Intel

Final Paper

MGMT 480- Frankforter

Executive Summary

As the world’s “foremost semiconductor maker,” Intel Corporation has a reputation to

uphold and a future to build. Founded in 1968, Intel has grown to a company of over 90,000

employees who operate Intel’s facilities in nearly fifty countries. Intel produces processors,

motherboards, chipsets, network adapters, flash memory, software, storage devices, and wireless

products. Many of us are the end-users of a wide variety of Intel’s products, but the Intel’s

numerous other customers are primarily OEM manufacturers who utilize Intel’s components,

end-user consumers (which includes individuals, large and small businesses, and service

providers), and “other manufacturers, including makers of a wide range of industrial and

communications equipment.”

Intel has capitalized on its ability to lead the semiconductor industry by continuous

innovation. Gordon Moore, one of Intel’s founders, introduced a principle that continues to

guide Intel which states that “the number of transistors on a chip roughly doubles every two

years.” In keeping with Moore’s Law, Intel’s key to success in the semiconductor industry has

been constant innovation. Such a strategy has allowed Intel to remain a leader among

competitors such as Texas Instruments, Advanced Micro Devices, International Business

Machines, and Freescale Semiconductor, among others.

The semiconductor industry is extremely competitive, but Intel seems to have the most

sure-footing of all the major competitors. By offering a diverse product lineup that calls upon

nearly fifty years of expertise and continuous innovation, Intel has become and will continue to

be a leader in its field. No competitor has come close to replicating the competitive advantages

possessed by Intel Corporation.

Analyze the Company Mission

According the company website, Intel Corporation’s mission statement is as follows:

“Delight our customers, employees, and shareholders by relentlessly delivering the platform and

technology advancements that become essential to the way we work and live.” As the world’s

foremost manufacturer of technology-related products, Intel has continuously delivered on this

mission. In the following paragraphs, the reasons why Intel has enjoyed such success with its

mission statement will be delineated.

The first goal contained in Intel Corporation’s mission statement focuses on not only

serving customers, but “delighting” them. In order to understand how Intel achieves such a goal,

we must establish who constitutes Intel’s customer base. Intel’s customers include “original

equipment manufacturers (OEMs) and original design manufacturers (ODMs) who make

computer systems, cellular handsets and handheld computing devices, and telecommunications

and networking communications equipment; PC and network communications products users

(including individuals, large and small businesses, and service providers) who buy PC

components and board-level products, as well as our networking and communications products,

through distributor, reseller, retail and OEM channels throughout the world; and other

manufacturers, including makers of a wide range of industrial and communications equipment.”

A focus geared toward customers “causes managers to realize the importance of providing

quality customer service.” By placing customers first—whether major manufacturers or PC

users—Intel has been able to build a positive reputation with those who utilize Intel’s products.

Strong employee relations are important to the ultimate success of any company. Intel

presently employs over 90,000 people in numerous countries, so the potential difficulties in

“delighting” employees are quite plain to see. Intel overcomes the odds, however, and has been
named one of the “100 Best Companies to Work for in America” by the Great Place to Work

Institute for eight of the past nine years. In addition, Intel has been recognized internationally as

an exceptional place to work.

Delighting shareholders is an essential element in raising capital to pursue growth in the

technology industry. Over the past 20 years, Intel has delivered on its mission to delight

shareholders by splitting its stock six times and increasing stock price nearly 5000%.

Comparatively, Advanced Micro Devices has not split its stock during the past two decades and

has seen only relatively moderate gains in its price per share. “Intel's approach to investors

appears to rest on a principle of transparency and trust. Intel ensures that investor queries are

answered, whether the answer comes from the investor relations department; the public relations

department; the environmental, health, and safety department; or the corporate responsibility

department.” Intel takes great pride in the relationship that it has built with its investors, and as a

result shareholder loyalty to the company seems to have remained strong.

“Relentlessly delivering the platform and technology advancements” that Intel offers is

the way that the company fulfills the aforementioned goals of its mission. Intel’s customers,

employees, and shareholders reap the most benefits from Intel through its ability to produce,

expand, and market its cutting edge technology. As Intel continues to broaden the capabilities of

existing products while entering new markets with fresh, innovative products, the potential for

the company to “delight” anyone who has a vested interest in the company becomes more

feasible.

Intel’s mission statement has been finely tuned over the past 35 years to become a fitting

compass for the company’s future. The appropriateness of Intel’s mission statement lies in its

congruence with company values and objectives. According to the company’s website, Intel’s
values include “customer orientation, results orientation, risk taking, [being a] great place to

work, quality, and discipline.” In addition, Intel’s stated objectives are to “extend leadership in

platform and silicon manufacturing, deliver architechtural innovation for market-driving

platforms,” and to “drive worldwide growth.” The effectiveness of a company’s mission

statement can be measured by the extent with which the company adopts the mission. It is clear

to see that Intel’s mission statement has permeated the core values and objectives to the point

that all three serve as guiding elements of the company’s philosophy.

Assess the External Environment

In assessing Intel’s external environment, there are four related sectors – economic,

social, technological, and ecological.

In terms of the economic environment, Intel must understand and consider the economic

trends in the segments that affect its industry. The book gives examples such as the general

availability of credit, the level of disposable income, and the propensity of people to spend.

Intel abides by something known as “Moore’s Law.” Moore’s Law says that the number

of transistors on a chip doubles about every two years. The company strives to make this law a

reality by working day in and day out to increase the level of technology offered to their

consumers. Intel feels that their expertise in the field of silicon gives them an edge in developing

platforms that will continue to fuel economic growth. By paying attention to the economy and

what is needed from technology, Intel can secure their already protected position at the top of the

food chain in the chip industry.

Social forces are dynamic, with constant change resulting from the efforts of individuals

to satisfy their desires and needs by controlling and adapting to environmental factors. Intel

understands the need to assess the social factors that are influencing the environment. The
company employs anthropologists, psychologists, and other social scientists alike to study people

in their natural environments. Intel believes that this will aid the company in finding ways for

technology to enhance the consumer’s everyday lives.

By keeping close tabs on the social forces that are driving the industry, again, it seems to

be a positive for Intel. As long as the company is knowledgeable of their consumer’s desires and

needs, and strives to fulfill those wants and needs, there is no threat to the firm of losing

customers.

The book states that creative technological adaptations can suggest possibilities for new

products, for improvements in existing products, or in manufacturing and marketing techniques.

Intel employs more than 7,000 technologists and thought leaders to discover breakthroughs in

five core technological areas: silicon technology and manufacturing, micro architecture,

computing platforms, communication and networking, and software technologies. The company

is ahead of the game with their technological advancements in the products that they currently

offer and the products that they are introducing to the market. Their “next generation micro

architecture” will reduce space and electricity burdens for IT managers as sever data centers

grow.

