Intel case study
Introduction
Intel Corporation is the leading manufacturer of microprocessors and integrated circuits. The company invented the microprocessor, which powers personal computers. More than 80 percent of the world’s personal computers use Intel microprocessors. The company also makes computer network products, memory products, servers, and supercomputers. Intel is based in Santa Clara, California. In 1998 Andrew Grove, whose engineering knowledge and aggressive drive had helped build Intel into a global powerhouse, resigned from his position as the company’s chief executive officer. He remained chairman of Intel’s board of directors (1999).
Also that year, Intel bought the semiconductor manufacturing operations of Digital Equipment Corporation for about $625 million as part of an agreement that settled a patent dispute between the two companies. In June 1998 the U.S. Federal Trade Commission (FTC) filed an antitrust suit against Intel. The suit charged Intel with abusing its power in the market for microprocessors by withholding key technical information from computer manufacturers who had refused to license patents to Intel (1999). The paper will discuss about Inter-dependencies between internal and external environments, SWOT analysis, Strategic Fit, Identifying & responding to Change, Change Management, Role and strategic value of Core Competence, Strategic Value of Corporate Ventures and Corporate Values. The correlations of the different methods in analyzing the case will be included in the discussions.
1. Interdependencies between internal and external environment
Internal environment
Mc Kinsey’s 7 model
Shared value
Intel stands for continuous innovation of products so that people will have lives that are exciting, fulfilling, and easy to manage. The company based their values on the things they can do to achieve their goal and be successful in their industry.
Strategy
Intel through its leaders are trying hard to learn from its past mistakes so that they can be market savvy. The company is trying to have closer relationship with customers so that they can create products that people will purchase. The company also wants to invest in new factories. The new factories are where the best products of the company will come from.
Structure
The structure of the company is decentralized wherein decisions are not made by a single person. Each department has a say on decisions that will be made. Each department communicates with each other before making any kind of decision. This structure of the company helps it to make the best decisions that in turn will be vital so that the company can create the best products that people will purchase.
Systems
The different systems of the company were reconfigured to make sure that the system will create changes in the way products are made. The different systems are revised according to the different concerns and needs of the department using them.
Staff
The company has 92,500 employees in 48 countries .These employees are the best and the most dependable not only to serve clients but to strengthen the company’s culture and values. The employees are highly competitive and they are given the best training so that their potential can be realized.
Style
Leaders of the organization are not all the times perfect in the way they handle the job and the way they treat the personnel. Their can be times when some of the leaders act differently from what is expected from them. Leaders learn from their mistake and they correct mistakes by making sure that the actions they will make will benefit the company.
Skill
Intel uses the personnel with ideas about their products and these personnel are the ones assigned to create the best products. Intel uses high tech materials so that the products they will create will have high standards.
Porter’s Value chain
Global value chain analysis provides another way of explaining development by tracing the amount of value added produced in the different stages of a commodity's life from direct production through to final sale. By focusing on a specific chain it analyses a significant, but still manageable slice of the world economy. Moreover, monitoring where value is produced and appropriated highlights patterns of inequality and the potential contribution of the activities to the development of the region where they are located (2004). The company makes sure that it monitors the value of its products from all over the world. It sees to it that the products in other places are given the appropriate value it should have. The company also makes sure that the different factors that are under inventory and supply chain are not having problems.
External Environment
PEST analysis
Political sector
The company will not get any good reputation, trust and success if it will not be aware of what is happening in the political sector of the country. The company makes sure they are aware of the political situation of the country and the company has its position with regards to political issues. The company is prepared for any problems concerning the political sector and has different steps undertaken to counter it.
Economic sector
The company can be said to be economically stable for the past years. Its economic stature is doing well that’s why they try to improve their products to give the best to their clients. It is not only the internal economic situation of the company should be taken note of but also the economy of the country, the company checks first the economic status of the country they are operating in before making decisions because making decisions during a difficult time on the economy of another country may cause catastrophe for the company. It also checks on how the economy of the country they are doing.
Social sector
The company makes sure that the product they create will not be cause of health problems. They make sure that the proper safety standards are followed and there are no hazardous chemicals in the production of products. They make sure that the product they create will be accepted by the public.
Technological Sector
The company offered new innovations in the technological sector and introduced new concepts with regards to its industry. Since technology rapidly changes the company makes sure they are updated to what is happening and they can adjust to these changes. The company makes sure that the products they have are updated with regards to technology and if new technologies emerge they can compete with these products.
