Use Lenovo Computers: East meets West.
Lenovo Computers is currently among the best and most known computer manufacturing companies. It is a company that was initially based in Hong Kong before taking IBM’s PC unit and integrating it to become its own (Bajarin, 2015). That move saw Lenovo become a worldwide technology center and one of the best over the past years. In Lenovo Computers, East meets West, the first production of a Lenovo PC was in the year 1990, and their first market share was in 2005. After licensing the company to use the IBM brand for five years, the CEO was changed, and the company later moved to have its operations in the US (Pauken, 2014).
For a company to have its full operations and be top-notch in the corporate world, some considerations should be put in place. They include things like competition, design analysis, cost analysis, price and output determination, profit maximization, and capital expenditure. Such factors are very important as they will make a company realize a significant output at the end of the day. The company’s organizational structure is also important as the different departments will be able to strategize on improving the company.
To help manage competition, we use the Five Forces Framework, which has helped a lot. Main rivals in the business have been identified, and they include companies like HP, Dell, and Apple. The quality of service offered by the Lenovo Computer Company is better than the rest; that is why it was able to become a global pc powerhouse as a company. Despite several hitches, everyone in the company tried their level best to offer the best services and have the best computers on the market. The market for PC is very stiff as different companies give almost the same specifications for the machines, the only difference being in prices. Its low prices as a company have helped get more customers, and it is not just the low cost but also giving them the best PCs of better quality compared to others in the market with the same worth.
Good marketing strategies put in place by the company have increased sales in a month over a period. It allows them to set aside some months to do promotions and give offers on some of the products, attracting more and more people. Being a global company, it realizes sales from a wide range of customers as the demand in each country is high. They have the cheapest suppliers for materials to use while making personal computers; this helps have low production and labor costs.
Demand analysis is the process of determining the number of goods and amenities the customers can purchase under given sets of economic conditions in a specific period. Doing this kind of analysis will greatly impact a company’s revenue collection and pricing strategy. The relationship within given sets generates discussions of price elasticity, mainly between percentage quantity changes and percentage pricing changes. There is a direct relationship between price elasticity and marginal revenue whereby when the demand is inelastic, the marginal revenue is negative, and prices are low. It is, however, indirectly proportional to output and price determination. Marketing strategies and competitive behaviors are some of the forces that could change the demand and cross-elasticity of PCs. We have been able to curb this by having different groups research and keep up to date with the demand for our products in the market.
Cost analysis in managerial economics is divided into two, namely, the fixed and the variable part. By adding fixed and variable costs, the total cost of our machines is computed, which helps when doing the average revenue collection at the end of the year. Unit costs are computed after dividing several total costs by output, and the marginal costs that impact the demand are obtained by comparing costs to its associated increase in output and the results are computed. With a well-managed financial department, emphasis on the computation of marginal costs is put in place. Mostly this case has helped us find the right and most appropriate cost for our PCs and avoid overpricing.
Pricing is very important in business if one wants to be on top of the competition chain. Price and output determination helps maximize profits found after selling a company’s product. This profit-maximizing equilibrium is realized by equating marginal costs with marginal revenue (Birch, C M. pre-1986). The equilibrium may also be found by maximizing the total revenue and total cost. By maximization of total revenue and cost, there is quite a good resemblance to break-even charts which is most popular among economists. The marginal economic analysis reasons that maximization of profit is a desire and a unit of productivity will be produced if there is more addition of revenue than cost, simply meaning that marginal revenue surpasses the marginal cost. A great profit will be realized by taking all those into consideration.
There are several ways in which a firm can maximize profit as a function of some units produced in a given period. Profit maximization decisions business unit strategic planners mostly face ways of maximizing the growth in profits and the discontinued value of cumulative income in a given period of two to five years. Reformulating the presentation of revenue expansion from one enlargement of profits as a function of yield produced and sold in a single period helps to face the profit maximization decisions made. Strategic decisions about whether to be a technology leader were made, and this is a dynamic representation of the microeconomics profit maximization technique.
Expansion of capital has helped in realizing a wide profit in the company. This comes about by the high production of computers for sales and market. The capital expansion was also influenced by the company striving to be a company that makes high-quality PCs for its customers. The organizational structures put in place have helped join innovation across the global team, and Lenovo operates by them. Designing innovative and exciting products and services has been as per the customers’ needs. The structure entirely depends on our company’s objectives and the strategy put in place to achieve them.
What is the importance of each of the six topics within your company?
The six managerial economics has helped Lenovo Computers in several ways. Being a leading company in innovation, it has helped make some of the company’s critical decisions. Given that managerial economics provides a logical and experimental framework for analyzing questions, we were able to answer the question of the number of productions we need to make and who our customers are and the pricing of our products. It has enabled us to know the kind of supply needed and the demand for computers, the market competition, and the market breakdown. For instance, in the production of computers, we have been able to deduce what features to add and which ones to remove in the final product that goes into the market. Developing computers in phases and going with the technology trends, also being able to rectify any errors that were present in past productions after complaints from our customers.