Concentration in technology, being Intel is a technologically based firm, poses serious

opportunities for the company. Intel is already the leader in the chip industry; further research

and development can only bring positive outcomes for the company. Intel has an exploratory

research group that focuses solely on long range emerging and disruptive technologies. The

company understands that in order to have a competitive advantage over other firms, they must

get new and/or improved/innovative products on the market before other companies have an

opportunity.
 Ecological factors are very important to any organization, as they can be the rise or fall of

the company. Ecology refers to the relationships between people and the environment,

specifically other living things, soil, water, and air.

Intel “strives to provide a safe and healthy workplace, to conserve natural resources, and

to minimize the impact of manufacturing operations have on the environment and neighboring

communities.” Ebay has joined with several companies, including Intel, Apple, HP, IBM, and

more, to create its “Rethink Initiative.” The purpose of this program is to educate consumers and

businesses about options for disposing unwanted computers. The Rethink Initiative is a website

that includes information on how to safely sell, recycle, or donate used computers. Intel is Ebay’s

primary ally in the campaign.

Intel attempts to conduct its business in a manner that is suitable for the environment. By

realizing and controlling the effects the business operations have on the environment is one more

competitive advantage that they can have over their competitors. Ecological factors do not look

to be a threat to the firm anytime soon.

Analyze the Industry Environment:

Intel primarily competes in the microprocessor industry. Defining the scope and

boundaries of the industry is important in evaluating Intel’s competitive position. If boundaries

are not defined well enough, then firms may be considered competitors when they actually

should not be. Inversely, if an industry is too narrowly defined, then forces affecting the industry

may not be used for consideration in strategy development.

Once an industry is defined, competitive advantages of firms in the industry can be

assessed using the “five forces model” developed by Michael Porter. The five forces consist of

entry barriers, extent of rivalry, supplier power, buyer power, and substitute products. Industries
vary on forces that hold greater importance. Capital intensive industries naturally have entry

barriers, while other industries may have a focus on cost reduction and operational efficiency as

a basis to decrease competition.

Intel is the beneficiary of numerous entry barriers in the microprocessor industry. The

first major benefit is economies of scale. Since the production of microchips necessitates high

quality equipment, Intel can produce chips at a lower cost per unit if fixed assets produce a

greater number of chips. Capital requirements also prevent other firms from entering the

industry. Companies in the microprocessor industry have to stay alert of trends, so large amounts

of capital are used in research and development cost. Small companies cannot compete in the

industry because they cannot match the cost advantages established by the larger firms.

Although product differentiation is difficult to establish since quality is measured by

performance and capability of chips, Intel has developed a brand image of perceived quality.

The second most important force is the threat of substitutable goods. Since microchips

are used as a component in finished goods and the chips have no significant physical differences,

product differentiation is difficult to manage. For example, Pepsi has tried to differentiate its

product from Coke on the notion of superior taste. Intel has had to differentiate its chips through

capability and through marketing channels. Intel chips are given names such as “Celeron” or

“Pentium” to establish a brand and establish perceived quality in the end user. AMD, a primary

competitor of Intel, could produce the same processor, but the typical mainstream consumer may

still choose Intel products because of effective marketing. The same perceived quality is seen in

name brand drugs over generic drugs.

Having entry barriers and substitution threat as industry driving forces has helped to

shape Intel’s operating environment. The industry has forced technology companies to be more
adaptable to change. Technology products generally have shorter life cycles than most consumer

goods. As a result, implementation of strategy is as important as the strategy itself. Intel and

other firms have to be efficient in operations with a concentration on speed in production and

release into the market. Once a product is distributed, usually to another computer

manufacturing company, it has a limited time period before prices must be reduced. Product life

cycles can be short as six months to a year. Obsolescence is a concern for customers of Intel

because they must be able to sell items in the market at high prices in order to rapidly recover

costs.

Power of buyers and suppliers is not as important in the microprocessor industry because

there is competition at both levels. Intel cannot be an overwhelmingly powerful buyer, even with

massive capital, because new technology must be developed every few months. There are also

numerous suppliers to the industry because raw materials are readily available and there are

multiple uses for supplied goods. Buyers in the industry may pay more for higher quality of raw

materials because that usually translates into better quality in the end product.

Rivalry in the industry is not extremely intense since Intel is one of three major firms in

the industry. AMD and Texas Instruments are the two other major firms. Small firms do exist in

the industry, but they usually compete in a niche environment. The small firms tend to specialize

in one specific product or compete in a small area.

The growth of the industry starting in the early 1990s has also helped shape the industry.

Intel and AMD are known primarily for producing semiconductors and processors, while Texas

Instruments has a more diversified product line. Texas Instruments is known mainly for their

“TI” line of calculators and have some recognition in developing “DLP technology” for high

definition television. Although AMD is a smaller company, it is known to produce higher quality
processors. Intel is known for being more marketable to mainstream computer companies such

as Dell and Hewlett-Packard. AMD has sold processors in lower quantities, partially due to

manufacturing capability, to lesser known companies such as E-Machines. E-Machines has been

acquired by Gateway.

Develop a Company Profile/Value Chain Analysis

The book describes the value chain analysis as an “attempt to understand how a business

creates customer value by examining the contributions of different activities within the business

to that value.” The book goes further to say that customer value is derived from three sources:

activities that differentiate the product, activities that lower its cost, and activities that meet the

customer’s needs quickly. VCA looks at all activities and determines the ways that each activity

that occurs between purchasing inputs and after sales service, helps differentiate the firm’s

products and services.

The initial step in conducting a value chain analysis is to break down the company’s

activities into primary and support activities. Primary activities, also called line activities, are

those that are involved with the physical creation of the product, marketing and transfer to the

buyer, and after sale support. Intel’s key primary activities are their solutions and services, their

resource centers, and their technical support and download centers. All of the above resources

can be found on the company’s website. The programs are in place to offer the customer

assistance in business solutions, decision making in terms of technology, as well as new and

updated downloads for their products.

Support activities, sometimes called staff functions, are those activities that “assist the

firm as a whole by providing the infrastructure or the inputs that allow the primary activities to

take place on an ongoing basis.” Intel’s most noted support activity is the company’s extensive
research in areas such as technology. The firm operates with more than 100 standards and

industry groups worldwide including: networking and telecommunications, general, software and

web, silicon and semiconductors, and computing platforms. Intel’s affiliation with these

standards and groups worldwide give way for the company’s primary activities to occur on a

continuous basis.

Intel’s primary rivals are AMD, Samsung, and Texas Instruments. The fact that these

three companies are all technologically based like Intel, gives the assumption that the primary

and support activities of each company are relatively similar to those of Intel. However, Intel

feels that they hold a competitive advantage over the other companies due to the firm’s

leadership in chip technology. Intel has a long history of translating technology leaps into

tangible benefits that people can appreciate. After evaluation of the company, it is obvious that

Intel does hold a leadership position and foresees at no time in its near or distant future losing

that position.