Porter’s five forces
Potential Entrants
The company has been around for a long time and the company is not greatly affected by the new entrants. The influence of potential entrants to the company is weak. But to ensure that no other problem arise the company maintains low cost of unit production, this helps in making sure that the new entrant will not have advantage over them. Another thing that the company do is to innovate new techniques and procedures in serving the clients so that their can be product differentiation and the company has a unique product apart from the product their rivals has.
Competitive rivalry
Competition is one of the things that the company tends to focus its attention. Competitive rivalry highly influences the company. Competitive rivalry affects the decisions made by the company. Different things are done by the company to ensure that they have advantage over their competitors one is a strategy wherein they give service straight from the heart. This kind of strategy gives the company a better relationship with the clients. Having a good relationship with clients gives them advantage over rivals. Another thing done by the company is to offer quality prices. By doing so the company lures clients away from competition. Moreover the company uses different promotional materials so that clients get to know them and so that more clients will transact with the company.
Substitutes
Substitutes give high influence to the company since substitutes can make a company lose the clients it has. The company makes sure that the substitutes won’t give them much problem. They do this by proving that the service and products they offer are the best quality and are better than substitutes. They also prove that their service is better against others by comparing and contrasting it with substitutes so that clients can know the difference. The company also tries to offer products and services superior than substitutes so that they can attract more clients. By offering superior products
Bargaining power of buyers
The bargaining power of buyers highly influences the company. It shows how good the company is doing in serving the clients. It also helps in determining how known the company is. The company makes sure that the bargaining power of buyers is high. They do this by making sure that buyers are concentrated and there are few buyers in a significant market share.
Bargaining power of sellers
The bargaining power of sellers highly influences the company. The company makes sure that their suppliers have high bargaining power through helping them show their importance in the industry. By demonstrating the value of their suppliers the company can attract other companies to purchase the suppliers products thus their bargaining power increase.
Industry Life cycle
An Industry life cycle is divided into 4 stages. The first stage is embryonic, the second stage is growing, the third is mature and the last stage is in decline. The company is on the mature stage. It had made many mistakes and miscalculations in the past. It is trying very had to make sure that it corrects its mistake and it makes it a certain it learns from its mistakes. With experience comes maturity, the company tries to make sure that before making any decisions it has checked all the possible things that might happen and it oversee all the problems the company might face.
Resources Audit
In creating the products the company needs different materials, these materials are made by the company’s trusted suppliers. The company gathers its materials and supplies from the most respected and trusted suppliers. The materials and supplies have high value and are highly reliable. The company is certain that the materials they use in producing a product is something that will make the product have high standards of quality.
2. SWOT analysis
Strength
A strength of the company is the technology it uses to create the products it has. The technology of the company is used to innovate new products and improve products that have problems. The technology the company uses modifies the field in the industry the company is competing. Moreover a strength of the company is the well trained employees it has. The employees are trained to respond to every need of the customers and offer customer satisfaction by making sure that the products will be finished as prompt and efficient as possible and the product will be delivered to the consumers as soon as possible.
Lastly the strength of the company is its policy of making sure that the suppliers are the best in its industry. Suppliers should be well chosen since they are the ones that will provide the founding materials of the product. A wrong choice of suppliers may lead to wrong choice of product. The company has a strong policy on choosing suppliers to ensure that they can create the best products. The company chooses well their suppliers to ensure that the materials needed will be delivered in time and no production activity is hampered. The company makes sure that the suppliers have reputable identity and not in the verge of bankruptcy so that they can be assured that materials that will be used will be of high quality. These strengths of the company assist them in competing with their rivals, and helps in maintaining their status in the industry.
Weakness
A weakness of the company is the limit on the products it offers. It may offer the best computer and information technology related products but it can still innovate new products not necessarily related to computers that can bring profits to the company. Clients tend to buy from company that offers vast products whether these products are related or not. Adding new products to its wide offer of products can help the company improve its status in its industry. A weakness of the company is the unequal promotion of its products. Some of the company’s product is being promoted well while some are not given focus on promotion. Some people only know that the company produces certain computer parts, they don’t know that the company also produces software. The weaknesses that was discussed showed which aspects of the company needs to be improved, what must the company do remain long in the industry, why are the rates of their sales reach only the current level it is in, and what are the factors that keep the company from reaching its goals and objectives.
Opportunities
An opportunity for Intel is to create methods and find out more ways to give employees incentives to improve employees’ performance. The company can make use of new ways to encourage employees to improve their performance and assist in making the company reach its objectives. An opportunity for Intel is to make their employees multi functioning so that they don’t have to hire more employees. Lastly an opportunity for the company is to merge with its non competitors so that they can both benefit from such endeavor. Merging with a non competitor can help in improving the company. The company can merge with company’s that are doing well in another industry and from that merger they can both improve their strengths, fix or lessen their weaknesses, and conquer threats from their respective competitors.