Through the topics discussed above, we can ensure that our business meets the intended goal in the economic realm. It has helped us understand ways of accessing and utilizing scarce resources to ensure optimal performance of the same to generate revenues and profits. Regarding issues about excellent production, maximization of profits and production types, managerial economics has come in handy. For instance, in pricing, there are detailed ways in which managerial economics tells one to do the pricing. This will, in a great deal, help in avoiding the overpricing of the products from the company and allow them to dominate the competition. It also helps maximize profits as strategies put in place are unique, and the marketing of our products has been successful in most of the countries where they are sold.
The cost analysis done has helped us know the pricing elasticity in the target market, which has greatly helped increase revenue for our company. Costing also helped give out the required amount needed for the total production of computers in a year, which helps plan and do budgeting for the company, also looking for the cheapest suppliers of raw materials needed for production. To avoid losing suppliers due to low-cost deals, it has immensely researched the amount paid for the services by other companies in the same industry. Retaining our customers has been our ultimate goal hence the production of satisfactory goods and good prices put into consideration.
What is the usefulness of understanding this topic in today’s corporate structure?
Managerial economics is important to a student; hence, one needs to understand it deeply. One of the importance of understanding this topic is that it gives one the ability to make important decisions for the business and the right one for that matter, like in the case of the amount of production needed. To set up a company, they have the goal of getting maximum profits from it while minimizing costs. This topic contributes to helping know how to achieve profit maximization and determine the policies in place and also help in doing it.
In regards to demand analysis, studying this topic helps one have the necessary tools in demand forecasts and planning of production demands. That technique helps in protecting the business against future losses that might arise and deals with them. It also helps with the cost of the products. For instance, this topic helps one analyze whether a business is going towards profits or losses and which way the company should go. Cost control decisions will effectively work when the things learned from this topic are taken into consideration because it plays a significant role.
How does managerial economics fit into your topic
Managerial economics fits into the Lenovo Company topic as all the factors discussed in it have helped increase revenue for the company. It has helped us do a cost analysis and demand analysis, determine our competition and give them ways to optimize profits for our product. The topic of the managerial economy has also helped us in doing pricing and output optimization hence creating a successful business. This section is significant for anyone who wants to venture into the economic sector as it will help avoid losses that might be incurred as a business is being done.
Marina Pauken (2014) Lenovo Compute’s: East meets West. Prezi Retrieved from https://prezi.com/oogpysfvwh6o/lenovo-computers-east-meets-west/
Tim Bajarin (2015). How a Chinese Company Became a Global PC Powerhouse. TIME Retrieved from http://time.com/3845674/lenovo-ibm/
Managerial Economics and Management Decisions Birch, C M Business Quarterly (pre-1986); Fall 1965; 30, 3; ABI/INFORM Global pg. 70
Updating managerial economics Egan, Thomas P Business Economics; Jul 1995; 30, 3; ProQuest pg. 51
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This week’s paper is required to be approximately 4 -6 pages in length, not including the title page and the reference page. No paper should be fewer than 1400 words. Double space your work, cite your work, limit quotes, and edit your work well for spelling, grammar, and punctuation errors. If you have quotes included in your paper, you should have more than 1400 words to compensate. Your work will be automatically reviewed by Turnitin upon submission. Please make sure you have cited your work properly. Utilize the APA resource material provided in the lessons section of the classroom under course materials.
After our readings over the past five weeks, you should have an understanding of the types of strategy, organizational culture, the pros and cons of different organizational structures, the elements of internal and external environments, and the types of risk a company may take. After reading the attached articles below, you then can incorporate all of these strategies with the managerial economic impact certain decisions will have on a company.
Read the two articles attached about managerial economics.
Your essay will address these items:
This must be original research. In addition to the information in your text, research this company using at least (2) outside scholarly articles. Do not use a website as a reference. Your reference source must have an author. Discuss six selected topics from our studies throughout weeks one through five. Discuss these six topics in relation to your company and also incorporate the issue of managerial economics within your company and how the economic situation of today influences the strategic decisions your company is making. Each of the six topics discussed should be in bold print. For example, how your company handles competition (Five Forces Framework), your company’s organizational structure and why they have the structure they have, strategic grouping, value chain, Stakeholder expectation, and Strategic drift.
Give examples using the terms and concepts in your textbook readings and your research articles.
- What is the importance of each of the six topics within your company?
- What is the usefulness of understanding this topic in today’s corporate structure?
- How does managerial economics fit into your topic?
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