Develop a Financial Analysis:

For the purpose of an effective comparison, AMD is most similar to Intel in terms of

product lines and customer base. In terms of stock prices, AMD has grown over the last five

years from as low as about $5 to the current level of about $40. Intel, on the other hand, has

been on a downfall from about $35 per share to the current level of about $21.

The income statement is an important tool in assessing the profitability of a company.

For the past five years, Intel has gradually increased profitability from 1.2 billion in 2001 to 8.7

billion in 2005. AMD, on the other hand, has only recovered from a loss of 60 million in 2001 to

a profit of 165 in 2005.

 Intel is a more profitable company, so why is the stock price for Intel lower than AMD?

There are numerous reasons why the market values some companies over others. Although all of

the factors affecting the stock price cannot be uncovered, a few assertions can be made.

First, investors consider factors in the company that will lead to future profits. When a

company’s future looks bright, the result is usually incorporated into the valuation of the stock

price. Also, stock prices fluctuate when members of executive management either leave or are

replaced. When long time Intel CEO Andy Grove left his position in the late 1990s, the market

was not certain on Intel’s future. Although Intel has generated profits every year since 2001,

Intel’s operational structure has come into question. Second, stock prices are determined in

accordance with stockholder expectations. With a company as large as Intel, investors may

expect higher profits. Investors may believe the company is not producing as well as it is

potentially capable. If investor and stock market analysts’ expectations are not met, a company’s

stock price may decrease even if it produces a profit.

Because of the differences in stock price and earnings of each company, they have

substantially difference P/E ratios. Intel has a ratio of 16 while AMD is approximately 42. This

does not necessarily mean AMD has an inflated stock price. It only means investors are willing

to pay a high stock price because of AMD’s value in the market. Intel is below the industry

average P/E ratio of 28, while AMD is in excess. AMD has a higher Beta than Intel, which is

expected since AMD is a smaller and more volatile company.

Intel has a quick ratio of 1.47, while AMD is 1.99. This can be explained because Intel

has greater production capability compared to AMD. As a result, Intel has a greater proportion

of fixed assets to current assets. Intel has a long term debt to equity ratio of .06 compared to .13

of AMD. Intel has made a conscious effort to reduce interest expense. The company reduced
interest expense from 62 million in 2003 to only 19 million in 2005. Some industries require

heavy financial leverage, but this is not the case in the microprocessor industry. Intel has

followed the operational behavior of other technology based companies such as Microsoft and

Apple in nearly eliminating long term debt.

The 5-year average net profit margin between Intel and AMD also differs. Intel has a

margin of 16.76% compared to -7.64% of AMD. The substantially large profit margin for Intel

demonstrates the effective cost cutting ability of Intel and the use of proper leverage. Because of

Intel’s size, management is better able to capitalize on market opportunities. Intel has current

Return on Assets and Return on Investment ratios of 16.54 and 20.52, respectively. AMD has

current ROA of 3.72 and ROI of 5.38. AMD has lower returns partially because of its size and

partially because of management’s ability. Investors are hoping AMD will become what Intel

was in the late 1990’s.

Investors in Intel have conflicts with Intel’s management in finding a nice balance between

profitability and growth. Investors usually want the company to be profitable, since some of the

profits usually go back to shareholders. Management has to maintain the survivability of the

firm, while growing to maintain market share. Looking at Intel’s balance sheet, long term debt

substantially increased from 703 million in 2004 to 2.1 billion in 2005. Although this conflicts

with one of Intel’s previously stated objectives of lowering interest expense, it was necessary to

sustain growth of the company. Prior to 2005, Intel had decreased long term debt from 1.05

billion in 2001 to 703 million in 2004.

Firm's Position and the Core Issue of the Case

One of the best ways to evaluate a company is to uncover opportunities for

your company’s advantage. Another way to evaluate and to discover weaknesses that
protect your company is through use of SWOT analysis. Every company’s SWOT

analysis is broken down into four parts: strengths, weaknesses, opportunities, and

threats.

First let’s look at the strengths of Intel. The first strength of Intel is their

strong brand name. Their brand name is one of the most popular as well as top brand

names in the computer micro-chip industry. The brand name of Intel is on various

computers, cell phones, I-pods, hard drives, etc. They have patented their own

unique micro-chip processor, as well as their own transistors. Intel is world-renown

for computer micro-chips. It is a high possibility that if someone looks at the back of

their computer, they will find the Intel logo. Intel is the number one seller in

computer micro-chips and transistors. As one could see, Intel’s brand name is huge

factor in why they have been successful thus far in their life cycle.

The second aspect of SWOT analysis is weaknesses. Intel’s largest weakness

includes their safety record. Intel used to pride themselves in their almost flawless

safety record. In 1992, Intel had an average of 92% incident free record. Since then,

their safety record has fallen to 81%. Situations that could possibly make the record

fall are employee injuries, transistor malfunctions, and chemical spills. From

chemicals spilling on the employees eyes, skin, or any other part of their body, the

injuries have to be reported to OSHA. OSHA deals with all safety situations that

happen on the job. Intel needs to implement some type of plan that increases

employee safety records. Also, Intel needs to offer classes to the employees that

might decrease the liability of more injuries on the job. This weakness is a problem

that Intel needs to fix. Once the company increases their safety record back to the
low 90%, Intel can reap the rewards that may come with fewer injuries in the near

future.

The third part of the SWOT analysis is opportunities. Intel has a great

opportunity to look toward in the future. The opportunity that Intel can look forward

to is the spread of sales into international markets. Intel has already become the

number one producer of micro-chip processors and transistors in the United States

and Canada. There is a positive outlook for their international market in the near

future. Intel has already made progress in countries such as: Bolivia, Brazil, China,

Japan, New Zealand, Norway, Sweden, and Peru just to name a few. Intel’s largest

opportunity is to continue to spread into international markets, so that they can

increase their chance of growth. Intel’s potential is as large as they want it to be.

Intel has a great opportunity to increase their niche in the market. It is up to them on

how and when they want to increase their market productivity.

The last part of the SWOT analysis is the threats. Intel’s has many threats, but

the main one that needs to be focused on is the chance that another micro-processor

company will come in and take away some of their competitive advantage. A

downturn in of Intel’s market would be if another company grabbed a large piece of

the market from Intel. Intel already owns 39% of the micro-processor market. As

long as another company does not come along and take away their business, Intel

should be fine. To avoid this threat, Intel needs to continue with their domination in

the micro-processor market. The ever increasing market of micro-processors has

created a threat for Intel, but as long as they continue to increase their technology

they will not be affected by this threat.

