When Lenovo Group Ltd. announced its $1.7 billion deal to acquire IBM Corp.'s PC division in 2005, the looming integration challenge was the first thing on many obervers' minds. They weren't wrong to be concerned, because the Chinese PC company initially had a tough time wringing out the purported benefits of the acquisition.

The latest McKinsey Quarterly offers a snapshot of some of the challenges Lenovo faced through the eyes of Qiao Song, the company's senior vice president and chief procurement officer. The purchasing department was the first part of the newly enlarged Lenovo to be fully integrated, the executive says, and he was given 18 months to find $150 million in savings from direct materials and cut $300 million in annualized run-rate costs.

Despite big differences in cultures--Lenovo's team was more unstructured and entrepreneurial, while the IBM people functioned around tightly defined processes--Song says the new Lenovo managed to exceed these targets. -- Olaf de Senerpont Domis

See May 2008 article on Lenovo from The McKinsey Quarterly
See May 2006 story from TheDeal.com