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Strong corporate culture, ability to adapt is best blueprint for going global: Lenovo

The blueprint for any company that pursues international expansion starts with building a strong entrepreneurial culture that adapts to the times, according to Chinese technology giant Lenovo Group.

It is a business principle that has served Lenovo well in its decades-long transformation from a start-up electronics company in mainland China in 1984 into the world's biggest supplier of personal computers.

"When a company becomes bigger, make sure that there is a unique culture committed to execute its strategy," Ivan Cheung, Lenovo executive director and general manager for Hong Kong, Taiwan and Korea, said in his interview at the South China Morning Post's Game Changers Forum 3 on Tuesday.

Lenovo has been a role model for many Chinese technology companies since it acquired IBM's PC business in 2005. Photo: AFP

Lenovo has been a role model for many Chinese technology companies since it rapidly expanded its international operations after acquiring the personal computer division of IBM for US$1.75 billion in 2005.

The computer giant, which operates in more than 160 countries, has continued its expansion with the purchase last year of Motorola Mobility for US$2.91 billion from Google and the commodity x86 server business of IBM for US$2.1 billion.

"We're trying to replicate our success in the PC industry, in the smartphone and enterprise server businesses," Cheung said.

He pointed out that Lenovo translated the principles of accountability and entrepreneurship into a few action points: "We plan before we commit; we perform as we promise; we prioritise company first; and we practice improving everyday."

In their book The Lenovo Way, authors Gina Qiao and Yolanda Conyers said the strong corporate culture keeps the company prepared to change and diversify.

"The Chinese have a saying: To cultivate trees, you need 10 years. To cultivate people, you need 100 years. That's fine with us because we know how to be patient," the authors wrote.

Amid changes in the global economy and evolving consumer tastes, start-ups must also realise that being adaptable can help them survive tough times.

Lenovo currently finds itself in need to be more nimble as global personal computer sales continue to decline and competition in the smartphone and commodity server businesses intensify.

The company last month announced that it was laying off 3,200 employees in non- manufacturing jobs, out of its total 60,000 worldwide staff, under a sweeping restructuring plan.

That would help the company reduce expenses by US$650 million in the second half of its fiscal year to March and US$1.35 billion on an annual basis.

The restructuring will see Motorola be responsible for designing, developing and manufacturing smartphones. The production supply chain for personal computers and servers will also be integrated.

Yang Yuanqing, the chairman and chief executive at Lenovo, said last month that the company targeted a 30 per cent global market share in personal computers and the turnaround of its mobile devices business in two to three quarters.

Question:

What changes did Lenovo undergo? Process change or strategic cultural change? Explain your answers based on the consideration of the theme of change, driving force, and the degree of the organization changes. What are the reasons for Lenovo’s to success?

A company is currently waiting for 4 days to collect money. Through a lock box arrangement, the funds could be collected the next day (1 day float). The company is considering using 4 lock boxes strategically located in areas where it has clusters of customers. The company expects to have 5,000 checks processed per day, per lockbox, and the average amount of each check is $520. The lockbox arrangement has a fee of $0.463 per check. There is additional charge $25 at the end of each day for a wire transfer of the collected balance to the company's bank. The hurdle return for the company is .03% per day.

1. How much is the benefits from lockboxes?

2. How much is the PV of the lockbox proposal?

3. How much is the NPV for the lockbox proposal?

Green and Green (2004) discuss changes in Canadian immigration policy.

1.  How did the power to set immigration policy change in 1910? Name an advantage and a disadvantage.

2.  How did immigration change in the 1930’s? Was the change based on a long-term view, or a short term view?

The number of arriving customers to a big supermarket is following a Poisson distribution with a rate of 4 customers per a minute.

What is the probability that no customer will arrive in a given minute?

What is the probability that exactly 3 customers will arrive in a given minute?

What is the probability that at least seven customer will arrive in a given minute?

What is the probability that at most one customer will arrive in 40 seconds?

What is the average number of arriving customers in a given one hour?

PEG AFRICA

Financial Manager Case Study.

This case study uses the fictional information on page 1. Questions based on the information are found on page 2. Where you feel information is missing, please use reasonable assumptions and not why you believe the assumption is reasonable.

PEG Ghana Solar Limited sells Solar Home Systems (SHS) to individuals on a hire purchase basis. The selling price per unit is GHS 1,043 and it is paid over 12 months by the customer.

Based on customer demand, the company introduced a Solar Tv to be sold on a hire purchase basis. Customers are expected to pay over a period of 24 months. The unit selling price of the TV set is GHS 2,500.

For each product, customers pay an initial deposit before the product is activated for use. In the event that the customer is unhappy and returns the product in a good condition the initial deposit is refunded to the customer but in this scenario the customer forgoes the loan amount (the above deposit) that they have paid.

The company is currently in the month of March, 2017 and purchased 500 SHS at the unit cost of $88 per unit, shipment cost was $1500. Customs duties was $10,000 and carriage inwards and offloading cost were $1,000 and $250 respectively.

The goods were received on 3^rd March, 2017 and were made available for sale. Total Inventory balance for the SHS prior to the receipt of new consignment was 1000units with a value of $124,000.00. The company uses the average costing method to value its inventory.

The company’s borrowing rate in USD terms is 7% and the exchange rate of USD Dollars to the Ghana Cedi as at 31^st March, 2017 is $1: GHS4.3

The company’s stated capital is $500k and the amount due to parent company as at 31^st March, 2017 is $4.3m and has been recognized as intercompany loan at zero coupon rate.

The company wishes to comply with the thin capitalization rule and therefore seek to strategically present its amount due to parent company to comply with thin capitalization rule.

Below is a summary of operational data

Questions to case study.

How should revenue be recognized? Please explain.

Compute the cost of products sold and gross profit for the month of March, 2017.

Explain how the trade receivables should be recognized as at 31^st March for the two types of products (SHS and Solar TV)

Discuss the strategy to adopt to enhance compliance with the thin capitalization rule.

Assume 20 customers returned their SHS. Before returning their SHS, the customers had paid off GHS 14,000 from their loans. Indicate the effect of this assumption in your books of accounts.

Indicate the appropriate accounting standards used for the completion of the requirement above where applicable.

NB: Make an assumption when you think you need extra information.

For each problem, perform the following steps. Assume that all variables are normally or approximately normally distributed.

1. State the hypothesis and identify the claim.

2. Find the critical value(s).

3. Compute the test value.

4. Make the decision.

5. Summarize the results.

2. The average temperatures for a 25-day period for Birmingham, Alabama, and Chicago, Illinois, are shown. Based on the samples, at α = 0.10, can it be concluded that it is warmer in Birmingham? [4]

Refer to the accompanying data set and construct a 95​% confidence interval estimate of the mean pulse rate of adult​ females; then do the same for adult males. Compare the results.

Refer to the accompanying data set and construct a 90​% confidence interval estimate of the mean pulse rate of adult​ females; then do the same for adult males. Compare the results.

Males Females

82       83

72       94

48       59

57       64

54       56

62       80

53       78

74       86

53       86

63       58

73       35

61       65

65       85

76       76

83       75

65       64

64       68

93       79

41       59

84       63

74       82

64       82

72       68

70       75

57       88

66       91

58       87

82       93

73       89

64       97

66       69

96       92

57       84

65       80

58       73

58       53

68       99

67       73

84       78

56       74

Refer to the accompanying data set and construct a 90​% confidence interval estimate of the mean pulse rate of adult​ females; then do the same for adult males. Compare the results.