 The core issue that Intel faces is fact that they need to stay the number one in the micro-

processor market. This is a key strategic opportunity. More and more businesses are

entering the market as years pass. That means Intel’s likelihood of staying number

one is decreasing. Other companies are learning the ends and outs of this market

that made Intel as successful as they are today. The way Intel stays number one in

the market is to continually come out with new and improved innovations in

technology. The former CEO of Intel Gordon Moore has come up with a rule that

explains the blueprint that Intel needs to follow. The plan is called Moore’s Law.

Moore’s Law is the future plan that describes how Intel will continue to double the

number of transistors they place on a micro-chip every year. By doubling the number

of transistors on the micro-chip, Intel always is increasing the technology they offer

in processors. Imagine if the company doubles technology every year. They will

continually put pressure on their competition. By placing pressure on the

competition, they will solve the key strategic problem.

Long Term Objective and Strategic Scenarios

The next five years is a key time for Intel. The next five years are crucial to

the long-term success in the micro-processor industry. The next five years will

determine whether they will be able to continue to increase their domination in the

market. The five-year outlook depends on the scenarios that Intel will likely face.

Intel’s best case scenario is simple. Their best-case scenario is that they will

still be the number one micro-processor company in the market years down the road.

As long as Intel keeps coming out with new innovations with technology, they will

stay the number one in the market. If Intel follows Moore’s Law, the company will
see higher productivity than the year before. Continually coming up with new

technological innovations is the most important factor to Intel reaching their best

case scenario.

Best case scenario and worst case scenario are obviously opposites. So, if

continually coming up with technological innovations is the best case scenario, then

the opposite for worst case scenario would be not to continually coming out with

innovations. The worst-case scenario for Intel would be to sit back and watch the

competition come up with new technology. By not coming up with innovations, this

would cause drastic loss of productivity. The best case scenario would improve Intel

chances of success, but the worst case scenario would make them a candidate for

bankruptcy.

If the best-case scenario were to occur, Intel would reap many rewards. But if

they do reap there rewards, they cannot rest contently with this success. They would

need to permanently sustain their long-term objectives to be able to continue with

this growth. Intel’s best case scenario directly affects their long term objective. If

they put new innovations out on the market for customers to purchase, Intel will reap

the reward of increasing revenue. So, the best case scenario and long term objective

can be positively linked together. In case of the worst-case scenario, Intel needs to

completely avoid this situation. If they followed the worst case scenario, they would

see that the industry keep up with technology and they did not. The success of Intel

all comes down to coming out with new technological innovations. Whether Intel

follows the best or worst case scenario, the company will not automatically go
bankrupt, but eventually they will if they do not come out with technological

innovations.

Develop Corporate Level Strategic Alternatives

Since corporate level strategies are a direct extension of a firm’s mission statement, core

values, and objectives, it is important to pursue strategies that will help to achieve overall

company goals. Corporate level strategies serve as a guide for the rest of the firm toward the

overall mission, and therefore directly impact a large number of the company’s lower-level

decisions. Intel’s aggressive mission, values, and objectives can be more readily obtained by

choosing proper corporate level strategies. Outlined below are four alternatives that Intel could

choose to pursue in an effort to achieve its overall goals.

Concentric diversification is an excellent avenue for growth, cost controls, and synergy,

all of which could improve Intel’s current stronghold in the technology industry. By pursuing

this strategy, Intel could potentially increase its current competitive advantages over competitors

by acquiring a firm “whose products, markets, distribution channels, technologies, and resource

requirements” contribute to the formulation of new strengths while shoring up any weaknesses

that exist in Intel’s current corporate structure. Concentric diversification can be a costly

strategy to pursue, however, and if Intel chooses to pursue this strategy in the future, acquisitions

should be carefully investigated and opportunity costs closely monitored to ensure that the

company is heading down the right path.

Over the past 35 years, Intel has grown into a company with nearly 100,000 employees in

almost 50 countries. Along the way, Intel has acquired numerous firms, some of which are no

longer of much use to Intel Corporation. Pursuing a strategy of divestiture of such firms could

result in increased assets that could be put toward the latest in cutting-edge technology. For
example, according to Intel’s most recent 10-K filing with the SEC, “during 2003, the company

recognized approximately $758 million in tax benefits related to sales of the stock of certain

previously acquired companies, primarily DSP Communications, Inc. (DSP), Dialogic

Corporation and Xircom, Inc. A net benefit of approximately $420 million was recognized on the

divestiture of a portion of the intellectual property assets of DSP, through the sale of the stock of

DSP. A benefit of approximately $200 million was recognized on the divestiture of a portion of

the assets, primarily real estate, of Dialogic, through the sale of the stock of Dialogic, and a

benefit of approximately $125 million was recognized related to the sale of a wireless WAN

business, through the sale of the stock of Xircom.” By divesting unnecessary business units,

Intel can streamline its operation and modernize its corporate portfolio to more accurately reflect

the industry in which it competes. Unfortunately, divestiture is contingent upon having a buyer

who is willing to purchase the divested assets for a fair market price. Also, by eliminating

business units, Intel could be selling away future, unforeseen opportunities.

Vertical integration makes sense for a company the size of Intel. With numerous products

and channels of distribution, and easy way to eliminate costs and gain a competitive advantage

would be to either reverse integrate into the supplier market or forward integrate into the

customer market. Either method will result in better cost controls, higher quality products, and a

general strengthening of Intel’s reputation. Vertical integration does not come cheaply, however,

especially in Intel’s industry. A careful cost-benefit analysis should be performed before any

vertical integration is pursued in order for Intel to be a savvy customer.

With a market cap over two times its nearest industry competitor, acquisitions are

certainly a feasible option for Intel Corporation. Such a strategy can be pursued for numerous

reasons, and careful acquisitions could potentially result from a strategy of divestiture if Intel is
seeking to update its company portfolio. Acquisitions are extremely costly, however, and should

be pursued with care. Reckless acquisitions could leave Intel with numerous “dead weights” that

could hamper the company’s competitive abilities.

As stated, corporate level strategies are essential to the overall direction of the company. Intel

has numerous alternatives to choose from, and the best choices will yield results that align with

the company’s mission statement, values, and objectives.

Evaluate Business Level Strategic Alternatives

In order to fully realize the potential outlined by the company’s mission statement,

objectives, and values, Intel must capitalize on the many business level opportunities that are

available to pursue. In particular, Intel should focus on strategic alliances, joint ventures,

concentrated growth, and product development.

Strategic alliances are “an agreement between two or more individuals or entities stating

that the involved parties will act in a certain way in order to achieve a common goal. Strategic

alliances usually make sense when the parties involved have complementary strengths.”

Currently, Intel is pursuing a strategic alliance with Apple Computer, Inc. to offer Intel’s

computer chips with Apple’s increasingly popular line of home computer systems. “This major

strategic shift [by Apple] signals the end of longstanding relationships with IBM and Freescale

Semiconductor, which until last year was a division of Motorola. The two companies

manufacture the Power PC chips currently found in Macintosh computers.”

