the company has effectively inoculated itself against regional disruptions. While others scramble to shift operations or suspend shipments altogether, Lenovo is executing a playbook years in the making. The results? A standout year — with revenue and net income up 21% and 36%, respectively, even as the broader S&P Technology Hardware Index slumped more than 5% year-to-date. The key insight here isn't just logistics — it's about Lenovo's operating philosophy. Rather than abandoning China, the company maintains its manufacturing presence there, recognizing the long-term efficiencies and infrastructure advantages. This balance — between diversification and rooted expertise — enables Lenovo to absorb a $15 million tariff impact without blinking. At the same time, Lenovo expanded its manufacturing footprint to ten other countries, which helped bolster its ability to meet the worldwide demand for its products and services. Another company saw trouble with manufacturing in China as early as 2017 and began shifting much of its manufacturing to Viet Nam. Dell has also applied this adaptability and diversification strategy to its business and is now, like Lenovo, more prepared to weather current tariff problems. Lenovo is showing the global marketplace that in a world defined by trade uncertainty and rising nationalism, the best supply chain strategy may be less about placing a bet on one country and more about being everywhere, all at once. It's not just a hedge—it's a blueprint for long-term resilience in a fragmented global economy. This manufacturing strategy is a critical point. Depending on only one country as the leading manufacturer of a company's goods, especially given today's political climate and unpredictable leadership at any time now or in the future, the need for multiple manufacturing partners in many countries has become imperative. No matter the product, companies can no longer rely exclusively on manufacturing in a single country. To remain resilient, they must design flexible strategies that anticipate an increasingly unpredictable global political and economic environment. If companies do that, they will be on a better footing to navigate a global supply chain that allows them to adapt to any governmental or economic headwinds in the future. Disclosure: Lenovo and Dell subscribe to Creative Strategies research reports along with many other high tech companies around the world.

Apple Tops Wall Street Expectations With $24.78 Billion Profit
Apple Tops Wall Street Expectations With $24.78 Billion Profit

New York Times

time01-05-2025

  • Business
  • New York Times

Apple Tops Wall Street Expectations With $24.78 Billion Profit

Apple built its business by innovating. But lately, it's been leaning on diplomacy. Tim Cook, Apple's chief executive, recently scored exemptions from tariffs on exports of Chinese-made iPhones. The maneuver freed Apple to focus on business, and lately, business has been good. A new, lower-priced iPhone, which the company introduced in February, and strong sales of apps and services helped the company make $24.78 billion in quarterly profit, a 4.8 percent increase from a year ago, Apple said on Thursday. The company's sales rose 5 percent to $95.36 billion. The results exceeded Wall Street analysts' expectations for $24.37 billion in profit and $94.35 billion in sales. Shares fell more than 2 percent in after-hours trading. Apple's steady performance came amid turbulence. In just a few months, the company has had to navigate internal and external obstacles, including the failures of its much anticipated artificial intelligence system and the challenges of the Trump administration's punishing tariffs on products made abroad. Last month, shares of Apple plummeted after President Trump imposed tariffs of 145 percent on exports from China, where Apple makes 80 percent of the iPhones it sells, as well as tariffs on other countries that make iPads and Macs like Vietnam. The tariffs erased about $770 billion of the company's market value in four days. Wall Street analysts predicted Apple would have to increase iPhone prices to $1,600, from $1,000. Some customers raced to buy iPhones before prices went up, helping lift sales. But three months after personally donating $1 million to Mr. Trump's inauguration, Mr. Cook pressed the White House to relax its tariffs and persuaded the Trump administration to temporarily relent. On Thursday, Apple said sales of iPhones, its most important business, rose 2 percent to $46.84 billion over the quarter. The company increased iPhone sales by more than 10 percent in Japan, India and the Middle East, helping it claim the largest share of smartphone sales in the world over a three-month span, according to Counterpoint Research, a market research firm. The company continues to struggle in China, where it reported its sixth quarter of sales declines. Total revenue from the region was $16 billion in the quarter, down 2 percent from a year ago. 'Everything is OK for right now because no prices have been raised,' said Ben Bajarin, principal analyst at Creative Strategies, a tech research firm. 'The question is: If more tariffs hit, then what happens?' The company's services business, which includes sales from apps, Apple Music and Apple Pay, outshined its devices. Apple reported revenue for the business of $26.65 billion, an 11.6 percent increase from last year. But the future of Apple's services business is uncertain. In an antitrust case on Wednesday, a federal judge rebuked the company for its business practices and ruled it can't collect a commission of 27 percent on app sales made outside the App Store. Her order allows apps to cut Apple out of their business, muffling one of the company's most important sources of revenue. In a separate antitrust case, Apple could lose $20 billion in services revenue that Google pays to be the automatic search engine on iPhone web browsers. A federal judge ruled last year that Google had broken the law to maintain a search monopoly. This month, he convened a hearing to address its illegal behavior, including remedies that could include restrictions on Google's payments to Apple. The company's device business also faces questions. Last year, Apple revealed a generative A.I. system capable of improving emails, summarizing notifications and upgrading its virtual assistant, Siri. It promoted the system, which it called Apple Intelligence, as a major reason to buy a new iPhone. But in March, the company pulled its advertisements promoting the features and said some would be delayed until this fall.

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