Lenovo’s history demonstrates that to establish an effective organizational design, it is necessary to take into consideration different situational factors instead of simply relying on the universal hierarchy. Lenovo is a company that underwent considerable development over the years and subsequently experienced the influence of numerous factors which directly affected its internal activities and external situations. Nevertheless, to a large extent, the CEOs of the company refused to adjust the company’s operations following the existing influences and adhered to a strict universal approach. Specifically, for a long period, the company embraced a hierarchical organization design which ultimately prevented it from being more flexible and perceptive of important influencing factors (Griffin, 2022). Thus, the history of Lenovo presented in the case study demonstrates the superiority of the situational approach over the universal one.
The Lenovo case shows how factors such as the size of the company play a major role in the choice of a proper organizational design. Since Lenovo experienced gradual growth and significantly expanded its operations, the executive team grew simultaneously, which led to the need to ensure and maintain a certain level of decentralization in the company. At the same time, the CEOs Ward and Amelio decided to retain the decision-making responsibilities and avoided reaching a consensus on different matters with other members of the executive team (Griffin, 2022). As a result, the company failed to deliver any substantial positive results and struggled to stay competitive in the market. Essentially, Ward and Amelio mostly embraced the universal approach to organizational design and did not consider situational factors, which caused them to fail. Additionally, during the second term of Liu as CEO, Lenovo began to address the environmental factor and became a more organic company. Because the technology industry in which Lenovo operated was prone to constant changes, Liu allowed different executives to participate in decision-making and share their unique expertise.
Its strategy of Lenovo was to expand into international markets and increase the sales of Lenovo products overseas, and it became extremely relevant in the company’s evolution of the organization’s design. For instance, Liu decided to hire CEOs who had previous experience working in different countries and therefore possessed the expertise on which organizational design a successful international company should choose. As previously mentioned, Ward and Amelio relied on a hierarchal organizational design since they believed that it would deliver substantial progress in terms of the implementation of Lenovo’s strategy. Although the company managed to achieve its goal of establishing a global presence, it eventually began to lose its market share (Griffin, 2022). As a result, Lenovo had to adjust its strategy and change it from expansion to gaining better positions in its current markets. Thus, to realize the strategy, the company had to embrace the organic organizational design where regional branches played a more important role.
The primary international element affecting Lenovo is the diverse workforce of the company consisting of people with different cultural backgrounds, which led to conflicts within the organization. For instance, the company’s organizational design during the times of Amelio remained hierarchical, which contributed to the tensions between the original Chinese Lenovo executives and the newly-employed ones. Additionally, another international factor affecting the organizational design of the company was the strong link of the brand to its national cultural heritage. The fusion of “old Chinese thinking” and “modern global thinking” became the key to the success of the company, according to Liu (Griffin, 2022). Thus, Lenovo managed to retain its original philosophy and blend it with the best international practices to create its organizational design.
Reference
Griffin, R. (2022). Management (13th ed.). Cengage Learning.