The example that Intel has set by pursuing a strategic alliance with Apple Computers

serves as an overall guide for the company when pursuing strategic alliances. Of course, there

are pros and cons to any strategic pursuit, and strategic alliances are not exempt from this rule.

The benefits of pursuing a strategic alliance are increased brand recognition, increased market
share, and the ability to “quickly provide value to the customer” by creating another avenue for

potential customers to purchase Intel’s products. The inherent risk, however, is that Intel could

overstretch its assets and neglect key aspects of its business, which may allow competitors to

catch up to Intel’s level of expertise.

Joint ventures would result in many of the same benefits as strategic alliances. As a

“contractual agreement joining together two or more parties for the purpose of executing a

particular business undertaking,” joint ventures are an attractive way for companies to minimize

risk while increasing overall market presence. Currently, Intel is pursuing a joint venture with

Micron Technology, Inc. to “manufacture flash memory for use in consumer electronics,

removable storage, and handheld communications devices. The new company will manufacture

exclusively for Micron and Intel. Intel and Micron have each entered into separate long-term

agreements to supply Apple with a significant portion of each of their share of IM Flash

Technologies’ NAND flash memory output.” This joint venture, along with any others that Intel

may decide to pursue, could have the benefits of allowing Intel to establish itself in a new

product market while minimizing risk. Once again, however, the primary drawback of a joint

venture is that Intel would be allocating assets toward the venture that would otherwise be

earmarked for Intel’s current areas of expertise.

The concentrated growth strategy has a certain level of potential for Intel Corporation.

By “focusing on a specific product and market combination,” Intel can continue to capitalize on

and further develop its expertise as the world’s leading manufacturer of microprocessors. A

concentrated growth strategy would devote most, if not all, assets toward widening the gap

between Intel and competitors when it comes to microprocessor manufacturing. Unfortunately,

however, Intel’s current position is not ideal for pursuit of a concentrated growth strategy. First,
Intel’s industry is based on major technological advancements, which is a strike against

concentrated growth. Perhaps the largest drawback of pursuing a strategy of concentrated

growth would be the potential limitations it would place on Intel as a company. With so much

technological experience and expertise, Intel still has plenty of unexplored potential to offer the

microprocessor industry. As a result, focusing on a strategy of concentrated growth would not

allow Intel to reach its fullest potential as a company.

As personal computers have become increasingly commonplace in American homes, the

Intel brand name has enjoyed increasing recognition as a high quality, reliable source of

information technology. As a result, Intel is drawing closer to a position where marketing new or

substantially improved products under the Intel name could prove very successful. Such

products would be marketed to existing Intel customers through currently utilized channels of

distribution. By further developing Intel’s product lineup, becoming a household name will be

even more feasible, and Intel will be able to apply its expertise in more diverse segments of the

technology industry. As previously mentioned, any reallocation of funds away from Intel’s core

business function could result in a slipping competitive advantage in exchange for unknown

results.

The primary disadvantage of each of these strategies, as mentioned, is the shifting of

focus away from Intel’s primary, most successful business segment. According to one Intel

executive, “we operate in intensely competitive industries that experience rapid technological

developments, changes in industry standards, changes in customer requirements, and frequent

new product introductions and improvements. If we are unable to respond quickly and

successfully to these developments, we may lose our competitive position, and our products or

technologies may become uncompetitive or obsolete. To compete successfully, we must maintain

a successful R&D effort, develop new products and production processes, and improve our

existing products and processes at the same pace or ahead of our competitors. We may not be

able to successfully develop and market these new products; the products we invest in and

develop may not be well received by customers; and products developed and new technologies

offered by others may affect the demand for our products.” Relaxing a competitive advantage

will surely mean increased competition from companies such as AMD, Texas Instruments, and

Samsung Electronics, among others. While it is extremely important for Intel to pursue business

level strategies, care must be taken to follow paths that will not hinder Intel’s undeniable success

in the microprocessor market.

Evaluate International Business Activities:

In recent years, heavy emphasis has been put on American manufacturing firms

relocating plants to South America and parts of East Asia. American firms are able to increase

profits due to lower labor costs and undervalued currencies in those foreign countries. Investor

pressure to generate higher profits has forced companies to compete on a global scale and to

expand strategy development to encompass other countries.

In recent years, Dell moved servicing operations for computer problems to India. As a

result, Dell receives a source of educated labor for a much cheaper price than in the United

States. Dell has also received numerous complains about the support centers due to a lack of

ease in communication. Competing in a global market can have benefits, but improper

implementation can lead to greater costs. Nike has also outsourced parts of athletic shoe

manufacturing sporadically throughout the world.

Intel has major opportunities in three East Asian nations. By operating in foreign

countries, Intel must first ensure that the quality of their product is not significantly diminished.
If the quality of Intel chips decreases, then consumers will not see quality in the well known Intel

brand. First, Intel should work with Japanese companies to develop ideas for new technology.

Japan has been an innovative leader in the technology dependent world. Japanese companies are

more advanced than American companies in efficiency and technological development. Next,

Intel should have a production plant in China to create products made at a lower overall cost.

Intel should only produce the chips on a test basis to see if the market reacts negatively to chips

produced in a country not known for high quality products. China would provide lower human

labor costs and the undervalued Yuan could also be beneficial in currency conversion. If the

Chinese venture is successful, then Intel should provide servicing in India. Most customers for

Intel are other corporations, so limited servicing would be needed. India provides an educated

work force specializing primarily in technology. Servicing may be better if accomplished

through e-mail or other text based support system.

Intel should primarily use joint ventures when doing business in other countries. Intel

has a medium amount of product diversity and is in an industry of medium complexity. Joint

ventures provide the benefit of professional management in foreign countries. Intel managers

from the United States would also not have the burden of overcoming cultural differences.

Although joint ventures are not as profitable as full immersion into foreign markets, Intel would

be protected against a large failure. If operations yield success, then Intel could invest further

into foreign markets and try to self-manage operations.

Intel can measure the quality of the foreign produced goods through benchmarking. Intel

could measure how many documents a chip could process in a certain amount of time and

compare the results to a rival’s chip such as AMD. Intel would have to try to remain the industry
leader, while reducing costs. If quality has decreased relative to an AMD chip, then better

quality control standards would have to be enacted.

Make a Strategic Choice

Business Level Strategy:

In evaluating the business level strategies, the one that is most applicable to Intel is

product development. Product development “involves the substantial modification of existing

products or the creation of new but related products that can be marketed to current customers

through established channels.” Although Intel has been playing an active role in product

development for sometime now, it is an area where the company should continue to concentrate.

Intel is famous for its superior execution in all parts of its business and shows no sign of falling

from its lofty perch at the top of the chip industry.