Threats
Intel’s threat includes the laws in the country they are operating in. Laws are a vital part of a country. There may be laws that can cause some delay in selling the products. These laws are enacted to protect the welfare of local sellers in that specific country. Another threat to Intel is the tariffs and taxes that the company has in different countries. The taxes and tariffs collected by a country is a threat because this causes expenditures to a company. Furthermore a threat to the company is if the country they are operating in has economic, political and other problems. This becomes a threat when it affects business transaction in that country. This problem also becomes a threat when in the country the company is doing business in; such problem has arisen or may soon be arising.
3. Strategic Fit
The mission of the company fits well with the current events in the company’s internal and external environment. Given the internal capabilities of the company and the things that are happening in its environment, the company can achieve its mission as long as it maintains its focus and it makes sure that every aspect of the company will be given proper attention.
4. Identifying and responding to change
The company can know that change is needed when nothing seems going right with the company. Change is needed when everything done by a company results to more problems than more solutions. Intel makes sure that when there is a need to change the company they first discuss the benefits and disadvantage of the change. After the need for change is approved they slowly implement the change so that people can adjust to it.
Change Management
Whenever change is needed the company has a set of procedures that helps in making sure that there is management of change. The procedures help in making sure that the effects of the change will create benefits for the company and it will help the company grow. The company needed to create changes when the internet becomes the single most important thing in the computer industry. The company responded by making sure that they have a wider horizon and that they take advantage of the internet phenomenon.
Implementation
After changes has been decided the next thing for the company to do is implement the things needed to be changed. Changes in the company’s strategy don’t end in the planning stage it must be continuous and result to the company taking action. Strategic action is managed through constant verification of its effect to the business. The effect of the changes is monitored by the company to see if the strategic action is effective and adaptable to the situation of the company. Strategic action is kept up to date through making sure that the strategy is still appropriate for the current situation of the company.
5. Role and strategic value of Core Competency
Core competency can help the company having more clients and it can make the company have more advantage over competitors. Without core competency the company will not have unique qualities over their competitors. The core competency’s strategic value depends on how it affects the company and how it creates changes to the company.
6. Strategic Value of Corporate Ventures
The corporate ventures are supposed to provide assistance to each other not only in terms of financial assistance but in other ways possible. Corporations having different businesses are the ones that are successful since each venture provides assistance to another for all of the ventures to gain success.
7. Key factors
From the analysis the key factors that arise are the capability of the internet and the personnel in giving the company advantage over its competitors and helping the status of the company improve. A key factor is the management team of the company who considers everything before taking any action.
8. Competitor analysis
While customer analysis examines how to attract and satisfy customers, competitor analysis gives a picture of rivals' positions in the market. Companies can use this information to concentrate on their weak spots or differentiate their product line, with the overall aim of creating their own competitive advantage. Competitor analysis should be viewed from a variety of perspectives. First, analyze competitors by how customers select a particular product or choose a company from which they purchase. Second, look at how competitors segment their market. Third, observe how customers display their various behavioral purchase patterns. And fourth, find out how competitors develop their strategies (2006).
The top competitors of the company include AMD, Samsung electronics and Texas Instruments. Among the three Samsung electronics is doing better than the company because it has higher amount of annual sales. The other two competitors have lower annual sales rate when compared to the company. As soon as the changes in the company have been realized the company will soon overcome its leading competitor.
9. Corporate values
Corporate values have an intrinsic power and they do not require justification to the organization's members, nor to other stakeholders. Corporate culture and values make a strong contribution to shape the informal structure of any company, and may even have more influence on the growth and evolution of the firm than the structure and formal systems. When both are aligned, their combination emerges as a formidable platform for corporate growth. Corporate values are those explicit or implicit principles that predominate in any organization. Normally, they are basic, universal principles, such as respect for other employees, the endeavor to perform a task as well as one can, or the commitment to give customers the best possible service (2000).
However, the fact that they are universally known does not mean that they provide specific guidelines for action for all an organization's members. Hence, many companies wish to formalize and specify those values that form part of a particular corporate culture, in order to facilitate their implementation by employees and their rapid assimilation by people who join the organization. These explicit or implicit values have an enormous impact on people within the organization and shape their behavior although they do not determine it completely. They are unlikely to override individual freedom, but they certainly contribute to guiding individuals' actions in one direction or another (2000). The company makes sure that its mission is in connection with its corporate values. The company makes sure that the value it has is based on proper conduct and norms and it will lead them to attain their goals.
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