Sometime ago, the company began their move into high end processors. After careful

evaluation, the company should continue to produce high end processors. High end processors

simply deliver higher performance to consumers, which is what most consumers are interested

in. Since Intel already has its name established with the processors, it would be a wise choice to

continue development in that area.

Currently, none of Intel’s competitors, i.e. IBM and Texas Instruments, have given a

second thought to moving into high end processors. The competitors do not feel as if it is an

option for them, because with sticking with their current architectures, they don’t require

software firms to overhaul their products. Or more simply stated, they don’t want to have to put

much effort into creating the processors. They may not have the resources to construct such

architecture, and by saying it is “not an option” allows consumers to be in the dark about their

inability to stay with the competition.

 High end processors are definitely something of the future. For Intel to be breaking into

this market and perfecting the systems relatively sooner than their competitors, it almost

guarantees them remaining at the top of the industry. Remaining at the top is a definite long term

goal the company strives to achieve on a daily basis.

Although the benefits of product development are many, there are a few downfalls as

well. Such concentration on one product, the processors, may take time away from concentration

in other areas of development. Other products should be watched closely as to find ways of

improvement for them as well. Also, when computer makers adopt new chip architecture, which

is what the processors essentially are, all software must be reworked to fit the new design. This

takes an abundance of time, energy, and resources on Intel’s part. The amount of resources

needed is the key reason competitors do not feel they are ready to make the same move that Intel

has. IBM has stated that their customers are more interested in “architecture stability,” and by not

moving into high end processors, they feel they will be “more successful in retaining their

customers.”

In argument to “retaining customers”, Intel puts an extensive amount of time, money and

effort into their research and development departments. People work around the clock to forecast

potential problems of new products and ways to fix or stop the problems from occurring. Highly

trained and skilled individuals are employed with Intel and it seems as if this is what gives the

company the courage, confidence, and ability to move into new territories. Perfecting new

territories faster than their competitors gives a lasting impression on the minds of the consumer.

Other business level strategies that were presented were strategic alliances, joint ventures,

and concentrated growth. While all of these alternatives could fair well for the company, overall,

product development is Intel’s current best choice.

 Joint ventures are formed when there are “two or more capable firms that lack a

necessary component for success in a particular competitive environment.” Intel is not currently

in a position where they are lacking necessary components. They hold strong in the position as

the leader of the chip industry. Strategic alliances are more along the lines of two companies that

join together for a common goal, and then split from one another after the goal is accomplished.

Intel’s competitors are not on the same level as the company and therefore may not be able to

provide any immediate benefits to Intel. In the future, a strategic alliance may be beneficial, but

currently, it does not seem like the most appropriate strategy to pursue.

Neither does concentrated growth. Concentrated growth implies that you devote

resources to the growth of a “single product, in a single market, with a single dominant

technology.” Intel provides an array of products for its consumers. Some areas of the business

are more concentrated that others, but it does not make sense to devote the entire company to one

area of product and market. Even if it would be a profitable growth, Intel does not seem to need

to focus on solely one product to retain its leadership in the industry.

Corporate Level Strategy:

After evaluating the possible corporate level strategies for Intel, the most pertinent for the

company seemed to be concentric diversification. By definition, concentric diversification

involves “the acquisition of businesses that are related to the acquiring firm in terms of

technology, markets, or products.” The acquiring firm searches for businesses “whose products,

markets, and distribution channels, technologies, and resource requirements are similar but not

identical with its own.” This strategy also allows the firm to diversify within the product line,

introducing new products when life cycles have peaked.

 Intel should focus on improving the computing experience for the end user, as well as

improving product capability for the customers. Doing so is a major priority for growth. Intel

could look to acquire smaller, but still profitable, firms that can alleviate some if not all

outsourcing requirements. The goal would be to find smaller firms that operate in an industry of

use to Intel, acquire it and in the end, save more money and generate higher profits.

The company needs to be concerned with what is in the consumer’s best interest,

however. Instead of solely focusing on improving the technology, a deeper look needs to be

taken as what the consumer will receive in benefits from the improvement. Intel should develop

new and innovative products based on what it is the consumer’s desires and needs are.

Researchers and developers simply do what they do best and work on ways to beat out the

competition with the issuance of newer and better products on the market. Consumers are always

going to buy the newer products because usually newer means better. However, Intel needs to

strive to ensure that consumers are getting the most out of the product, and that “the most” is

exactly what the consumers are looking for in their everyday and business lives.

The improvement in product capabilities will essentially provide consumers with better

memory technologies, better memory controllers, and better overall management. This signifies

the diversification within related areas of the technology. As for keeping a focus on the overall

computing experience for the consumers, the benefits outweigh the cons. The more focused the

company is on its consumers and their needs, the higher likelihood that the dominant computer

companies, such as Dell and HP, will continue to use Intel processors in the computers.

Consumers will also recognize the concern that such a large corporation as Intel has for its

customer’s wants and needs when it comes to computing hard and software.
 With Intel already having found ways to provide anywhere from 5 times to 40 times the

processing speed, it would be a safe guess to say the company already knows consumer needs

should be of major concern.

Other alternatives that were offered for the corporate level were divestiture, vertical

integration, and acquisitions. These three strategies did not fair as well as concentric

diversification in the evaluation phase.

The divesture strategy suggests the sale of a firm or a major component of the firm. Intel does

not have the opportunity to sale any part of its firm. It would not be a wise decision on the

company’s part to rid itself of any part of the organization. The firm has most everything it needs

to be successful. A more reasonable option would be acquisitions, however still not currently of

importance to Intel. Intel could look to find other firms with similar goals and objectives, but

why put time and energy into finding companies to acquire, when things are running smoothly as

is, and concentration could be focused more on the interests of the consumers.

Key Institutionalization Processes

There are certain key institutionalization processes that companies must have

to succeed and remain competitive. These four key institutionalization processes are

structure, culture, leadership, and rewards. How well a company can implement

these processes often determines whether the company has success in their market.

The first key institutionalization process is structure. Intel is the number on

seller of micro-chips in the United States, but what about other countries. They need

to operate internationally to improve the structure of their company. If they

successfully integrate internationally, not only will they get revenue from the Unties

States, but other countries as well. Intel is not a company that only operates in a
certain town, county, city, state, or even a region, they operate internationally. Since

they do have business in other countries, they reap the productivity in other places

than the Untied States.

Culture is the second key institutionalization process. Intel has to realize the

different styles of cultures that go along with international business. For example,

the sizes of routers (which contain transistors) are different in other countries than in

the United States. In Europe, the router is an average of eight feet long and the

router in the United States is about five feet long. The number of transistors that go

in a European router will be more than in a router in the Untied States. Intel has to

realize this culture change and be able to adjust their production line to fit the

culture. Intel has done an excellent job in adjusting to different cultures that allow

them to be one of the most successful micro-processor businesses in the world.

The third key institutionalization process is leadership. Leadership is the front

most reason why companies succeed or fail. A great example of leadership is to refer

to the former CEO of Intel Gordon Moore. Gordon Moore started working for the

company in the early 1970’s as a financial analyst straight out of college. The

current managers of Intel saw some something special in him. The something special

was his leadership abilities. His leadership abilities allowed him to advance in the

company over the next 15 years. Over the years, he progressed from a lower level

manager to a middle line manager. And then in 1986, the owners of Intel promoted

him to assistant regional manager. Shortly after this promotion, the CEO of Intel

stepped down. The owners looked at the possible candidates for the job and

appointed Gordon Moore for the CEO position because of his leadership abilities.
This example shows how leadership affects Intel. Gordon Moore went on to become

the most successful CEO in Intel’s short history. One can see how leadership

positively affects a company. And with the right institutionalization processes, a

business will see the productivity substantially increase.

The last key institutionalization process is rewards. Rewards are the one

aspect besides money that employees want to obtain. Rewards make employees put

their best effort forward and try that much harder. Intel offers many possible pension

plans and benefits that attract employees. Intel gives the option of giving their

employees a chance to have paid vacations, employee discounts on Intel products,

and various bonuses. Intel also offers to pay for grad school to employees who wish

to further their education. Not all employees get these rewards. Only the employees

who possess certain qualities get to obtain the rewards. With all of these rewards, it

is easy to see how Intel is able to maintain a knowledgeable staff that is highly

motivated to make their company the best in their industry.

Some companies use the McKinsey 7-S framework to diagnose certain

problems in the company. The McKinsey 7-S framework consists of 7 items:

structure, strategy, systems, styles, staff, skills, and shared values. The first two

items in the McKinsey framework can be grouped together. Structure and strategy

are two of the most important items in this framework. Intel’s structure and strategy

was discussed earlier in this paper. Their structure and strategy are primarily based

on their international market right now. Intel already established themselves in the

United States, so now they are venturing in other countries. Their international

success depends on the way Intel performs over seas. Their structure and strategy
needs to follow the same way they follow in the Unites States. Intel’s structure and

strategy are focusing mainly on their international markets right now.

The next McKinsey framework is system. Systems are what make the business

run on the day-to-day procedures. Whether it is accounting programs, training

systems, or budgeting software, the systems help the company run more successfully.

One system that has allowed Intel to perform more smoothly is the culture procedure

system. This system allows Intel to see how different cultures use different amount

of technology. For example, if India’s technology is more or less advanced than the

United States, this software will alert them of the change and then show the

procedures needed to proceed. Without this system, Intel would have to manually sit

down and figure out the difference between the two cultures. With the new system,

all they have to do is wait on the system to perform its’ duties. One could obviously

see that using the system software makes it easier on the company to perform its’

everyday duties.

The next two aspects of the McKinsey framework can be grouped together.

The staff and skills of Intel are similarly connected. The more knowledgeable the

staff becomes in their area, the more efficient the member of Intel becomes. The two

can be linked with one another because the skills that Intel’s employees have are a

direct result on whether the company succeeds. If the employees do not possess

enough knowledge to correctly perform their job, the company will lag on their

productions. So, Intel wants their employees to be the most knowledgeable that they

can be. The staff and skills of Intel’s employees are directly corresponding with the

success of their business.

 The last two items of the McKinsey framework are the style and shared

values. Style of the company is the way they perform their duties of the job. Some

businesses are people based organizations and others are technological based.

Obviously, Intel is technological based because they communicate with other clients

through the world of computers and technology. It is faster to communicate this way,

but it might cause confusion in technological lingo. Intel shares these technological

values with many other companies, but the one value that they share with every

successful company is great customer service. Intel prides itself on their customer

service department. The value that Intel sees most important is to mimic other

companies in the customer service field. The fact that Intel possesses great style and

shared values shows why they are the number one in the computer micro-chip

market.

Ethics and Social Responsibility

Ethics and Ethical Conduct of Employees

Intel’s company website states that they “strive to conduct themselves with

uncompromising integrity and professionalism.” In the Global Citizen Report for 2004, it

mentions that the company’s Corporate Business Principles serve as the backbone for guiding

both employees and corporate officers each day in the way they conduct their business. Also in

2004, Intel, along with Microsoft, HP, and others, endorsed the Electronics Industry Code of

Conduct (EICC). The intent of this code was to establish unified industry expectations for all

socially responsible practices.

Intel strives hard to maintain an ethical workplace and workforce. In 2005, as a part of a

new training requirement for all Intel employees, each class was introduced with actual case
studies. The studies were used to aid employees make ethics based decisions when resolving

business questions and issues. Intel understands the importance of abiding by ethical standards,

and consumers and employees alike can be assured that the company takes the necessary steps

and actions to be regarded highly in this area.

Social Responsibility Management

Intel was recently reorganized as a platform company, directing the entire focus of the

organization on the customer and the market. The new organization is out to seek to define what

exactly the consumer’s needs and wants are before they create the product. Intel is also interested

in finding out what their employees needs, wants, likes, and dislikes of the workplace are. The

feeling is that if employees are in a suitable and acceptable working environment, there will be

an opportunity for more innovation in products and ideas. In return for excellent work that

employees do for Intel, the company offers cutting-edge benefits and highly competitive

compensation.

Intel employees are encouraged to take part in their communities by volunteering for

schools and nonprofit organizations. Intel’s Computer Clubhouse Network sponsors such

organizations as the Big Brothers, Big Sisters mentoring program in an effort to show

commitment to its stakeholders and the communities.

The company website explains that the company’s focus areas of investment are what

provide the company the ability to “align itself with the needs of the communities and the

expertise of their employees.” Some key areas of investment are those of education,

environmental safety, and diversity. In 1998, the Intel Foundation was created. The board of

directors includes four corporate officers and the Intel CEO, Craig Barrett. The Foundation’s

mission is to “strengthen engineering and computer science education and increase participation
in these fields by women and under-represented minorities; to improve mathematics and science

education for elementary and secondary students; and to foster the effective use of computer

technology in education.

Intel is strongly focused on its involvement within the surrounding communities.

Employees and corporate officials alike are encouraged to donate their time and help an

organization in need. The company understands to be successful it needs to have well rounded

employees as well as well rounded business practices.

Stakeholder Involvement

Intel maintains formal management systems to engage with, monitor, and learn from their

stakeholders. The company has a diverse array of stakeholders in which they state they derive

value from. Stakeholders for Intel include: employees, customers, suppliers, communities,

investors, governments and policy makers, and non-governmental organizations.

Intel has a customer excellence program in which they obtain objective customer

feedback which drives improvement and motivates employees to have a positive impact on the

consumers. The company also issues a supplier newsletter which aids in improved interaction

with and among stakeholders in the development of the Supplier Code of Conduct. In an effort to

provide communities with a broad range of resources, Intel has extensive working relationships

with educators and educational institutions worldwide. The company holds meetings, formal

dialogues and projects, and conducts multi-sector efforts that promote mutual understanding

between company and stakeholders on critical issues. Discussions in 2004 included resource use,

supplier expectations, globalization, executive compensation and more.

Intel takes pride in making sure its stakeholders are as involved as possible with the

company. Different programs and initiatives are set up for various stakeholders to ensure their
ideas, beliefs, and opinions are heard and considered. Intel in doing a very good job of

maintaining stakeholder involvement in decision making.

Diversity

The company websites reads “Intel was one of the first Fortune 500 companies to

recognize domestic partnerships and offer benefits to family members.” This has been a

tremendous help for same sex families, and Intel prides themselves in being a company that they

can work at and still feel as an equal part of the organization. In 1995, Intel recognized IGLOBE,

Intel’s Gay, Lesbian, Bisexual or Transgender Employees, as a chartered employee group. This

gave members a feeling of acceptance and importance within the Intel community. Intel sponsors

groups such as Out and Equal, a nonprofit advocacy group, as well as the Employee Non-

Discrimination Act and the Human Rights Act. Currently, Intel has approximately 19 affinity

groups that cover a variety of diverse populations and experiences.

Intel employs nearly 85,000 people in over 45 nations. The company has been recognized

as the “workplace of choice for Asian Americans” and is also recognized for offering

multicultural and global training programs. Intel’s website gives a breakdown of the ethnicities

and gender of its employees. As for senior management and corporate governing bodies, 82% of

the company’s board of directors are white males; the remaining 18% are white females. The

company’s corporate officers consist of white males and females, and Asian males. The majority

of the United States workforce are white males and females. Distantly following are Asian males

and females, Hispanic males and females, and lastly, with 3% of the workforce each, black males

and females.

In 2004, out of 2,852 employees hired, 38% were minorities, and 30% were females.

Currently Intel’s workforce is comprised of 70% males and 30% females. A somewhat diverse
workforce, but a more favorable workforce would have a slightly higher ratio of females to

males.

Prescribe Strategic Controls:

The two most important controls for Intel are premise control and implementation

control. Premise control consists of environmental and industry factors. Both factors have to be

taken into consideration when implementing a strategy. Premise control is important to Intel

because of its rapidly changing industry. Managers at Intel must choose premises in a strategy

that are likely to happen, which can be a difficult task. When a project is undertaken, managers

must be fully aware of market trends and factors that affect the industry. Because of such short

product life cycles, something that is true one day may not be the next day. When a strategy is

created for Intel, it has to be flexible in the implementation phase because of market factors.

Implementation control is also important when a strategy is carried out. Managers must

set difficult but realistic goals to achieve the overall goal set at the corporate level. When a

product is developed by Intel, speed and time are crucial factors for success of the product.

Managers should be given tasks that will make use of time. Any idle time in operations takes

away from being efficient. Implementation control helps to make sure that a strategy developed

at higher management levels is carried out effectively by lower management.

Intel, like most technology firms, has to maintain quality in current technology while

developing new technology. In doing so, a system of continuous improvement would help to

yield success. In order for the system to be implemented properly, coordination must be

organized enough to be maintained day to day.

One of the most important factors for success of the system would have to be speed.

Product developers would have to gather data quickly on customer demand and relay that into
creating an effective strategy. The product must be made with specified customer demands in

mind. The product must also be designed and engineered quickly. One of the best ways to

implement this strategy is through cross functional teams.

When cross functional teams are used in the creation of a product, various perspectives

get to have their input. When functions are separated, there is less flexibility. For example, if

the members of the engineering team design a product, it can go to the next function in line. The

next function may be finance. If the members of the finance team reject the idea due to high

cost, the engineers would have to redesign the product and resubmit the proposal to finance.

However, if cross functional teams are used, then the problem of high cost is addressed

immediately. As a result, the use of cross functional teams also eliminates redundancy and idle

time.

Once a product is quickly designed and engineered, it must be distributed into the market.

Operational efficiency also plays a key roll during this segment. Proper marketing campaigns

must take place before and during the release of the product. Intel also has to establish proper

distribution channels, so the product is distributed as soon as it is released. Intel has effectively

used marketing tools to establish a brand name and to contract with computer manufacturers

such as Dell and Apple.

When additional products need to be created, continuous improvement strategy must still be

used. Technology develops rapidly and processor capability has to keep up with the changes.

Intel has to continually improve their technology in order to stay in business. If Intel does not

improve rapidly, then other companies will. Customers will ultimately purchase the best

processor available at a reasonable price. Small incremental changes made to Intel products

have helped to keep Intel the industry leader. Intel can gain a competitive advantage when a
patent is granted on specific technology. Having the research capability also helps Intel

gradually improve.

Project Future Trends

The new technological innovations that Intel came out with this past year

allowed Intel to reach highs never before seen in March. The reason Intel is seeing

all-time highs in revenue is the fact that they keep creating new innovations in

micro-chips. The more chips created to put on the processors, the faster the computer

will work and the more information the computer can hold. Customers see that Intel

comes out with new and faster computers, and they are attracted to purchase their

line of computers rather than other brands. So, the trend in the future seems to be

that the brands of computers that have the best technology are the ones customers

tend to buy more of.

A major trend that Intel needs to go through is increasing the number of

transistors that they place on each micro-chip. According to Moore’s Law, Intel

wants to double the number of transistors on each chip, but what if they triple the

number of transistors. Not only will they increase the technology of their devices,

but they will put the competition to shame. The more changes to technology that

Intel does for the better, the more space they put between them and their

competition.

As for the implementation of these technological changes, Intel places itself in

a whole new market. That market is the speed at which the processors can deal with

information at one time. Other companies that are in the micro-processor field do not

have quickness in which Intel has to process information. The average speed of
Intel’s microprocessor is 1.3 seconds for 300 megabytes. The closest competition

comes in a far second at 3.2 seconds. So, one can see that Intel has placed itself in a

completely different market than it’s’ competition.

Five years down the road, every company wants to increase in revenue,

efficiency, and effectiveness. But Intel wants something different. I spoke with the

Southeastern regional manager of Intel, Terry Triplett. Terry Triplett said, “It is very

simple. We want Intel to become a household name for micro-chip processors.” After

speaking with him, I realized that what Intel wants is when customers want a

computer they demand a computer with an Intel processor. Intel is the number one

producer in micro-chip processors. Nothing will get in their way as long as Intel

remembers what got them to the successful level they are at right now. The best

thing for Intel to do for the future is to keep coming up with technological

innovations and stay ahead of their competition.

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